To Get Value from a Merger, Grow Sales

Rothenbuecher, Juergen &Schrottke, Joerg

Harvard Business Review; May2008, Vol. 86 Issue 5, p24-25

Some interesting points

After a merger, managers strive primarily for improving the bottom line through cost reductions. Instead they should make it a priority to strengthen sales and marketing in order to sustain profitable revenue growth.

These insights came from our recent study of 270 mergers in various countries and regions. We found that in most cases sales growth had slowed dramatically after the merger - on average, it had dropped six percentage points. (The figures in this article are weighted averages adjusted for industry trends and refer to three years pre- or post-merger.) That decline led to a reduced rate of earnings growth, by 9.4 percentage points, and a consequent reduction in value creation: The firms' market-capitalization growth decreased by 2.5 percentage points.


Therefore, the post-merger firms must throw themselves into preventing or offsetting the customer attrition (often the result of diminished trust) that usually follows a merger. Managers must devote sufficient resources to retaining current customers and gaining new ones. That typically involves improving the customer experience by streamlining processes; creating consistent marketing messages on how the merger will improve offerings; minimizing changes in sales-account managers; ensuring that the formerly distinct companies present a single face to the customer;


Juergen Rothenbuecher (juergen.rothenbuecher@atkearney.com) is a vice president at the strategy consulting firm A.T. Kearney and the head of its EU Merger Strategies Competence Team. Joerg Schrottke (joerg.schrottke@atkearney.com) is a principal at the firm and a member of the EU Merger Strategies Competence Team. They are based in Munich.