If you sell into the technology space, then you need to plan for acquisitions and their impact on your revenue stream. M&A is both a threat and an opportunity. It is a Yin / Yang situation for sales reps.
There are several ways in which acquisitions can result in a customer drop or lost revenue:
- If your customer is “acqhired” by a company in another industry, then their talent is often re-purposed, and they may no longer require your product or services.
- The acquirer may be a customer of a competitor and not looking to change vendors. The acquirer may be tied into a long-term contract or they may be satisfied with their current solution.
- Both companies are customers, but volume pricing results in revenue decline at renewal. This can be made worse if the firm is looking to obtain efficiencies through layoffs or process efficiencies.
- Your key contacts are let go or assigned to other duties.
- The acquiring company has lengthy and expensive procurement processes that delay renewals or cause a drop as your POC is unwilling to navigate the new purchasing system.
But it also presents opportunities to cross-sell into new divisions and creates a greater openness to new ideas and solutions. Likewise, the new parent may be a good fit for other products and services from your firm.
Thus, it is important to be present during these windows of opportunity and risk. Here are a few recommendations:
- Reach out to your advocates and congratulate them on the transaction. Keep the note short and indicate you’ll reach out to them again in a few weeks once the dust has settled. Employees, particularly at acquired firms, are nervous and often initially in the dark about what it means to them and their department, so give them a little space to breathe while acknowledging their new reality. Then make sure to follow up a few weeks later as promised.
- If your current advocates and influencers aren’t LinkedIn connections, then send out the connection requests. This is the easiest way to see if their titles or roles change.
- Track any departures to new companies. They are likely to be your future advocates or deal influencers so keep the conversation going even if they don’t represent any near-term opportunities.
- If key individuals depart, then move quickly to reestablish connections with their replacements or former departmental colleagues. Don’t leave gaps with the buying committee.
- Ask for referrals into the new organization.
- Be flexible in your contracts. Being intransigent and holding firms to current contracts when they wish to renegotiate ensures current revenue but increases the likelihood that you will be dropped in the future. Consider the impact on their LTV by being intransigent.
- Honestly evaluate the impact on your pipeline and discuss it with your management. Opportunities may be pushed out and renewals put at risk. Update your account plan and work with your sales director to manage and broader account risk.
Remember that no customer is permanent. You need to both deepen and widen your relationships. The broader your set of relationships, the more stable your LTV and the greater your likelihood of withstanding acquisitions, changes in top leadership, and departures of your cheerleaders. The best way to prepare for an acquisition is to have established a broad set of relationships across your key accounts. Relying on one or two champions leaves you vulnerable.