Corporate Integration - easy right?

Congratulations, you’ve closed the deal, and acquired the company you convinced your management to invest in. No doubt a big part of your arguments were based around the incremental sales revenue the integration of the services will bring - 1 + 1 must equal more than 2…shouldn’t it!

What’s the real value of integration?

The question isn’t “What went wrong?”, but “What did you do differently?”

Selling integrated services takes a different, and often more complex approach if you and your customers are to benefit from the integration you had the foresight to embark upon.

All too often, Integration results in “Integrated Price Discounting” as the sales teams don’t know why you’ve acquired the company you did. More importantly, not enough thought was given ahead of time about the true commercial value that the integration could bring, and how that would be articulated

Let’s think why we would want to acquire another company to provide integrated services.  One internet definition is “To gain a sustainable competitive advantage by being able to fully address a customer’s challenges whilst maintaining an acceptable level of control over the process”.​ In other words, be able to access markets that would otherwise have needed potentially complex contracting and collaboration between competitors, to achieve. This is perfectly valid, but infers that the benefits are yours, not your customers…as is often the case.

So how can we take this definition further, and deliver benefits to the customer from the integration itself that we can then share in?

Let’s go back to our initial question ”What did you do differently?” If you are to get value from the integration of your services in addition to the services themselves, you MUST address a need that ONLY the integration can resolve…this isn’t easy and is very rarely articulated by your customers who will focus on the challenges and the downsides. So, what might this look like, and how do you find this out?

A simple example can be seen in software packaging. A buyer can purchase all of the packages that he or she needs individually, and they will all perform perfectly well, even though they may have to buy 10 licenses instead of one - and remember when to upgrade and renew each one. On the flip side, if they find something better, it’s easy to change a single package. The value of the integration in this case is convenience, and it’s worth will vary for each buyer.

Let’s make life a little harder and instead you supply engineering services to a large corporation. Individual convenience may not be a big motivator, so what is? Is safety, or risk of failure so important that your customer recognizes that they need to minimize the operational interfaces to complete their project safely and on target? If so, the integration value could be estimated as the mitigation cost of these interface risks, validated and openly accepted as critical by your customer. To identify this takes relationships; asking the right questions early enough; and time. Get it right and you are sharing those integration benefits of greater control over the process with your customer - you are aligned.

So, if you want to derive incremental value from acquiring a company, you must understand how this can help your customer resolve their challenges or better still, meet their stretch targets. To do this, you have to ask the right questions, at the right time, and above all think how the integration can bring value in its own right

If any of this sounds familiar to you and you’d like to discuss it further, please get in touch with us. We’d be happy to talk.