Mergers and acquisitions are common in the fiercely competitive MSP sector – yet successful acquisitions are not.
In fact, between 70-90% of acquisitions fail, according to Harvard Business Review. The primary cause of failed acquisitions is often integration, or rather, a lack of it.
One of the most critical aspects of an M&A is the integration of the newly acquired company’s channel partners. After all, with more than 70% of a company’s revenue being driven through the channel, any gaps during the M&A process can have long-term ripple effects.
The longer it takes to integrate and onboard partners, the longer it takes to reap the benefits of the acquisition.
Prioritize Channel Partners Early On
It’s common for IT services providers to address partners after an acquisition is complete.
Anthony D’Angelo
Given all the sensitivities in the transaction and integration of the two organizations, it makes sense to bring partners into the fold later in the process.
But don’t wait too long. Since the acquisition process often takes longer than either company expects, partners can play a vital role in continuing to drive revenue, ensuring customers have everything they need, and closing any gaps as the newly acquired company is being integrated.
While there are legal considerations that may prohibit partners from being directly involved during the M&A process, MSPs can take the following steps to ensure the channel is ready to respond as soon as the acquisition is announced:
- Include leadership from both organizations responsible for the channel as part of the M&A planning team. Their participation is crucial to understanding the partners’ voices and the channel needs while also avoiding any missteps during the post-acquisition process.
- Identify and address partner overlaps well in advance. Put a plan in place to resolve potential channel conflicts, and proactively communicate with partners to stay ahead of any confusion.
- During the IT assessment phase of M&A due diligence, look for ways to merge SaaS subscriptions without compromising valuable data. Both companies likely have overlapping and complementary tools for managing channel programs and partners. While each company has its own processes, many of these tools solve only parts of the channel management process. If this happens, resist the temptation to bolt on tools. It’s often time-consuming, expensive, and creates a less-than-enjoyable partner experience. Instead, consider a single platform that supports the easy onboarding, training, and success of partners.
Post-Acquisition Channel Strategy and Planning
Once the excitement of the acquisition settles down, it’s easy to fall back into old processes.
This is one of the most vulnerable times for channel partners. For this reason, channel efforts should be enhanced by making sure the following items are in place:
- Channel leadership: Represent both organizations to ensure consistency and collaboration.
- Easy onboarding: New partners should have access to a personalized portal that provides everything needed to get up to speed and drive results.
- Training and resources: Include cross-training on complementary products and services from both companies, marketing materials, and support.
- Joint marketing campaigns: Make it easy for partners to launch and amplify marketing campaigns. This ensures consistent external messaging while keeping the company front and center in the market.
- Added incentives: Create healthy competition in the partner community, reward them for their efforts, and build stronger ties to new partners, especially in a highly competitive market.
- Provide ongoing support: Consider allocating resources to address and mitigate any lingering concerns about the acquisition and ensure partner success.
When MSPs acquire companies, they believe it will enable them to exceed revenue targets and seize a larger market share. To avoid becoming part of the failed M&A statistics, the right integration plan must be in place – one that prioritizes channel partners.
Essentially, a seamless M&A transition for the buyer and the company being purchased requires a strategic approach – one that considers how the acquisition will change every facet of each organization, especially the channel.
This includes keeping the M&A team in place long after the acquisition has taken place to regularly evaluate progress, and ensure a stable and smooth post-acquisition integration for every stakeholder.
Anthony D’Angelo is vice president of Zift Solutions.
Image: iStock
