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Making M&As Work: The One Strategy That Makes the Difference

In the dynamic world of business, companies that simply react to change get stuck in survival mode. But the most successful leaders don’t wait for change to happen: They foresee it. Or create it. So it’s no wonder that mergers and acquisitions (M&As) have become a common sight; after all, they’re a pivotal move for companies aiming to grab a competitive advantage.

In fact, according to the Harvard Business Review, companies spend more than $2 trillion on acquisitions every year. This degree of investment doesn’t come as a shock: combining capabilities, resources, markets and talent pools has the potential to create new value and consequently grow revenue.

What is surprising is how many M&As collapse. Study after study puts the failure rate at somewhere between 70% and 90%. What’s going wrong? Here are some common reasons:

  • Many deals are doomed from the start because they’re based on misinterpretations of the practically undecipherable laws that govern M&As.
  • Weak integration strategies end up broadening rather than narrowing the gap between divergent company cultures.
  • Management, needing more support, loses its control over operational performance.

Dig into those latter two, and another arises: when companies merge, they inevitably end up overloaded with processes and systems that perform differently from each other. The result: organizational inconsistencies and inefficient use of resources.

These issues need to be mitigated by harmonizing processes – i.e., creating standard processes specific to each department’s particular needs. Over my many years of experience helping clients navigate M&As, it’s become evident to me that a successful unification, in fact, depends on successful harmonization.

With the right combination of technology and expertise, harmonization functions like a curation method that reduces the number of processes a department carries out, thus increasing their quality, lowering costs, and improving response times to changing business conditions. Other benefits include a smoother transition for every part of the organization, the ability to overcome common hurdles in a unified way, and the establishment of common ground as you build a new company.

Still, few companies realize the strategic value of pursuing harmonization before, during, and after the transition. When you harmonize processes you: enable the standardization and streamlining of sales activities, speed up the integration of new technology, and get salespeople aligned behind the new sales strategy so they can execute it with confidence and ease.

Moreover, harmonization helps provide the clarity and stability people need through the five most common challenges of M&As:

1. Changing sales leadership

It’s only natural for M&As to result in leadership changes due to restructuring; improperly handled, that can lead to confusion about who has the power to make decisions and who owns which responsibilities. For the most effective transition, executives from both organizations should provide clarity and smooth the transition by establishing firm leadership roles from the start, even before beginning to harmonize business processes. Doing so lays the stable foundation that you need to make changes and integrate your businesses effectively.

2. Implementing a new sales strategy

M&As often necessitate a shift in sales strategy; after all, when leaders take the helm of a new and bigger organization, they need to draw a new roadmap. Communicating new business goals to the sales force should be a top priority – as should developing a plan for translating those goals into specific sales behaviors. Start with the most powerful tool at your disposal: the compensation plan.

Used strategically, a well-designed comp plan will support business objectives, maximize individual salesperson earnings, and drive profits. A company that plans to launch new products, for instance, can motivate the right selling behaviors by tying rep commissions or bonuses to their contribution to a successful launch. Conversely, I’ve seen companies implement poorly thought-out comp plans – ones that don’t align with their new goals – and suffer as they unintentionally encourage salespeople to focus on selling old products. An inadequately planned sales strategy will result in a launch that’s dead in the water from the get-go.

3. Reevaluating the compensation plan

Immediately following an M&A, consider bringing in Sales Operations experts whose skills in process creation and refinement have been honed through the experience of creating transformational value through well-designed business processes. Working either independently or alongside your ops team, they can facilitate the harmonization of the new comp plan by applying the highly respected methodology espoused by Sales Ops centers of excellence. They can also manage the collaboration that has to happen between Sales Ops, finance, HR, and other stakeholders.

Though agreeing on all the different facets of the comp plan may take time, it’s worth your while. The collaboration between different parts of the organization will lead to a plan with a backbone and built-in flexibility – one that can be adjusted without trouble when necessary.

When my clients have needed an extended period to collaborate and plan, I’ve found it’s best to keep their sales forces motivated (and turnover at bay) by deploying interim comp strategies, which can be based on prior period averages or other factors. Here again, expert input on best practices can smooth the transition by ensuring timely and accurate payments when faced with the extra volume of transactions and payouts. Taking these steps will also pave the way to success by providing salespeople with visibility into their – and their team’s – performance.

Until the new compensation plan is defined and implemented, it’s best to stay in close communication with the field and avoid making sudden changes.

4. Integrating advanced technology

When companies merge, Sales Operations inevitably ends up dealing with multiple legacy systems that have been used to handle comp, territories, and other operations. I’ve seen the effects of crucial data, often collected and stored using a variety of methods and formats, being scattered ineffectually across an entire enterprise. When Sales Ops is stuck dealing with incorrect information and/or multiple sources of truth, comp can become overly complex and create disputes over pay, causing reps to lose confidence in the M&A process.

A harmonized approach to integrating modern technology makes these problems solvable and establishes one source of truth. Evaluate available tech early on and get feedback from your team. Once you’re up and running, quickly develop clear standards for collecting, storing, and managing your data.

Keep in mind, however, that even the most advanced tech can only provide these benefits if people understand how to use it. Make sure your provider has a strong engagement model and will offer your users all the hands-on instruction they need on the new system’s functionalities and benefits. The more reps get to learn about the benefits of the technology, the greater the adoption rate you’ll achieve.

5. Communicating effectively

In the hectic days after you announce the M&A, keep the doors of communication open and the information flowing. When people don’t know how the coming change will affect them, rumors and half-truths often fill the void. That can lead to your sales force losing the motivation to produce at peak ability – and the last thing you want is to see your revenue shrink during this crucial time as a result of your salespeople feeling like they’re being dismissed or kept in the dark.

An M&A can have far-reaching effects, so it’s only natural for it to provoke plenty of questions. The most effective leaders take the time to meet with their employees, explaining the situation and offering guidance about the direction of the business. This period of change can provide a great opening for leaders to generate enthusiasm, establish a connection with staff, build trust, and ensure that the sales force communicates a consistent message to customers. Treat it as an opportunity to improve your processes with the input and involvement of your people, and you’ll put yourself on the road to a happy union.

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