Time and again, mergers fail to achieve their potential because management moved too slowly to realize the deal’s top-line growth potential. Acquirers are often slow — shockingly slow — to integrate their sales, marketing, customer experience, and other commercial functions.

Consider, for example, a recent merger in the telecommunications industry that was largely predicated on the belief that the new company could generate $500 million in new growth from increased wallet share and expansion into new international markets and industries. After the deal closed, however, the commercial initiatives got delayed by six to 12 months while management prioritized items like back-office restructuring, headcount reduction, and synergies in third-party spending for IT and similar services. The hoped-for gains — the core of the deal thesis — didn’t begin showing up till well into the second year.

Or consider an insurance company that made a series of tuck-in acquisitions of small, niche providers with the aim of getting a 12% revenue boost from cross-selling each acquisition’s products to the other’s customers. A year later, gains from cross-selling were less than 5%. A major cause? The integration of various customer relationship management (CRM) systems had left the sales team and senior management unable to see where the gaps, opportunities, and successes were.

Delayed and ineffective commercial integration can turn a good deal into a loser, because sales growth ultimately determines whether a merger achieves its value-creation goals. Sure, there will be important cost benefits — duplications in overhead, technology, facilities, and more — but those often do little more than cover the premium a buyer pays for control, or (in the case of a competitive sale) get built into the price. At the end of the day, to create value, mergers need top-line gains, too: More sales to more customers, expansion into new territories or market adjacencies, new products and services to sell to existing customers.

But compared to other areas of post-merger activity, the commercial engine starts late, operates uncertainly, and often runs out of gas before reaching its goals. We’re frequently engaged in the latter stages of mergers, particularly when revenue begins to decline. We typically observe unsynchronized sales strategies and ambiguous customer priorities, coupled with limited synergy between products and services.

These experiences have also shown us the underlying causes of these delays and what acquiring companies should have been doing. With M&A activity picking up — Goldman Sachs reports a year-over-year 34% increase in the first quarter of 2024 — and high interest rates making delay costlier, it’s more important than ever that private equity and corporate acquirers leave the deal table with underwriteable, ready-to-go plans to make deals pay off through growth — and carry those plans out quickly.

5 Challenges That Delay Commercial Integration

Integrating commercial operations is difficult. In our work with clients, we see five interlocking challenges:

Limited visibility pre-closing

Buyers start out at a disadvantage because they can learn less about customers in the due diligence process than they can about operations, finances, and payroll. Even after closing, it may be hard to see a complete picture of the new company’s business with a given customer because of different, not-yet-fully integrated systems and processes.

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