S-3 Integration: Stabilize the Business

Mark Herndon headshot
By Mark Herndon
Chairman, M&A Leadership Council
Dec 7, 2016

Here’s a startling thought: your customers probably have more M&A experience than you do! Think about it. Whether your business is B2B or B2C doesn’t matter. Your customers have more M&A related “been there, done that” deal-count experience with other businesses they interface with than your current leadership team could ever hope to achieve.

Don’t believe me? From a personal standpoint, your customers have been through consolidation waves of banks, retailers, grocery chains, auto dealerships, insurers and health care providers to name just a few. From a business standpoint, your customer’s companies have likely been bought and sold, as well as many of their suppliers, vendors, partners and their own customers.

"Your customers have more M&A related ... deal-count experience ... than your leadership team could ever hope to achieve.”

So what does that mean for you, a corporate acquirer about to announce your next deal? Plenty. “When mergers and acquisitions occur, customers demand consistent, seamless service across both buyer and seller companies from the start. If they don’t get that, they defect.” (Miles and Rouse, Wall Street Journal).

To build on our discussion of the M&A Partners S3 Integration Model, let’s talk about one key aspect of how you stabilize the business, on both the buyer and seller side, by proactively managing current customer expectations and experiences. The download linked here, S-3 Integration – Stabilize the Business, summarizes some of our thinking on this important topic. Let’s start with these core principles:

  • Customer value-proposition: Revenue synergies will never be achieved if customers don’t buy your fundamental value-proposition behind the deal.
  • Focus: Fight the natural tendency to focus only on the internal priorities once the integration is underway. Most companies going through M&A tend to lose sight of customers at the most critical time – when they are most likely to bail out or get picked-off by opportunistic competitors.
  • Deal value: Before value can be created it must be preserved. Value erosion is primarily a failure of strategic planning, lack of readiness, ambiguity or delay on key decision points.
  • Business model: Before making integration decisions, make sure you understand the target’s business model and how that compares / contrasts with yours. Poorly conceived or poorly implemented changes to the legacy customer experiences or expectations typically have equally poor outcomes.

Gain Clarity of Action. Accelerate Deal Value. Empower Internal M&A Competencies.
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