M&A is fundamentally about merging the “Book of Business”
The last couple of years have, once again, proven the professional services sector is robust. Despite the operational challenges, firms on both sides of the Atlantic saw revenue increases. And, as Pamela Tobias, highlights mergers and acquisitions represents an ideal approach.
Buoyed with confidence, for 2022 and beyond, for instance, law firms have their eyes set of growth – with geographic expansion a key objective in 2022. Mergers and acquisitions (M&A) present an ideal approach – rather than building a presence from the ground up and dealing with all the teething troubles that would naturally come with establishing a new presence.
Not only does it support territorial and jurisdictional expansion, it’s also a great way of adding other practice areas to the firm’s offering. The same would apply to any other professional services firm too.
However, when merging with another firm, it’s not just about acquiring a set of new partners or clients, it’s about combining and bolstering the “book of business”.
Merging the ‘acquired’ book of business and seamlessly embedding it into the new organisation is a highly involved and intricate process. It requires planning and attention to detail, especially to ensure that the “relationships” of the acquired organisation meaningfully become those of the new firm.
Here are some considerations to take into account from a business development perspective in a M&A scenario, alongside the benefits that are likely accrue:
- Don’t make it a fire drill. Far too often, in M&A situations, the emphasis is on a range of operational issues such as HR, office locations, IT, and so on. But when it comes to transferring contacts, many times, it’s either an after-thought or a fire drill – because people in charge simply forgot to plan and schedule a migration of contacts to the new firm’s CRM technology. It’s of course surprising, because in a professional services firm, where business to large extent is still incumbent on relationships, organisations forget to adopt the same approach they take for transferring matter or case data. The contact data is a key component of the current and indeed the future book of business.
“Merging the ‘acquired’ book of business and seamlessly embedding it into the new organisation is a highly involved and intricate process. It requires planning and attention to detail, especially to ensure that the “relationships” of the acquired organisation meaningfully become those of the new firm.”
- Address data quality. The quality of contact data that is being migrated is critical. It’s well recognised that customer data degrades at a rate of two percent per month, translating into almost a quarter of the entire customer database annually. Therefore, it’s imperative that the merging firms invest time in cleansing the database and completing every single contact entry that represents a “relationship” so that the marketing machinery of the new entity can hit the ground running, and with impactful campaigns. Otherwise, the new firm runs the risk of reputational damage and impaired relationships, caused by poorly targeted communication.
- Relationship intelligence. Centralise data in the new firm’s CRM system so that relationship intelligence can be leveraged. For instance, knowing which are the common contacts between the two merging firms, who all in the merged organisation have the strongest relationships, which contacts should be added to the key client programme, and so on, is valuable insight to help take the contacts from being an entry in the “rolodex” to hot leads in the new firm’s sales pipeline.
- Business intelligence from the relationship intelligence. Today, many technologically advanced CRM systems, leverage technologies such as Power BI. Utilise this capability to help draw business intelligence from the relationship intelligence that the CRM system already provides. Embedded Power BI enables users to view data in ways that are insightful and meaningful to them via a role-specific user interface and dashboard. The added advantage is that these individuals can then undertake timely and even real-time self-service reporting too. For example, if the user is a business development or marketing professional, they would be able to interrogate the data on historical activities to draw insights that could help them to better plan future activities. Similarly, they could drill down into the data to demonstrate campaign success to lawyers and partners. Likewise, if the user is a managing partner, they might want a broader view of the overall new business pipeline of the firm, to then narrow down into the various stages of the sales lifecycle that each opportunity is in, at that point in time. This might then draw their attention to the resource planning that they need to proactively undertake, in preparation of the new matters that are expected to come in. This is just one illustration of a data-driven approach to business, there are potentially numerous others.
In essence, connecting contact, marketing and business development data in this manner can genuinely facilitate data-driven decision-making for competitive advantage.
As firms execute on their M&A strategy, equally they need to then devise their strategy for business development and marketing, so that the new entity is able to deliver a return on investment in the shortest time possible. A CRM strategy must be a core element of their approach.