Why Customers Leave After Acquisitions: A Cautionary Tale

Successful #B2B acquisitions are about buying an excellent client base. So why do most acquisitions fail? One answer is that many #B2B companies skimp on the Customer Due Diligence (CDD) process. They pay a premium for the acquired company but end up with a pig-in-a-poke because they haven't asked all the right questions to determine if those clients are going to stay, and stay for the long term. Click through to find out how to do #CDD properly. https://lnkd.in/enM2fGpn

One of the worst post acquisition integrations I’ve seen started with one of the best companies I’ve worked at. Great team. Great brand. Exciting growth. Then a larger company acquired it — and within months, the magic was gone. Not because the strategy was wrong, but because the integration wasn’t intentional. The bureaucracy showed up faster than the opportunities. People lost trust, and the turnover and distrust followed. I learned an important truth at the acquirers expense: the deal isn’t the milestone. The milestone is whether the combined company is thriving six months or six years later. That’s why I believe acquirers need to obsess over the first 180 days as much as they obsess over getting the deal signed. Employees decide quickly whether the new company is one they want to be part of — and once you lose them, you lose the knowledge, momentum, and consumer trust you just paid for. I’ve pulled together those lessons in a free eBook: https://buff.ly/6hBTShb If you’re preparing for a deal, it might save you from learning the hard way.

Recently, I was interviewed by Mark Szakonyi, Executive Editor, The Journal of Commerce on the impact of the UP-NS merger on intermodal markets. Link to full article follows the summary below: The merger of Union Pacific Railroad (UP) and Norfolk Southern Railway (NS) is expected to incentivize more US West Coast routings and increase competition with the Port of Vancouver for markets in the US Midwest, potentially reversing a decade of market share loss to Canadian, East, and Gulf Coast ports. The core benefit of the merger is the efficiency gained by creating a single-line, transcontinental operator. This would make cross-country shipments from the West Coast to markets east of Chicago more cost-feasible and allow the combined entity to directly serve regions like Detroit and Indiana. A key advantage is the elimination of necessary inter-railroad hand-offs. As Vann Cunningham, a former associate vice president of economic development at BNSF Railway, told the Journal of Commerce: a single transcontinental operator "could open so-called watershed markets primarily within the Ohio Valley and the eastern region straddling the Mississippi River, thanks to more efficient operations in Chicago and other Midwest hubs and no need for interchanges." Cunningham highlighted that this efficiency gain would eliminate interchange moves that "normally take 24 to 48 hours, cutting operating costs and offering shippers a faster option than the all-water route via the Panama Canal to East Coast ports." The Port of Los Angeles strongly supports the move, with Executive Director Gene Seroka noting the merger would give the port "access to the most populous third of the nation." However, some analysts are skeptical that the merger will significantly boost West Coast ports. Rail analyst Paul Tonsager believes the merger may not move the needle because ocean carriers prioritize rail price over service, and the low margins from international intermodal business don't incentivize major investments. He suggests this could even encourage more East Coast routing. Furthermore, the merger's full impact won't be realized for about three years, and there's no guarantee the newly achieved operating savings will be passed on to customers to offset the cost difference compared to cheaper East Coast trucking into the Ohio Valley. Ultimately, the West Coast's potential gains depend on more than just efficiency; they also hinge on the ability of Western railroads to provide enough railcars without creating terminal congestion. While rival railroads are launching jointly-operated services to compete, they can't match the interchange efficiency of a single transcontinental line. Achieving operating efficiencies from the combined network is arguably the most significant factor, but it's only one piece of the equation favoring the West Coast ports. The full article can be found here: https://lnkd.in/gbiidZWu

Understanding what an earn-out is can be crucial when structuring a merger or acquisition. Earn-outs protect buyers from overpaying if the business underperforms, while giving sellers the opportunity to earn more if certain targets are met. https://lnkd.in/eCPFR3BP

Negotiation can make or break a deal — yet too many buyers fall into the same traps. Here are 5 common mistakes I see in acquisition negotiations: 1️⃣ Talking more than listening 2️⃣ Focusing only on price, not terms 3️⃣ Showing your hand too early 4️⃣ Ignoring the seller’s emotions and motivations 5️⃣ Rushing to close without clarity on details Avoiding these mistakes can save you thousands — even millions — and build stronger trust with the seller. 💡 Remember: the best negotiators don’t “win” by force… they create a deal where both sides walk away feeling like they’ve won. Which of these mistakes have you seen the most in business deals? 👇 #BusinessAcquisition #NegotiationTips #MergersAndAcquisitions #DealMaking

Dusted off an old classic the other day, Andrew Sherman’s Mergers & Acquisitions, and it took me straight back to college and early career days. One concept still lands: EOTB analysis (Eye of the Buyer). We’ve always called it “reverse engineering,” but EOTB says it better. Transaction prep is all about putting on the buyer’s shoes and seeing your business the way they underwrite it. If buyers want 15% EBITDA and you’re at 10%, don't be searching for excuses. Close the gap! How we operationalize EOTB (before a process even starts): build a one-page buyer scorecard and run it quarterly. Hit what actually prices deals - quality of revenue (recurring > one-off), customer concentration, pricing power and gross-margin durability, unit economics by site/channel, working-capital discipline, leadership bench, compliance/contracts, and add-back credibility. Goal: convert “we’ll verify in diligence” into “we’ve already verified.” That’s how you compress timelines, widen the buyer pool, and earn the multiple you want.

