A framework for go-to-market M&A diligence and integration
It’s a basic goal that often isn’t achieved for complex reasons: When your company makes an acquisition, you want to create significant value — but you almost never do. One big reason is because integration usually fails to achieve go-to-market (GTM) goals. Consider what executives said in PwC’s 2020 M&A Integration Survey. Across the board, respondents ranked essential business growth areas as important, yet those goals were rarely completely achieved.
Why is this happening – or rather, not happening? While GTM goals can vary based on industry characteristics and customer personas, many acquiring companies face common challenges:
- Attrition of top-selling employees recruited by competitors or frustrated with unclear answers to compensation questions
- Insufficient upskilling to cross-sell products while carrying a higher quota
- More difficulty doing business as customers deal with confusing account team structures, quotes and billing systems
- Duplication and overlap with the routes to market
- Confusion in the market with different product offerings and pricing
- Different product strategies, delayed releases or lagging product platform integration
- A long period of time to achieve revenue synergies
Any of these challenges can be difficult, especially as company valuations have generally risen in recent years, elevating acquisition prices. Achieving all of these objectives is even more daunting, which explains the overall lack of success revealed in the survey. Only 13% of executives reported very favorable results in capturing revenue synergies, and only 10% reported the same with cost synergies.
What can acquiring companies do? Converting GTM goals to reality requires a strategy that encompasses collaboration, communication, sharing information through cross-functional coordination and GTM leadership with an executable operating vision. Each group within the company has its own goals in an integration, and focusing on those can naturally lead people to stay in their lane. But when you enable teams to go beyond simply streamlining individual operations and widen their perspective to consider the entire organization, you’re more likely to realize synergies while integrating GTM functions.
Go-to-market starts before deciding on a deal
If you wait until after a deal closes to start thinking through cross-functional coordination, it will be too late, and protecting and creating value will be a lot less likely. The GTM framework spans the entire deal cycle, with specific actions taken at specific stages. These actions can combine to chart a course for achieving revenue synergies — in which the merged company could generate more sales — and realizing deal value.
Build a business case
Before reaching a deal agreement or even a letter of intent, you should align the deal strategy with your overall company strategy and lay the groundwork for successful execution and integration. This involves asking direct questions that could prevent you from considering a target in a vacuum:
- What’s your overall strategy?
- Is M&A the right tactic to further your strategy?
- What M&A target is most aligned with your strategy?
- Is the target positioned to deliver value and further your strategy?
- What does the target bring to the party: Technology? Products and services? Geographical footprint? Sales channels? Account relationships?
To build a business case, you should answer these questions, while carefully considering factors such as the investment thesis; the market size, share and growth rate; the competitive landscape; and customer needs and perspectives. Keeping those elements front and center should allow you to quickly take advantage of the acquisition’s value.
Validate the baseline
To support the investment thesis, assess the acquisition target from both inside out and outside in. An inside-out analysis shows the level of both fit and differences. It also includes commercial due diligence on the core offering and customer sentiment on existing and pending purchases.
An outside-in analysis can leverage artificial intelligence (AI) and natural language processing (NLP) to further assess customer sentiment on the target and its product offerings. These analyses — combined with an analysis of key GTM metrics to assess the target’s current strengths and opportunities for improvement — can provide a holistic view of the current state. Then you can understand the scale of integration planning and validate the initial deal baseline.
Protect the business
Engage employees and customers during integration to help limit anxiety, uncertainty and doubt. Make clear what’s in it for them before your competitors tell them a different story with potential misinformation. Create a war room to enable prompt communications across workstreams to better respond to issues and increase your odds of retaining talented employees and customers. Those workstreams should include:
- Marketing: Be clear on brand selection and messaging around the value proposition in the market. Align advertising, online presence, marketing events and campaigns, as they are critical for the market to better understand the product positioning. This can lead to demand generation for the sales functions to convert into wins.
- Sales: Align routes to markets, customer segments, sales coverage models, sales and channel compensation plans, training and enablement. Have a structure of roles and responsibilities in the pursuit models. This includes having a Day One interim operating model while designing the longer-term model and implementing it in an integrated lead-to-order ecosystem. Before Day One, run mock sales scenarios that incorporate your newly acquired strategic GTM element (e.g., channel, business partner, customer) and think through how you can make that migration easier.
- Customer success, support and services: Have customer success enablement ready on Day One, regardless of the issue entry point. These eventually should converge and create an ideal customer experience at a more appealing cost. This should include integrating support and services vendors, enabling common infrastructure for case and knowledge management, and developing integrated portals for a cohesive customer experience. To start, take a few basic steps, which could involve creating call scripts to handle the new inbound calls into service centers and interactive voice response options to route calls between call centers.
Achieving revenue synergies to create value
Protecting value during integration can put an acquirer in a better position to create lasting value in the long term. That means going beyond cost synergies to pursue revenue synergies that can significantly boost growth potential. Whether it’s deepening penetration with existing customers or winning entirely new customers, consider how four objectives — cross-selling and upselling, pricing and discount improvement, route to market, and net-new customer acquisition — can work together to help drive growth.
None of these objectives can be achieved overnight, and it’s not a matter of months, either. Unlike integrating individual functions, GTM integration is a long-term game in which real value creation usually doesn't happen for at least a year. But when managed well, the investment and effort can pay off. Leaders who take time to understand the above-mentioned elements of GTM integration — and the keys to protecting and creating value — can execute a smoother transition to a truly combined company.
Related content
Contact us
Follow us
