B2B SaaS mergers and acquisitions: dos and don’ts

The first merger in your B2B SaaS journey is often a synonym for growth. Acquiring a new venture and combining the superpowers of two companies will give your new company a larger market share. It will allow you to reduce operations costs and expand business into new geographic areas and market segments. 

A merger is also an excellent avenue for two B2B SaaS companies to come together with a stronger set of features and a more complete solution. While this is all super exciting, the first post-acquisition months are crucial to success in the long run. Today I’d like to share some of my learnings, what mistakes to avoid, and tips on what you should prioritize as you plan your post-acquisition marketing strategy. 

Five mistakes you need to avoid

1. Poorly defined success metrics

This may seem obvious, but more often than not, stakeholders fail to define clear KPIs during the early stages of SaaS mergers. The company acquiring is focusing on its plan while the company acquired is getting stuck on its own agenda. Soon enough the metric of success becomes blurry. Limited transparency across teams causes a lack of accountability, and straight from the start, you are in the driver's seat but unsure where to go. 

This is easily avoidable. You first need to tie all the performance metrics together so you can test the hypothesis you made while going into this merger. Some common KPIs are:

• Revenue and profit margin: this is probably the main reason you acquired another venture in the first place. You want to drive revenue up and see your company’s ARR increase.
• Customer retention: you may have been in business for years and have reached PMF a while ago, but when you go through a merger, you are in a way coming back to MVP. You need to make sure customers stay and happily renew. Better, you want them to refer new customers. 
• Product integration milestone: you need a product roadmap with a clear timeline. This is important internally but also externally with customers’ communication. Transparency and clarity on what’s coming up are critical for success. 
• Cross-sell/up-sells: How many deals can you generate with your existing customer base? Setting the right goal and establishing milestones is crucial. One of the key factors that will impact your capacity to scale exponentially depends on your ability to sell more of your solution to your existing customers. 
• Employee retention: talents are the backbone of your success. Making the people in your organization happy and proud to work for your organization is the only way to reach your goals. Create company culture; make sure 1+1=3. You want both companies to bring their magic and become stronger together. Everyone needs to belong and feel like they contribute to the success of this new entity you are building. 

2. No shared vision or goal

While it is related to the previous point, this is more about the long-term vision and outcomes of the merger. Are teams aligned on why this acquisition is happening in the first place? Change often triggers fear, and this is true internally and externally. 

• Internally: some of your employees may feel like their position is threatened. They might see the merger as an opportunity for the leadership team to cut the budget and replace some of the members in the respective independent teams. 
• Externally: client also fears change. How is this going to impact the way we are served? Is this going to make things more complicated? Is my point of contact going to change? What’s the impact of this merger on the way we do business together? 

All these concerns are legitimate, and you should address them as early as possible. Here are some tips for preventing such a scenario:

• Share a firm-wide presentation to existing employees of both companies with a clear roadmap and KPIs (use the ones described earlier).
• Circulate a set of FAQs for every employee and a point of contact for any unanswered questions. Do this internally and externally. 
• Generate excitement and provide an avenue for employees from both companies to meet and get to know each other. 
• Address key customers of both companies immediately and ensure you provide white glove service to make them feel special and well-attended during the change. These are your fans, your most important customers; treat them as such. 

3. Fail to re-integrate

While everything we described before happens around the official announcement, there is a ton of work to be completed before the end. Months before the official announcement, you need to share the plan with a few team members and start working on integrating your solution. This does not have to be perfect, it is a V1, but it must be a working integration by the time you announce the merger. 

However, the many hours you spend on due diligence, negotiation, and document approval will not serve you well if you don’t prioritize integration. Choose a few trusted employees and prepare a smooth transition for your employees and customers starting day one. Too many companies fail with this step, which reduces the merger's positive impact, ultimately costing the long run. First impression stick and a successful merger come with an integrated solution from day one. 

4. Fail to appoint team leads

Who does what? As you prepare for this acquisition, you need accountability and appoint key leaders at the head of each department. Think about each department of your business and ensure you have a trusted leader in charge of delivering the work needed to prepare for the public announcement. I suggest you concentrate on the six areas: 

• HR: Talent management is the backbone of your success.
• IT: You must be ready on day one to provide a smooth onboarding.
• Product: Integration work must start before the official announcement.
• Sales: Prioritize key projects such as revisiting pricing.
• Marketing: ICP, Personas, Positioning, and Branding. You are becoming a new company; in a way, you are starting from scratch. 
• Finance: acquiring a company comes with a cost and miss management in this department can cost you to lose big. 

5. Hire too many consultants

I get it, it might be the first time you go through a merger, and you want to ensure you get the best advice possible. You are right; investing in consultants to help you make the right decision at the right time is a great strategy. Though, you don’t want to invite too many cooks into the kitchen. I’ve seen it before. Priorities get passed on to someone else too many times. This creates a lack of accountability and no real incentive for all these consultants to work together. 

Most likely, this will ricochet to the rest of the leaders and their team members, creating a divided environment in which each team and department don’t communicate with each other. This will isolate employees and ultimately costing you to fail to create the work culture you need to be successful. 

Three B2B SaaS mergers and acquisitions pro tips 

1. Build the marketing foundation 

Before the official announcement of the merger, you need to revisit your go-to-market strategy. Bring a group of key stakeholders in both companies and come to a room to discuss your growth priorities, ICP and personas, and positioning. The key outcomes of these exercises are: 

• New value propositions that combine the superpowers of both companies.
• Identify your SaaS market using a TAM, SAM, SOM analysis.
• New market penetration strategies.
• Revisited market development strategies.
• Diversification strategies ideas.
• Additional product development strategies.

2. Conduct a full rebrand

There are two roads you can take while going through a merger. First, you can acquire a new company as part of your product development strategy and deciding not to go through a rebranding. This is most likely for large B2B SaaS companies acquiring small competitors. Second, you can go through a full rebrand and create a new entity from the two companies you are merging. This is the recommended route for most early to mid-stage B2B SaaS ventures, and here is how to successfully rebrand a company. Here are some pros and cons you should consider: 

Pros:

• Accurate depiction of your company: you have the unique opportunity to create a brand that represents your new company. 
• A chance to expand your opportunities: you can redefine the value you bring to your customers. 
• New customers: you can attract new customers by tapping into new audiences with your new brand. 

Cons:

• Losing touch with core values: if done wrong, you can create confusion for your customers and employees. 
• Price: A rebranding project can be pretty expensive and take time. 

3. Revisit pricing

A merger is a perfect opportunity to revisit your pricing and packaging strategy. One way you can hit your goals and achieve exponential growth is by communicating your product's value by increasing pricing.

What’s next? 

If you are interested in a merger or in the middle of an acquisition, our marketing team will be happy to support you and make sure you go through it successfully.