Understanding what an earn-out is can be crucial when structuring a merger or acquisition. Earn-outs protect buyers from overpaying if the business underperforms, while giving sellers the opportunity to earn more if certain targets are met. https://lnkd.in/eTbSevmz

95% of acquisitions fail post-integration. And my contrarian take is that it actually has less to do with the business being acquired and more to do with the business doing the acquiring…. Don’t get me wrong, absolutely sell side leaves bodies in the closet you can’t possibly understand or know until integration but you should be prepared for that reality to happen… Everyone’s so obsessed with finding “the perfect acquisition target.” When there is NO such thing. So instead we need to stop putting emphasis on finding the perfect business …. And start putting it towards becoming a business ready to take on acquisitions irregardless of the surprises. You will spend months digging through data rooms, analyzing EBITDA multiples, running comps, calling brokers… but almost NO ONE applies the same level of diligence to their own business …the one doing the buying. And THAT is where deals collapse. Because integration failure rarely happens because the target was bad. It happens because the acquirer wasn’t ready. If your systems can’t absorb new tech, if your ops team is already stretched, if your leadership isn’t equipped to handle two org cultures colliding…it’s not the deal that failed, it’s the infrastructure. It’s why at SIR., our obsession isn’t JUST “Can we find you a good business to buy?” It’s “Can we make you the kind of company that can turn any acquisition into a good one?” Because that’s the skill. That’s where the generational wealth actually happens. We call it deal readiness. And it’s the invisible factor that determines whether your acquisition becomes a flywheel or a funeral. Before I ever put attorneys, analysts, or compliance officers on a deal, I want to know one thing: Can your business carry the weight of what you’re about to buy? Do you have the portfolio managers? Do you have the ops infrastructure? Do you have the capacity to integrate people, systems, clients, and tech….without breaking everything you’ve already built? That’s what we focus on. Not just finding opportunities, but building acquirers. Because finding a “good” deal is luck. Building a company that can turn any deal into a profitable one? That’s strategy. And that’s the game we’re in. #buyside #acquisitionadvisor #businessdevelopment #corporatedevelopment #corporatedevelopmentfirm #mergersandacquisitions

Who would be interested in our company? A customer recently asked us this question — Usually, we see potential buyers who are somehow related to your business: Suppliers who want to secure their supply chain, Customers who want to control upstream, or Competitors who want to expand market share. Basically, someone who would benefit when the two businesses combine — when 1 + 1 > 2. But not all deals are like that. Some buyers look to diversify, stepping into a completely different business if they believe they can create more value than the cost of the acquisition. So, in short — your buyer could be: 👉 someone already connected to your business, 👉 someone in the same industry, or 👉 someone from a completely different sector looking for growth opportunities. 💡 If you’re thinking about selling your business, understanding who the right buyer could be is the first step toward the right deal. #BusinessValuation #MergersAndAcquisitions #CorporateFinance #ORNALimited #ThailandBusiness

The number one reason deals disappoint both sides? No one ever says what they really want.   Buyers think it’s about price and terms. Sellers think it’s about money and timing. But those are surface-level answers.   Scratch a little deeper and you find something else: Security. Legacy. Freedom. Fulfillment.   I heard a lesson someone had learned from Marc Morgenstern: “𝗔𝗻 𝘂𝗻𝗮𝗿𝘁𝗶𝗰𝘂𝗹𝗮𝘁𝗲𝗱 𝗱𝗲𝘀𝗶𝗿𝗲 𝗶𝘀 𝗮 𝗴𝘂𝗮𝗿𝗮𝗻𝘁𝗲𝗲𝗱 𝗱𝗶𝘀𝗮𝗽𝗽𝗼𝗶𝗻𝘁𝗺𝗲𝗻𝘁.”   That line changed how I approach every deal.   Because when people don’t express what they 𝘳𝘦𝘢𝘭𝘭𝘺 want, they rarely get it. When they don’t get it, even the best-looking deal can turn sour.   Buyers often fear that being transparent gives up leverage. But in reality, clarity builds alignment and alignment builds trust.   The same goes for sellers. When you ask what they want, they’ll say “the best price.” But that’s almost never the whole story.   Keep asking questions. What do they want that money to give them? Time with family? A new project? The comfort of knowing employees are safe?   That’s where real negotiation begins.   You can’t deliver what the other party wants if you never uncover what that truly is. And they can’t give you what you need if they don’t know what matters most to you.   Deals built on clarity last. Deals built on assumptions can quickly end in disappointment or regret.   How do you get people to open up about what they 𝘳𝘦𝘢𝘭𝘭𝘺 want in a deal? #Negotiation #MergersAndAcquisitions #SMB #EmotionalIntelligence