The Pricing Advisor: Taming the M&A Chaos: Advice for Pricing & Sales Managers

June 30, 2014-

By Matt McCLung

So you’ve just gotten the news: Your company is acquiring another organization. That’s great, and you understand the combination will enable your company to reach more customers and bring more products to market to drive your customers’ success. You foresee the benefits that abound. And then it hits you: What do you do as a sales or pricing professional to bring the companies together? The integration comes with chaos, and you’re under pressure to maintain revenue and margin targets.

On the other side of the coin, if you’re part of a company that’s being acquired, you’ll face similar challenges and will need to demonstrate the value of your group to the new company.

Many of us have been there. We’ve either been part of an organization that acquired a company, or we’ve been acquired. Both situations come with opportunities and challenges, and you’ll have to dig through the turmoil to reach the treasure that awaits you. I’ve had the opportunity to work with several customers who have acquired new companies, and faced merging their pricing and sales processes, along with their PROS tools. I thought I’d share what I’ve seen and offer insights into how to make the situation work for you and your teams.

Communicate … again and again
To begin, there’s rarely too much communication. In fact, on that front, the “less is more” theory should never be part of your playbook. Work across your organization to find a range of vehicles to communicate change and to ensure messages are clearly understood. Whether it’s your internal communications team, the marketing organization or other employee-facing or customer-facing groups, use these stakeholders to help you successfully convey important components of your plan.

It’s also important to identify key messages for each group, understanding the information that’s relevant to them. Your sales team requires information that’s different from customers. Help each group comprehend how the merger will affect their day-to-day dealings with your team. Successful communications and change management planning will make your work easier, and more beneficial and fulfilling in the long run.

Measuring success
Pricing and sales organizations can’t stop what they’re currently doing to get ready for the new organization, so it’s important to continue to innovate and optimize your opportunities. Now’s the time to update your goals and enhance your pricing strategies. In some organizations, we see paralysis set in – people enter the twilight zone, afraid to make decisions. Take time to document your processes and goals, putting measures in place to ensure you’re in sync. Here’s a guide list to help you stay on track – and don’t be afraid to ask these questions:

• How will you measure success? And what is success anyway?
• Does the newly combined company have all the tools you need to measure success?
• When was the last time your organization reviewed key initiatives?
• Are your strategic pricing goals clearly articulated and understood?
• It’s important to be clear about objectives and measurement. For example, what does it mean to “maintain margins with strategic customers”?

If you’re part of the acquired company, make sure you maintain your current processes and continue to innovate. The integration of two companies takes time. The more valuable you are now – and the better your results are during the acquisition – will position you and your team once the acquisition is complete:

• Now’s the time to be sure your data is clean.
• You’ll want to focus and report on key metrics that are easily attainable.
• You’ll also want to list your top customers and products by revenue, margin, product mix and cost to serve.

These will be crucially important metrics in the company and may shape strategy moving forward. With the integration of the new company, you’ll have a vehicle for users/stakeholders to get information, whether it’s a hotline, chat room or self-service portal. It must be easy to get answers to the questions they will have.

Train your teams
Training is essential. Plans must be in place to teach the new team about the tools and processes that will be retained after the merger. Training must be continuous and consistent, not just “one and done.” Reinforce the new dialogue through recordings and documentation so that users can easily get answers when they need them.

You’ll also want to work with customers on the forthcoming changes, whether it’s a different billing cycle, new and different affiliations or even altered customer numbers. How you communicate the changes and work with customers now will set the stage for how they perceive your company.

Harmonize across the board
Product managers will be working together to “harmonize” products from the two companies, which means setting pricing strategies, determining which products to retire and what innovations to pursue. While product managers may set list prices and promotions, as well as market segmentations, your pricing team needs to be in sync with product managers. For example, let’s say you’re a manufacturer. Your pricing team must understand the cost of raw materials, product line target prices and margin goals, as well as pricing on new products.

Also key to this merger/acquisition integration is harmonizing measures and strategies around profitability, sales and costs. Start quickly and focus on results, not perfection. Move forward in phases, aligning your KPIs and providing high-level analytics that are pertinent to the newly combined company.  Next, begin combining customer and product information. Once you are able to get your data into a logical form, you’ll be able to view KPIs and make well-informed decisions. You’ll have time to merge product lines and customer groups, but in the interim you’ll have a view into your new business and make better decisions while you work to complete the integration.

There’s opportunity amidst the chaos
Pricing, sales and product teams play a pivotal role in the integration of the two companies. As leaders, it is our responsibility to ensure we work through the chaos and get to the opportunity. Clear, measurable, accurately documented goals are essential to the success of this merger or acquisition. Equally as important is effective change management, which aligns all the new stakeholders and users. The organization is changing, and everyone needs to understand their role to achieve success.

Being part of the solution – not an obstacle to change – will heighten your value and provide a far more positive result.

Have you experienced a merger or acquisition? I’d like to hear about your experiences and how you managed through the challenges.