Pitfalls to avoid and strategies to consider during market lulls
Tech companies that scooped up acquisitions during the days of easy financing are now hitting the brakes. As M&A deal activity in the sector sags, companies that were set on growth are now struggling to unlock value across recent investments—and they’ll need to act fast if they want to hit the topline figures listed in their investment theses.
But the hurdles to capitalizing on acquisitions are numerous, and fragmented tech stacks and poor product architecture can lock companies out of promising new markets—stymying their expansion of differentiated product lines.
The upshot? Without a clear post-acquisition platform consolidation and product strategy, tech companies may fail to realize the projected synergies those deals were meant to achieve.
We see these common pitfalls that tech companies encounter after acquiring smaller businesses—and offer benefits of using a product strategy framework to overcome them.
Companies should actively engage and communicate with their newly acquired customer base—beginning on Day 1 of the post-sale integration—to gain a deeper understanding of their needs and expectations. It’s especially important as tech companies analyze and plan their approach to rationalizing their platforms, products, and operations post-acquisition.
Tech leaders often take a narrow, product-centric view as they migrate customers from their new acquisitions’ platforms. A common mistake is to focus on filling product gaps while underestimating other significant decisions—such as data migration and pricing/contract renegotiation, and the related churn risk—that must also be addressed before making migration and upgrade plans.
Instead, acquirers should pivot to a customer-centric view of migration. With a deeper understanding of the use cases, business drivers, and needs of their new customers, they can develop a realistic approach and timeline for their product planning and more accurately estimate the complexity and cost of migration.
Redesigning a company’s operating model is a challenge. It’s no surprise that as incoming leadership teams map out their transition plans, many fail to consider how operating model changes might impact the customer journey of migrating customers.
Tech companies should ensure that their customer-facing functions, processes, and tools provide a seamless, unified customer experience as part of the migration. Specifically, they should focus on key support areas such as sales, contracts, implementation and deployment, onboarding, and ongoing customer support.
Businesses undergo rapid acquisitive growth for a variety of reasons—to amass new products and intellectual property, gain more customers and market share, or break into a new sector. Because of that, there is no one-size-fits-all approach to post-acquisition strategy and execution.
We’ve seen holistic, customer-centric approaches to product strategy succeed where others fail. This framework considers the impact of consolidation on business operations and customer adoption, allowing leadership to adapt their acquisition strategy to best align to their needs.
Specifically, there are three pillars to address these needs, drive smart decision-making, and produce valuable outcomes based on overarching business goals:
The model begins with a comprehensive, multi-pronged analysis that takes the product, market, technology, and financial objectives into account. Leveraging insights from that analysis, the framework helps tech leaders achieve the operational and organizational alignment needed to deliver a winning platform consolidation and product strategy.
Tech players should prioritize and target opportunities based on each potential deal’s financial and strategic attractiveness. Consider if incorporating those platforms could unlock competitive opportunities—or if combining customer bases could produce upsell and cross-sell synergies.
From the outset, tech companies must define a go-forward platform strategy—a short-term (typically 90-day) plan that defines the mission and values of that platform—as well as a go-to-market approach. Such plans should clearly articulate how the consolidated platform will meet market needs and unlock new opportunities.
Leadership teams must also craft a roadmap that details how the platform will evolve to align business outcomes with strategy and investment. It should also depict how the platform will fit into customers’ existing ecosystem. Tech companies must develop a path to migrate existing customers to the next generation of the platform while effectively minimizing disruption and churn.
As leadership teams consider their business objectives, they’ll need to develop and deliver a new vision for their platform. One way to bolster that vision is to assemble an integrated, cross-disciplined team dedicated to accelerating the delivery of the envisioned platform. Aligning functions across the company—from product engineering to customer success—toward that vision helps ensure a seamless customer migration process.
With the high period of acquisitive growth at its ebb, tech companies should take advantage of this market lull to efficiently consolidate their acquisitions with a product strategy framework.
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