Strategy Research Blog

Maximize Your Acquisition Success By Utilizing Strategic Marketing Research

When the economic climate and consumer trends are making it difficult to grow your business organically, a merger or acquisition might be the perfect solution for your organization. When thinking about mergers and acquisitions, many people think of a movie set on Wall Street that depicts an army of investment bankers, attorneys, and accountants. However, there are many other decisions before that stage.

Understanding the markets, market sizing, brands, their brand equity, as well as the innovation pipeline for the organization is critical. Both companies may have aggressive growth strategies and growth plans that may not be achievable through organic growth, and that’s where the magic could happen in terms of a merger or acquisition.

An Acquisition Strategy can help an organization.

• Acquiring Market Share or increasing sales is a primary reason for considering a merger or acquisition. Managerial time and resources will be required and it is a diversion from the everyday business decisions, therefore it must be seen as worth the risks.
• The Diversification of your holdings could be critical for the long-term success of your organization. Based on consumer trends, what are other areas of the economy that you need to grow into? Where is your organization currently vulnerable?
• Expanding into a new and related industry that could broaden and complement your existing product lines/brands. Doing so should not cannibalize sales and should expand your sales and markets.
• Gaining New Markets is an especially important reason that you might want to acquire another brand or organization. This is especially true if their geographic footprint is outside of yours, and would likely not cannibalize your sales, but should be additive.
• Product Pipeline Expansion is another essential element in a merger or acquisition strategy. What does this brand or organization have in terms of products or innovation that could be additive to your existing business?
• Intellectual Property or Innovation is closely associated with product pipeline expansion. As an example, the company could have new packaging expertise that could transform your current product lines, beyond just adding their business to your organization.
• Reducing the Risk of Competition is another way to help ensure the long-term success of the merged company. There may be fewer competitors vying for business among the same pool of customers.
• Reducing Costs in the merged organization can be accomplished where it makes sense. This is a very tricky issue, but if there are functions (legal, accounting, etc.) that can be combined, over time some duplication would likely be apparent. This is the downside for the company being acquired because some of the positions would likely be eliminated at some point.
• Supply Chain Impact can be a benefit of the combined company also, if the two organizations have more negotiating power. It is possible they would have reduced operating expenses if they are working with the same suppliers (theoretically speaking).
• Acquisition of Talent or business units can be a key reason to acquire another organization—for example, if they have a stand-out sales team, streamlined distribution system, or an innovative research & development team, an acquisition could add even more value to the new organization.

Of course, when you combine companies, it’s not just about the finances on paper—there are risks to evaluate and attempt to mitigate. It can cause a real culture clash, with operational disruptions or general “surprises” that were not expected.

• Culture is a huge part of what makes any organization work. Once an organization is merged or acquired, it can devolve essentially into an us-versus-them situation. In-depth understanding up-front, as well as check-in meetings on the pulse of all employees impacted, are critical to long-term success.
• Operational Disruptions are to be expected. Both organizations have to learn the other, determine the hierarchy of making decisions, and determine what happens when there are disagreements. In addition, while all of that is happening, customers’ needs must be met, as usual.
• Other Surprises could encompass a range of matters, including legal and/or financial issues that were previously unknown.

In addition, there can be a loss of differentiation, which can lead to confusion in the marketplace. For example, if Company A stood for design, and Company B stood for great customer service, does the new company provide design plus great service? Or do the key messages get diluted?

Sometimes there are major dangers to consider when thinking about mergers and acquisitions. It can be a time of uncertainty at best, and cause worry for employees, stockholders, and customers alike.

As a part of merger and acquisition decisions, it has been our privilege to help many clients as they evaluate these decisions by utilizing strategy research in these key areas, including:

Mergers and acquisitions can add fuel to grow a business and positively change its trajectory for many years.

Bonnie Janzen

President

Bonnie helps drive growth for companies based on strategic consumer insights, innovation, and analytics to shape marketing campaigns and new product development programs. She has consulted with clients on merger and acquisition strategy including global expansion. In addition, advertising and messaging research is a particular passion of hers.

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