Mergers and acquisitions (M & As) have long been a major strategic option for corporations in the global business world. Whether these succeed and bring about the desired success depends on many factors. One very important: sales. How your sales consultants record and evaluate M & As and how they relate to the new company decisively decides on performance breakdowns in sales and thus on the success of the takeover.
70 to 90% of all M & A transactions demonstrably fail to deliver sustainable value for the acquiring company.
Given that mergers and acquisitions are popular and widely used tools to provide critical strategic momentum from a corporate and investor perspective, this number is surprising.
It is all the more important to know the reasons for this. Part of the argument is about a lack of strategic fit of the affiliates (macro level), and on the other hand about socio-cultural factors that occur during the merger (micro level).
Breakthroughs cause loss of identification and performance in sales
At this micro level, far away from any strategic aspects, a team of US sales researchers led by Prof. Dr. Ing. Zachary Hall, et al. Visiting professor and cooperation partner at the Sales & Marketing Department of the Ruhr University Bochum, found interesting and highly relevant connections.
Specifically, they examined in two studies, how mergers and acquisitions of companies with a different external image, ie an image discrepancy, on the personal attitude of the sales force and thus affect their performance. External image stands for the assessment of their own employees on the review. So how does my salesperson estimate what his customer thinks about my company?
Experience has shown that these assessments are very close to reality, as sales consultants interact with customers more closely than almost any other company representative. If the sales consultant perceives a so-called image discrepancy, this means that the external images of the two companies involved in the M & A process differ.
The result of the researchers: If the own company joins with another one, which has a worse external image, the company identification of the own salesmen decreases. This then results in performance drops in sales.
The decline in identification with one’s own company in a merger with negative image discrepancy is also significantly greater than its increase in the case of a merger with a better-off group.
Lower performance in sales can be avoided
However, you can actively influence these effects. On the one hand, key factors here are the targeted management by the management, but on the other hand characteristics of the sales staff, such as the professional experience of a sales manager in the company.
By emphasizing the strategic intentions of corporate governance underlying the merger decision, a manager in internal communications can slow down the decline in identification.
Interestingly, however, the researchers also found that highlighting their own existing corporate culture compounded the negative impact. The sales staff are less open to new ideas.
For a similar reason, longer-term sales consultants are more vulnerable to identification and thus to a decline in performance due to a seemingly unfavorable M & A business.
So let’s be clear: There are many set screws that can be turned. Below we have listed again the most important results for you.
3 Recommendations for Action against Performance Dropouts in Sales at M & As
1 When it comes to M & A, you not only value strategic aspects. Employee identification is a crucial factor.
There is no question that mergers and acquisitions are also about a superordinate, strategic perspective. However, in order for the business to succeed, it is essential for you to identify an imprint discrepancy that may exist and to factor in its effects. The negative consequences of decreasing company identification through distribution are too important to ignore.
2 Control your sales with great sensitivity and note the potential impact of your actions in an M & A situation
The example of the increased communication of the own corporate culture by the management in the case of an upcoming merger shows that the same internal marketing measures, which increase the enterprise identification in stable times, can be harmful in the M & A case. Important for you therefore: Put a lot of tact into the day, and adjust quickly and spontaneously to the new situation.
3 In times of upheaval, in particular, take on those sales consultants who have been with the company for some time
For long-time employees, upheavals are particularly difficult, and a decline in identification is more likely in the case of negative image discrepancies. Use separate coaching and targeted discussions to counter this trend.
M & As have long been established as proven strategic means. In order for these to succeed optimally and bring about the desired increase in value, in addition to detailed strategic considerations, the effects on one’s own employees – and in particular on one’s own sales – must be considered. If you succeed, you will avoid sensitive negative consequences.