A medium-sized employee drug-screening company was competing in an industry where a major industry roll-up was occurring. The company’s two biggest competitors had recently received VC money and were on a buying spree. The company was not interested in selling at that point and was wondering how it was going to compete successfully under the new circumstances.
Industry roll-ups have always had a land-grab feel to them. Clearly, the goal is to be number one and to increase corporate value and multiple. However, problems with operations and key personnel typically arise whenever there is a merger or acquisition. Since the company was interested in organic growth, we decided to take advantage of the weaknesses in each competing company that was going through a merger or acquisition.
First, we conducted a competitive analysis on each company being merged or acquired. Through various means, we identified those companies’ largest clients and anticipated what kinds of problems their clients would most likely experience. Next, we came up with a ninety-day blitz campaign to go after the competitors’ largest clients. We positioned the company as the “go-to alternative” whenever the clients noticed a slight decline in service. We asked them to perform a few trial runs to make sure everything would flow properly at the flip of a switch, whenever the clients called. They also beefed up their operations to handle the extra workload.
Over the next twelve months, the company landed eighteen major accounts, and sales went up 218% over the year before. In the meantime, the competitors were still in disarray. The company planned to conduct another similar blitz while the companies involved in the mergers and acquisitions were still delivering poor service.
The Common Mistake
During a merger or acquisition, everyone is so focused on getting the deal done that they forget to secure their customer base. You may not be able to secure every account but, with a little forethought and executive attention, you can secure your key bread-and-butter accounts. If you don’t, your smart competitors will.