Mergers and acquisitions (M&A) move fast, and many of them fail.
Research shows that over 60% of M&A deals ultimately hurt shareholder value, often because companies underestimate what it takes to integrate two organizations post-close.
But following proven merger and acquisition best practices can help make a deal deliver on its promise. Read on to learn more!
16 Merger and Acquisition (M&A) Best Practices for Team Integrations
If you're navigating an M&A or preparing for one, here are some of the best practices your team should follow:
- Define Objectives and Goals
- Over-Communicate with Everyone
- Protect Your Customer Base
- Define What Success Looks Like
- Be Ready for the First Day
- Prioritize M&A Activities You Do First
- Retain Your Best Talent
- Manage Cultural Integration
- Prioritize Sales Integration as a Top M&A Success Factor
- Address Fear, Uncertainty, and Doubt Across Sales
- Move Quickly on Territory Realignment
- Use Data to Ensure Fair Territory Distribution
- Ensure Accurate, On-Time Commission Payouts
- Maintain Transparency Around Compensation
- Keep Sales Teams Motivated with the Right Incentives
- Centralize Your Sales Data Before Combining Teams
M&A Best Practices for All Organizations
1. Define Objectives and Goals
Before any merger and acquisition activity starts, you need to make sure you are crystal-clear on the strategic objectives behind the acquisition.
Once you have the “Why” and the evidence behind why you’re doing it, you’ll find it much easier to achieve long-term business growth. Then you have to create a plan to make it happen.
2. Over-Communicate with Everyone
During an M&A, employees often fear the worst. Combat this by over-communicating with all stakeholders through transparent, multi-channel communication. Address tough questions about layoffs and restructuring head-on using town halls, FAQs, and 1:1s. This proactive approach reduces anxiety, stops rumors, and builds trust throughout the transition.
3. Protect Your Customer Base
It’s dangerously easy to lose sight of customers during an M&A, but protecting your customer footprint is one of the best things to do during mergers and acquisitions.
Competitors will lurk, waiting for the slightest misstep to pounce on the opportunity.
Make sure to give your teams clear messaging to use during conversations so they can address and clear up any concerns.
4. Define What Success Looks Like
Document clear, measurable KPIs before the acquisition process starts, and get alignment with leadership to create accountability. The reason is, defining what success looks like early is arguably one of the most important things you can do during an M&A.
Without setting clear objectives and KPIs, the integration can get ahead of itself, far away from what was originally intended.
With clear goals, however, your team has a solid Day 1 focus.
5. Be Ready for the First Day
The first day post-acquisition and merger sets the tone. Your goal on the first day should be to have no disruption. Zero.
If you ensure a seamless "Day 1" by focusing strictly on business continuity, core operations, and critical communications, you set up success long-term.
Note: You should also try to establish clear reporting, secure IT, and lock down compliance immediately.
6. Prioritize M&A Activities You Do First
Because post-merger integration can easily overwhelm an organization, it’s important to maintain momentum while prioritizing high-impact initiatives.
To do this, you should work on using a 30-, 60-, and 90-day plan that helps you manage and deliver quick wins. This will help your organization demonstrate early success within the acquisition without causing fatigue.
7. Retain Your Best Talent
To prevent top performers from leaving during M&A uncertainty, identify which employees are your top performers, and engage them proactively and regularly.
Note: Use targeted bonuses and career paths to reassure them of their value and importance to the organization.
8. Manage Cultural Integration
Many mergers and acquisitions struggle because of culture clashes. To avoid this, treat cultural integration with the same strategic focus as financial alignment by actively assessing both organizations' values and working styles.
Then, work to build a new, united culture that visibly models both cultures.
M&A Best Practices for Sales Teams
Let's take a closer look at some of the best practices you can use to protect and support the piece of your business that drives your company's revenue: Your sales teams.
9. Prioritize Sales Integration as a Top M&A Success Factor
The biggest challenge for any M&A deal is post-merger integration. Effective integration ranks consistently as one of the top three most important factors for M&A success. By integrating well, McKinsey & Company finds that companies can deliver as much as 6 to 12% higher total return to shareholders (TRS).
Within that scope, integrating the sales organization is arguably the most difficult and the most important. Without a clear path to drive and maintain sales momentum, sales teams can flounder, resulting in lost opportunities and revenue.
10. Address Fear, Uncertainty, and Doubt Across Sales
M&A activity can create fear, uncertainty, and doubt (FUD) across sales organizations. Sales reps worry that they may lose selling opportunities through territory adjustments or product line changes.
Executives worry about the impact of post-merger chaos and confusion on sales productivity and revenue growth. Managers worry about an underperforming sales team and losing the best people to competitors or dissatisfaction.
All of these factors can affect the deal's potential success, so make sure to address FUD from the start.
11. Move Quickly on Territory Realignment
Sales territory distribution is almost universally affected by M&A activity, so it’s important to align quickly.
Typically, if organizations have any sales operations within the same country, there will be overlap. In a region where you previously had five sales reps, you may now have 10. Companies must quickly determine if the sales potential supports the increased coverage and make needed adjustments.
Many companies still rely on maps and spreadsheets to do territory design and planning – a painful, labor-intensive, and time-consuming process. As a result, most organizations only conduct territory planning on an annual basis.
In the case of M&A deals, organizations are suddenly faced with the need to quickly realign territories
12. Use Data to Ensure Fair Territory Distribution
Nothing upsets a sales team more than unfair territory distribution, or the perception of unfairness.
Make sure to use data insights when dividing sales territories. This will help you ensure an equal distribution of work and sales potential for all sales reps, maximizing your sales productivity and ensuring a fair distribution of opportunity.
13. Ensure Accurate, On-Time Commission Payouts
Nothing erodes trust faster than inaccurate and delayed payouts. The last thing you want to do during M&A activity is create more problems with employee worries about getting paid right and on time.
If employees don't have confidence in how they're paid, they're going to start shadow accounting to make sure they're getting what's due to them. This takes away valuable time that should be spent selling: precisely what you don't need going into a merger or acquisition.
14. Maintain Transparency Around Compensation
When you're bringing two sales teams together, it's important to be transparent about the methodology being used to design sales compensation plans and create sales territories. When teams understand the process is based on data, you increase trust within the sales organization.
Even if an organization doesn't change comp plans immediately, it’s still helpful to communicate your plans earlier rather than later.
15. Keep Sales Teams Motivated with the Right Incentives
During a merger and acquisition, you need to appropriately motivate sales reps, or they might easily get discouraged.
Leading companies leverage sales incentives to drive sales rep behavior and business results. By using the right mix of variable pay and incentives, you can keep the sales team motivated, drive performance, and ensure a customer-centric approach.
16. Centralize Your Sales Data Before Combining Teams
Sales Performance Management (SPM) software helps address many of the pain points that sales reps, RevOps teams, and finance leaders feel during mergers and acquisitions.
With SPM solutions, organizations can hit the ground running with:
- Modernized sales technologies to empower the team
- A centralized location for critical sales data
- Prescriptive and data-based processes for building territories, setting quotas, and designing incentive compensation plans
How Xactly Helps You Use M&A Best Practices
Successful mergers and acquisitions rely on seamless execution. Xactly’s Intelligent Revenue Platform eliminates the friction of merging sales organizations. Here’s how:
- Our sales forecasting software enables you to forecast revenue exposure and ensure financial stability after an acquisition.
- Our sales planning software helps you create sales territories, quotas, and plans using 21+ years of unmatched benchmarking data.
- The incentive management software helps you automate compensation and eliminate errors
