Merger time: The best opportunity for digital transformation

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I have noticed that as M&A activity heats up, more clients are asking tough questions about how to address digital, particularly a digital transformation. Much of it, however, is from the nuts and bolts perspective of how best to cut costs—where can we save on digital-media spend, where can we better coordinate search, can we get down to one website, how do we combine our two digital organizations. A few, however, are going deeper and using this as the moment to step back and rethink what they should be doing in the first place. They’re asking pointed questions like: what go-to-market strategy should we have, what will be our mix implications, how should we align our integrated marketing organization to be best suited for this, how should we rethink our broader social/mobile presence, etc. They are asking tough questions about how they can capitalize on the moment to make the structural and process changes to be more digitally agile and have the right “footprint” of marketing coverage and allocation.

Of course there are significant risks during a merger, and companies are rightly hesitant about changing up commercial functions that provide revenue. However, there are several broader reasons why considering the deeper changes for digital—and understanding their implications—in an M&A situation makes sense:

  • If the combination aims to drive growth together, there will be an awful lot of testing needed to figure our what works. Whether you are cross-selling to each company's base, creating new combined offerings, or eliminating something, having a robust, scaled, test-and-learn discipline will be key to working through how to get it all right.
  • With a merger, you are also bringing new data sets together. Much of the focus is on back-office processes and complex database management. But when it comes to better understanding and engaging with customers, models from one company could be better and help the other with targeting or personalization. Combining the data could create whole new views of segments and behaviors to pursue.
  • Changes in brand structure or how one goes to market is fraught with tricky messaging implications on how to communicate with one's customer base and get it positively engaged with the changes. Ramping up a new social media approach, or at least building on strengths you already have, will be critical to getting a privileged channel of connection and feedback to the market.
  • Metrics during the transition will change as you aim to secure the merger scale and benefits assumed in the financials. For many companies, getting these new measures of cross-sell, adoption and cost reduction in place will be terrific foundations to build on as the combined entity matures.
  • It is quite possible that a smaller, less mature acquisition actually has more forward-thinking processes in place that would serve the mother ship well if they can be scaled. But it takes more than just putting the new company in charge. It also requires a sharp look at what brand position in the market the new processes need to support.
  • Lastly, and perhaps most importantly, M&A raises tough issues about people. You need to know what kind of people you want to have. Looking ahead to the skills you'll need and the roles to support a more digitally agile way of operating will likely provide a much more useful lens on the talent screens you'll want to use as you put the combined organization in place.

Of course there are still all those basic decisions that need to be made about consolidating agencies, media buys, websites, apps, and social presence. But getting them done is easier in the context of a plan for how the brand will broadly connect and operate in an omnichannel world. One of our clients is using the concentrated focus of a merger transformation to rethink its customer-experience goals, marketing strategy, and operations. Yes, it is a lot, but they are forcing exploration and decisions at a fast, managed pace, then quickly translating their direction right into structures and processes of the combining entity. They are achieving their revenue synergy goals much faster than expected and have used their evolving strength to now confidently plan how they can add yet another company into their mix and use their digital skills to raise the bar at their target acquiree.

So as your company contemplates an M&A plan, how are you thinking through the digital/social/mobile opportunity? Is it just about cutting cost, or could it also be about a transformation that can drive faster growth?

This article originally appeared on LinkedIn.