The journey that you take to buy or to sell an enterprise is quite complex and can span months. During that time, it’s easy to take your eyes off the business. That’s one of the reasons that people engage M&A investment bankers like the people here at SiVal Advisors. When you are trying to sell your business, the last thing that you want is for results to suffer and make your business less valuable.
More importantly, you should focus on the most important person involved with your enterprise – the customer. Whether a single individual or a global company, that customer is largely the reason that someone wants to acquire your company. So what the customer thinks when they hear you are being acquired can make or break the successful outcome you desire. The lesson here is to have the customer a part of the planning and execution of your M&A process.
Start with the reason that someone is a customer. Why do they give you money? You must be solving some mega-problem or be making them more profitable. You are helping them explore new opportunities or just making life easier for them. Some product, service, or combination of the two is making what they do better and they love you for it. Keep that idea in your mind as we move to the next step.
When your company has been acquired, what will change? You can’t say nothing otherwise you wouldn’t be doing the deal. Will the acquisition mean better service, more products, higher quality, and lower prices? All of those things are good. Does it mean cuts, increased costs, decreased response, or something not so good? In any case, you should know before the M&A event is announced.
Put yourself in the customer’s shoes. When you hear the news, would you jump up and down ecstatically? Would you jump off the nearest bridge? Would you immediately want to switch vendors? If so, where would you go? Would you just not care? You would like your customers to be as excited about this as you are. You are your customers are on a journey together. Why should it stop? Again, you need to know the answer to this.
What can you do? Here are some ideas to get and keep the customers involved.
- Create a plan to deal with the customers. Don’t make customer reaction an afterthought.
- Preview the deal under NDA with important strategic customers. You will need to do this under almost all circumstances as part of the buyer due diligence process. Turn it into a chance to get real feedback.
- Prepare your own troops. Many reasons exist why you need to keep the knowledge of the M&A process limited to few, selected people. Those reasons range from employee morale to staying out of jail for securities law violations. You can still create a special hit squad to deal with customer concerns when the news hits. You should have a similar hit squad for your own people, by the way.
- Have real information about how the new combined enterprise will make the customer’s life even better than it is today. This is not press release filler. You need real answers framed by real customer situations.
- Hopefully, the vast majority of customers will be happy. Get set in your mind that no matter how hard you try, you’re going to make some people mad and disappoint others. If that happens, make the separation as painless as possible. Remember that those people may come back to you one day.
The reason that your company exists is because of your customers. Without the customers, you have an empty shell that cannot reach its potential. Make the customer a key part of your M&A journey.
Need some help understanding that journey? Contact the professionals at SiVal Advisors to get the insight you need to be successful.