The business world has taken a strong interest in synergy, or the added value that results from an M&A transaction. The goal of creating synergies is to increase profit. There are three synergies most companies focus on accomplishing; these include cost synergy, financial synergy, and revenue synergy.
To gain profit after an M&A, businesses must create effective strategies. While cost reduction and capital costs are clear focal points of synergy achievement, combined businesses must develop revenue strategies to maximize profit following a merger. By getting involved with mergers and acquisitions, a company hopes to yield more revenue than possible had the entities operated independently of each other.
Revenue synergy requires a detailed understanding of how a combined company can maximize revenue while establishing mutual company benefits. In this article, we discuss the critical points of developing an effective revenue strategy after a merger so that you can get started with your own profitable pursuits. Continue reading for your complete guide to achieving revenue synergies after a merger.
Why Approach Revenue Growth With Revenue Synergies?
Following an M&A, companies aim to achieve more revenue than if the companies weren’t combined. If there is more revenue because of these conjoined businesses and their strategy for revenue synergies, the merged business has successfully achieved revenue synergy. Since there is more to go around, the revenue synergy benefits the target and the acquiring companies.
Strategy Is Key For Post-Merger Profitability
Methods for revenue synergies require combined companies to implement new practices that consider how to achieve excess revenue after an M&A. Identifying the best approach for your revenue strategy takes some trial and error. In many cases, the revenue-boosting strategies that were effective for the companies alone are not effective for the combined company.
Here are some ideas to develop revenue strategies for your combined business:
Define Areas Where Additional Income Is Possible
You can only establish an effective revenue synergy strategy following a merger if you know where other income is possible within your company.
There are many different ways to earn money outside your core businesses. You need to establish how your products and services will fit in with those of your new partners and make sure you have the right people in place to manage this.
Hire For Advanced Skill
Your sales team will play a primary role in the success of your revenue synergies. Your revenue synergies are only as successful as your employees’ skills. Therefore, it may be necessary to hire sales leaders who can effectively sell new products and services developed by the merged business. Hire advanced sales experts if needed.
You may not have an existing team with the sales skills needed. The solution is to bring in outside sales leaders. Identify which sales leaders are best suited for the company and the new opportunities.
Be Clear And Intentional
With a clear path forward, it will be easier to achieve revenue synergies. Create measurable and specific goals that identify how you plan to increase revenue synergies from beginning to end. Troubleshoot potential setbacks and develop a plan to avoid them before they occur.
The final step is to measure the progress you’ve made in achieving your goals. Once you’ve developed a solid plan and established concrete benchmarks, you can see how much progress you’ve made.
Gain Profitability With Skillful Strategy Formulations
Utilize the resources at your disposal to increase your likelihood of achieving revenue synergies following the M&A transactions you’re interested in. Creating excess revenue with your company is possible by implementing the above practices. Formulate a strategy that allows your combined business to profit from the revenue synergies you’re working to achieve.
M&A is a common and effective way for organizations to create growth. With the right approach, it can also be an efficient way to enhance existing operations and create more value for shareholders.