January 10
M&A Science Live - The Evolution of M&A Functions
October 6, 2022

M&A doesn't end when a deal closes. The deal's success relies heavily on how well the acquirer can integrate the target company. Revenue synergies are one of the most important, but also one of the hardest, things to achieve during integration. When two companies come together, their products and services often overlap, and it can be challenging to figure out how to market them as one company. This article discusses how to realize go-to-market synergies featuring Karen Ashley, Vice President, Corporate Development Integration at Cisco.

"When creating your go-to-market plan, you need to be realistic because everything else will be based on that. You can't go achieve something that you have never done before." - Karen Ashley

Revenue Synergy

While cost synergies are good, they are not a priority for them over at Cisco. Instead, revenue synergies are the driving force behind Cisco’s larger acquisitions. Revenue synergies dictate Cisco’s entire deal model, which is why they focus heavily on them from the beginning. 

At Cisco, they have three phases for capturing revenue synergies. Pre-diligence is where the Karen’s team builds their assumptions regarding go-to-market, and they validate those during diligence. Next, the integration team works in parallel with the deal team to understand the risks regarding synergies and how to mitigate them. Then, the strategy is finalized during the post-diligence meeting. Finally, the integration and deal teams confirm whether or not they can realize the projected synergies and operationalize the model, so they are ready before even signing the definitive agreement. 

How to Capture Revenue Synergies

The first step to capturing revenue synergies is to create a realistic go-to-market plan. Too much optimism is a recipe for disaster and needs to be balanced. Look into the company's history and use it as a basis for the plan's feasibility. The more similar the offer is to what the company currently does, the higher the success rate. 

Also, work with the target company and validate the plans. The acquired leadership knows their company best and their opinions should matter. 

After solidifying the plan, focus on the sales team. The sales team is who executes the plan, so keeping them happy should be a priority. Compensate the sales team in a way that is either similar to or better than how they were being compensated before the acquisition. Enabling the sales team is also crucial, provide them with the necessary tools and training to perform at the highest level.  

Lastly, monitor the progress of the sales numbers. Ensuring the sales team delivers what the sales leader is committed to is essential. Manage failures and guide people if needed. 

Team Commitment

One of the best practices that has evolved at Cisco is securing the commitment of everyone involved in the deal pre-diligence, not just the business sponsor. At Cisco, they make sure that everyone commits to certain milestones before signing the LOI to avoid redundancies after closing and pointing fingers during failures. 

In addition, Cisco makes sure that everyone understands what will have to happen if they were to move forward with the deal. This way, everyone is accountable for their function and will be ready to execute after closing.

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