Refine the Roll-Up: RightStar Alliance Takeaways
Every company strives to grow, evolve, and adapt to the market. In an effort to do so, many seek inorganic growth through acquisitions and roll-ups. The thought of a toll-up can be daunting when you consider the branding, strategy, and consolidation that goes into making it happen. In its first-ever webinar, the RightStar Alliance discussed how to Refine the Roll-up.
What is the RightStar Alliance?
The RightStar Alliance is about best serving private equity by bridging together 3 groups of experts, SBI, Sustena, and OpFocus. Together the alliance provides an end to end solution for companies that reduces delays and provides the complete package. This partnership allows private equity firms to solve a number of problems without needing to seek out multiple vendors.
The Impact of Brand on GTM Programs
Before considering how to Go to Market (GTM), how will the Roll-Up impact the overall business strategy?
It’s important to understand the internal alignment of goals and objectives before you go-to-market. You need to agree internally on where the company is headed before you consider the brand. It’s important to understand the impact of the offering on both your customers and internally. This strategic foundation will set the stage for the go-to-market program. Brian mentions the danger of two entities pulling different directions after a roll-up. A proper alignment will eliminate this concern.
What is the ‘brand equity’ of the entities externally?
To understand brand equity you must gather data from multiple sources. Brian suggests taking not just documents, but looking at customers, prospects, and the market in general for each company. You’re trying to identify the perceived value of the business and what you have to work with.
Is there a business case for a new brand and/or a new name?
Does one business offer a brand that the others can reverse into or would the entity benefit from a net new brand? You must nail down these perspectives and this equity. Some of the things you are looking for is the perception in the market. Can the pieces add up into a brand or do you need to tell a new story?
How will you position the roll-up for external audiences?
The key to this stage is to lead with the Why then follow up with How. This benefit first approach takes your customer’s view of the situation. Part of this involves making sure your internal audience understands where you are going and can tell the story. Look at keeping existing customers first. Take the time to tell your story to existing customers as they will serve as a base to build off of. A final step is to provide the unified team with one flag to rally behind. Brian explains that it needs to come from leadership. Marketing or HR has done great with developing this but it needs to come from the top down.
Winning Strategies for Revenue Growth
Establish a clear understanding of the combined customer base and overlap.
Your team should look at the customer base of all the involved companies and determine where the overlap lives. There are almost always customers that feel left behind during a roll-up and it is important to identify where this is likely to happen.
Prioritize customer retention above everything else.
Mike makes it clear that this is the most important part of any roll-up. You should touch every customer and prioritize retention over everything else. “Everyone becomes a member of the customer success team during a merger.” Getting this wrong can cause your entire investment thesis to go sideways in the first 100 days. Regardless of someone’s role in the company, they should be focusing on bringing customers along with them. Mike mentions that the CEO should be leading from the front and getting the executive team involved.
Have a maniacal focus on cross-selling and up-selling without creating concern over who gets paid.
There have been too many instances where teams worry about who owns something and ultimately miss out on an opportunity. “It’s amazing how much gets done when no one worries about who gets credit for it.” Mike suggests the double comp model, incentivizing people to sell as much as possible without the fear of not being paid for it. This should be weighed with the cost-benefit tradeoff and may not be the best fit for every company, but it should not be dismissed immediately.
Now you can act on the deal model → org redesign, compensation plans, synergies, etc.
Now you can act on the deal model. Most companies want to go here first but we recommend handling the previous steps beforehand. The temptation to do this first is driven by human nature to jump right in. The problem with doing this is that you’re not sure yet who you’d like to keep and what you may need to let go of. By handling this last you are able to address the previous steps and will be better off for it.
GTM Tech and Data
What are all the “new” resources in the way of tools, talent, processes, and market access?
When most people think about the GTM tech stack, people typically think about the systems and the tools. We think about the tech stack as 5 different things, systems, the people users and admins, business process, data, and the reporting you’re trying to get out of it. Your team should be doing an assessment or catalog exercise.
Look at the platforms, like Salesforce, and apps, like DocuSign, at each organization. Your team should create a spreadsheet of what each company has in its stack. Information around the renewal date and the number of users is crucial to include in this sheet. Once you have this baseline, compare the tools to what the new entity will look like and your business needs. Some tools will scale well with the new organization while others have a very niche use.
Do you have overlapping or even conflicting customer data?
The next thing to think about is data. Your team must decide if it makes sense to combine data. If the ideal customer profile is the same, then it is helpful to clean and combine this information. If the two data sets target different groups, it may make more sense to keep them separate. Another thing to consider is whether or not the new entity will go to market with the same process. Some may choose to go to market with an enterprise process and an SMB process. This decision will also impact whether the two data sets should be merged.
Final Thoughts
As the conversation came to an end, it became clear just how much goes into performing a roll-up. In an effort to make the entire process more seamless, the RightStar Alliance assists at every step. If you’re considering a roll-up and would like to get in touch with a group of professionals that can provide the expertise you need, connect with a member of the RightStar Alliance.
