Mergers and acquisitions are up there with death and taxes as one of life certainties. But what happens when it strikes close to home and one of your business clients is acquired by a larger company.
Will your products/services still be needed? How can you find a way to keep the relationship going as your client is swallowed up by a larger enterprise?
It’s a worrying time. But it doesn’t have to mean the end of that particular line of business. If you are proactive you can make the change work for you and position yourself for continued business.
Understand the Nature of the Deal
Mergers and acquisitions are often heaped together but can take different forms so it’s important to assess the precise nature of the converged company. A merger occurs when two businesses combine operationally, often followed by significant restructuring. An acquisition is similar, but with this process the corporate leadership team of the company that did the acquiring doesn’t usually change.
Media releases will be able to shed more light on the why’s and wherefores of the deal and what the immediate next steps will be.
Assess Potential Threats
As soon as you get wind of the merger or acquisition, reach out to your day-to-day contacts for more information.
Will there be job losses? Does the new company have their own resources to cover off the kind of service you provided? What vendor relationships do they already have? Will there be a new RFP process to consolidate the new company’s vendor relationship?
Chances are they are still unclear as to their vendor strategy moving forward, but you can request that they keep you in the loop.
Find the Positives
Just as there are threats, there’s also the potential for positives. If your client was acquired because the purchasing company was looking to diversify their product lines, the acquirer may not have the talent or skills in-house to support those products or services. This could mean that there’s still an opportunity for you to continue your relationship with the newly absorbed operations unit. Similarly, the new company may have more budget and a commitment to growth that could send more business your way.
Position Yourself for the Future
After the dust has settled and the merger/acquisition has gone through, reach out and see if there’s an opportunity to get in front of the right decision makers. This is an early opportunity to introduce yourself and your services and stress the value of the relationship you’ve had with the acquired company. It will also give you a chance to further gauge the temperature of change.
You may also need to alleviate any concerns that the newly converged company has about buying from a small business. They may worry that you can’t scale to meet their needs. Tackle this head on by stressing the benefits of working with a small business like yours – agility, responsiveness, product customization, etc. Share your business achievements, goals and product roadmap. If you have partner relationships, be sure to mention them.
Find Out Who’s Paying the Bills Now
M&A’s can play havoc with process, so be sure that you are in the know about the new invoices and accounts payable process. Things to find out:
New billing address
New billing POC
Are there any changes to their payment terms different?
Do you need to revisit your contract?
Will you need a purchase order? (Large companies usually issue POs to vendors so that they can track budgets and payments)