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Post-Merger Market Development

With the economy growing more rapidly, merger activity has accelerated.  Many companies appear to be bolder in their acquisition strategies by acquiring larger, more diverse companies.  Once the high priced acquisition is consummated, management then has to come up with a plan to integrate the newly acquired company.  This is when companies often discover that they do not have sufficient answers to important market development questions.  Answering these questions is essential to smoothly integrating the company. For example,  

Opportunities

  • Which markets (vertical and/or geographic) offer the best incremental combined revenue and margin expansion potential, and how should these segments be prioritized?
  • Where are the best opportunities for competitive differentiation, and which customer groups will be most receptive to the differentiation message?
  • How are customer needs and buying behavior evolving, and how should the newly-merged company be positioned to serve future customer needs?

Challenges

  • Which business development resources can best grow the newly-merged portfolio of products and services, and which might no longer be needed?
  • How can the newly-merged company eliminate redundancies in product offerings while minimizing cannibalization?
  • Where will there be channel conflicts, and how can these be addressed with minimal alienation of channel partners or end customers?

To effectively integrate the acquisition, management needs to assess the actual synergies between the entities for the acquisition to pay dividends.  This assessment often needs to be done at the business unit level.  Synergies stem not only from combining operations but also from offering a larger basket of products to customers.  Understanding these marketing synergies from the ground up will enhance the chance that the acquisition will be a success.