January 10
M&A Science Live - The Evolution of M&A Functions
August 18, 2022

Revenue synergies are one of the most challenging metrics to achieve during integration, but are also the primary reason companies buy businesses. It's safe to say that many transactions fail to realize their intended value. Joe Heel, Chief Revenue Officer at Zebra Technologies, has vast experience in this matter, and in this article, he will be talking about capturing revenue synergies. 

"Speed is always of the essence in M&A. You want to be in a position to have as many of the operational decisions ready to go on Day One." - Joe Heel 

Collaboration 

Acquisition machines are companies that force targets into their strategies, process, and culture. And while that has been successful for large companies, it's not always the best approach, and it could destroy the momentum and innovativeness of the company acquired. 

The best way to integrate is to collaborate with the target company and allow them to play out their innovation and momentum. Every function must communicate and work well with its counterparts to understand what matters to them during diligence. 

Go-to-market Integration

The most important thing to do during go-to-market integration is to understand how the acquisition will create more value than the sum of the two businesses. For instance, acquiring a solution from a small company and putting them into a large go-to-market and sales machine will reap huge benefits. This strategy should now guide the entire integration process. 

The next step is to figure out how to integrate the target company while keeping the strategy intact. Going back to the first analogy, if the acquired solution is not scalable, incorporating it into the large sales machine could potentially be problematic and not valuable. 

Before integrating, the acquirer needs to make the solution scalable. The sales organization and the product team must work together to make the required changes and develop the solution into a scalable product. 

Managing Culture

Culture clashes are one of the biggest challenges when combining two large companies. No matter how much planning is involved, people must be happy during the transition, and mitigating this early will increase the chances of success. Joe breaks down culture clash into three major concerns:

  1. Will the acquirer take over and squash the acquired company?

This fear is often present on the target company side, where employees are on the verge of finding another job due to uncertainty. To mitigate this risk, acquirers must be objective and transparent about the integration plans. A clear view of what will happen will help calm people down.  

  1. What will happen to the strengths of both companies?

Each company has strengths and capabilities that make it unique and special. It's very easy to lose them when integrating two successful entities. To preserve those strengths over time, build a center of excellence.  

  1. Will the differences between organizations tear them apart?

Every company has its way of doing things, and if the differences between the two parties are too significant, build a new culture. When Zebra acquired Motorola, they worked with a third-party firm that broke the entire business into small groups. 

Each group participated in a workshop to establish basic principles and cultures around them. Having a cultural workstream makes a big difference in understanding the difference between the two cultures and what's important to each one.

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