{"id":5541,"date":"2019-10-08T05:49:21","date_gmt":"2019-10-08T10:49:21","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=5541"},"modified":"2020-12-18T22:43:21","modified_gmt":"2020-12-19T03:43:21","slug":"ok-the-mergers-done-how-do-we-secure-the-promised-revenue-synergies","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/ok-the-mergers-done-how-do-we-secure-the-promised-revenue-synergies\/","title":{"rendered":"OK, the Merger’s Done. How Do We Secure the Promised Revenue Synergies?"},"content":{"rendered":"

\"\"Stiff market competition, expansion into new territories, product portfolio extension, and gaining new capabilities are the prime reasons why more and more organizations are seriously looking into the prospects of\u2014and carrying out\u2014Mergers and Acquisitions<\/a>.\u00a0 However, only a few M&As achieve their desired revenue objectives.<\/p>\n

Revenue Synergies are a decisive factor in closing such deals.\u00a0 However, identifying precisely where these Revenue Synergies lie and then capturing them isn\u2019t as easy as it sounds.<\/p>\n

A McKinsey study<\/a> comprising of 200 M&A executives from 10 different sectors revealed that all the respective organizations of the respondents remained short of achieving their Revenue Synergy targets (~23% short of the target on average).\u00a0 Securing Revenue Synergies<\/strong><\/a> is a long-term game.\u00a0 Studies reveal that the companies that succeed in securing Revenue Synergies achieve the target in or around 5 years.<\/p>\n

Leaders aspiring to achieve Revenue Synergies should first clarify the objectives from and the schedule of the revenue synergies, lay out the organizational priorities and go-to-market strategies<\/a>, remove obstacles from realizing value, and gain across the board readiness and commitment for the initiative.\u00a0 Organizations that are most successful in securing revenue synergies pay close attention to these 7 guiding principles during the Post-merger Integration<\/a> process:<\/p>\n

    \n
  1. Source of Synergies<\/strong><\/li>\n
  2. Leadership Ownership <\/strong><\/li>\n
  3. Customer Insight-driven Opportunities <\/strong><\/li>\n
  4. Salesperson Driven Strategy <\/strong><\/li>\n
  5. Ambitious Targets and Incentives <\/strong><\/li>\n
  6. Sufficient Support <\/strong><\/li>\n
  7. Performance Management <\/strong><\/a><\/li>\n<\/ol>\n

    \"\"<\/a><\/p>\n

    These 7 guiding principles to capturing Revenue Synergies<\/strong><\/a> are critical for effective integration of two firms after a merger and unlocking potential benefits from the deal.\u00a0 Let\u2019s discuss the first 3 principles in detail now.<\/p>\n

    1. Source of Synergies<\/strong><\/h2>\n

    The inability of the leadership of the acquiring company to spot major sources of revenue that integration brings in results in losing significant pools of opportunity and failure of M&As. \u00a0Realizing Revenue Synergies demands a thorough methodology to ascertain and qualify revenue prospects along markets and channels, Go-to-Market Strategies, and developing commercial capabilities. \u00a0This entails:<\/p>\n