Breaking Down Fiefdoms Post-Acquisition

Post-acquisition challenges abound. However, one of the greatest is getting the individuals in your legacy organization and the newly acquired one to play nice. An area that is especially difficult in this regard is commercial operations where both organization’s customers overlap. In situations where the newly acquired and legacy organization have complementary products and overlapping customers, companies tend to stumble. With both sales organizations making a loud case for maintaining their own P&L and independent footprints and presence at clients.

As difficult as it sounds to manage on paper, letting both the legacy and newly acquired assets manage in silos is even more difficult to pull off in real life. Why? Because client budgets are seen as a zero-sum game, each sales organization jockeys for position, clients receive different (and potentially undermining) messaging for each and in-fighting and confusion ensue. Companies committed to maintaining two (or more) separate sales teams targeted at the same customers attempt to solve for that complexity by leaning on one of two primary models:

 

An area that is especially difficult in this regard is commercial operations where both organization’s customers overlap.

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• Well-routed sales teams: At a basic level, the two teams are coordinated so that they maintain an effective cadence and some consistency in approach with customers. This can extend down to marketing and communications support as well. However, each team stays focused on its own silo with attempts made to not step on one another’s toes

• Cross-trained sales teams: At a more advanced level, those well-routed teams are cross-trained to speak effectively to the organization’s broader product portfolio. Should the broader portfolio come up in conversations with customers

 

So what’s the alternative? Truly integrated sales models.

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The problem in these situations is that incentives don’t align with desired behavior. And incentives are everything. By maintaining two separate P&Ls across their sales teams, these organizations integrate their sales efforts in name only. These situations tend to result in finger-pointing and valid discussion, internally, about how cannibalization is taking place within the product portfolio. And whether that cannibalization is healthy or not (vs. losing share to a third party). The problem is, without a unified approach, one not predicated on pre-existing fiefdoms, that cannibalization and infighting is almost impossible to manage. Because, frankly, cannibalizing oneself can be a good thing.

We saw this in action recently where a newly acquired, high-upside division at one of our clients could not gain access to clients owned by the legacy organization. Substantially limiting its ability to achieve forecasted revenue (on a higher margin business). Think that threw the valuation models that assumed sales synergy out of whack?

So what’s the alternative? Truly integrated sales models. Where the P&Ls for all linked products sold into the same segments are housed under a common sales platform and recombined into a single P&L. A sales platform agnostic to the corporation’s needs and one that is obsessively focused on selling customers what they want across the portfolio as a whole. While the best-in-class pursue such models with immediacy, most companies don’t. For one simple reasons. Such models require substantial, transformative change. Down to where and how people are housed within the P&L structure. And change is hard. Not just for organizations. But for P&L owners. Few executives want to give up control or power. However, based on our work and experience, we believe those individuals are just kicking the can down the road. Because we’ve seen this issue rear its ugly head time-and-again, delaying value capture on acquisitions filled with much promise. Value squandered because executives like their fiefdoms.

Contact us to learn more.