In talking with a CEO friend running a smaller tech firm, he indicated that there is increasing buzz about various potential combinations and roll-ups that will impact his specific sector. He said this with a smile, and an interesting observation that “when my competitors are acquired, our business spikes and new opportunities are uncovered.”
That’s an Interesting way to look at the situation. I know a lot of people who fear the outcome of Competitor X merging with Firm Y and respond by cowering behind corporate walls or flailing internally. Instead, my CEO friend advocates methodically seizing upon this as an opportunity.
A quick sidebar: The external pundits and internal fear-mongers like to exploit M&A situations for personal visibility. It’s easy to sound like an expert and spread fear when no one can conclusively prove you wrong. In my opinion, if you were to provide the pundits and fear mongers with truth serum, they would be forced to admit that they have no more idea about the outcome of this merger than they do about the specific weather forecast for noon on a day far in the future.
While I would never counsel ignoring the potential disruptive or market-changing impact of a new combination, just like my CEO friend, I see ample opportunities to gain from an acquisition announcement for the smaller and more fleet-of-foot market participants.
-Customers are immediately spooked. In the tech sector in particular, customer have been well-trained to react to an acquisition announcement of one of their suppliers with the knowledge that “this is going to hurt.” As a result, purchase decisions slow to a crawl, proof of concepts are derailed and risk-averse buyers begin looking for options that they can justify to their bosses.
You can professionally and ethically exploit this sales interruptus period. You don’t have to and shouldn’t engage in hearsay and spread rumors as some firms do, but you should absolutely engage prospects (including those that you believed were recently lost to your competitor) and make certain that they know that you are the safe, secure choice focused on serving them.
-The company being acquired is horribly distracted. The press announcement is the beginning of the internal churn at the company being acquired. Confusion reigns supreme. Long-term projects are suspended. It’s not clear who will survive and what products will make the cut, and no matter how much cheerleading goes on from executives silently wondering the same thing, the business goes into autopilot mode.
Customers sense when a firm goes into autopilot mode and this makes them very uncomfortable and risk averse. See the point above. It’s time to make hay.
-Consider cherry-picking talent. It’s a great time to approach the competitor’s top reps in particular.
There’s nothing an Alpha Rep hates more than having his/her potential sales glory impacted by extraordinary circumstances. Any threat to the success of the hunt and the opportunity for commission accelerators and another club trip is a chance for your firm to gain some top sales talent. Some will remain fiercely loyal, and others will seize the opportunity. Again, do this professionally and ethically and consult counsel on non-compete issues.
-Watch for markets being abandoned. As the post-merger integration activities proceed, the newly combined firm will de-emphasize certain market segments in favor of others. This momentary “white space” can be just the opportunity to fuel your growth.
Make certain that your firm is watching closely and keenly attuned to any overt or even silent decisions to de-emphasize. Listen carefully to your customers and prospects, they will sense this before anyone else. One firm’s unattractive market may be your treasure.
-Leverage the situation to build internal excitement and to fuel performance
There will never be a better time to get your teams fired up about serving new and long-standing customers and focused on identifying new products and services to exploit the changing market dynamics. Communicate and celebrate successes, encourage innovation and reward efforts that create value.
The Bottom Line for Now:
While the acquisition of key market competitors and participants can have profound long-term implications for your firm, there are often windows of opportunity created by these events that you can exploit to capture clients, strengthen market position and turbo-charge employee enthusiasm. Instead of fearing the worst, seize the opportunity to propel your business.