Mergers & Acquisitions:
3 Biggest Cross-Selling Challenges

Mark Donnolo
You know, on the point on cross selling, Keith, I could see you were thinking a bit about that. And you said, you tried it so many times. I’m wondering, what is it that you found that makes cross selling so challenging? Because it is kind of the obvious, big benefit? It’s like, well, we just crossed out, we’re going to be able to get all these these extra benefits. But what are the what are the challenge points that you see with that?

Keith Conley
I you know, I think it has a lot to do with turf. Right? So, for example, a sales rep, being very successful, right, making a million a year, right? And you say, Hey, we bought this company, there’s other services can pull in, here’s the compensation plan. And they’re like, Well, I don’t know if those guys who can deliver that. Why would I want to risk my million dollars and bringing in a service line that, you know, I don’t know how good the services and so forth. So it’s the risk that many in territory, turf, that I found at the end of the day, is the hardest thing to break down. You think compensation plans for cross selling, in itself, And we put some really attractive compensation plans together for cross selling, would be enough for the inertia. But it wasn’t. And if I had to do it all over again, we never had a chief revenue officer. And when you have different lines of businesses, it really goes up to the President, and you become the chief revenue officer, right. So I was driving a comp plans discussions across five different sales executives, and, you know, trying to get them to work together. But having a chief revenue officer and you got to be a certain size, but that, you know, their goal is to cross sell to align things across all the different business units. That’s something we never had at Epiq. And if I had it all over again, I would put that in place because that could have been a big driver of bringing things together and breaking down some of these barriers.

Mark Donnolo
So it’s, so, when you talk about behavioral motivators, you know, you think the comp plan is going to motivate people to do certain things. But the bigger motivator is actually the avoidance of risk if people are at a certain compensation level, I’m more motivated to not mess things up than I am to try to make a few extra dollars possibly, and put it at risk, right

Keith Conley
At the end of the day, because I would go out in the sales calls, not to bring them in. I try to say why is this right? Because we measured, we went from like, 4% cross selling into the 7%. But it sounds like a big percent increase. But it’s around here in the big scheme of things. And that was what I found out personally and you know, even in consulting, we did a lot of cross when I was in management consulting in sales, and it’s easy to lay out the plans, but it’s just really one of the most difficult things to execute on a company.

Mark Donnolo
All right, so I want to ask for maybe if you have anything in your head for any examples, kind of the blood and guts stories, like, anything that’s happened, you go, man, this is like something I saw that it was a pitfall I would avoid at all costs are something to watch out for. And you don’t have to name names or anything, Keith, but I’m just kind of interested cuz you’ve seen a lot of action, like what are some of the bigger mistakes that you’ve seen happen?

Keith Conley
Well, in smaller acquisitions, right, when you’re acquiring a company, you’re imposing your vision, mission values, existing comp plan right, processes, and so forth. Now, you know, when you’re acquiring company and posting that it’s less risky, in my opinion. But we’ve run into issues, as I mentioned before, when you get good at integration, you have speed and velocity, you integrate quickly. And with smaller companies, we had earnouts. So someone that ran a company, right, we would pay them out 1/3 of the valuation, next year a third, next year a third to keep the business going. And when you integrate a company quickly, you start losing that p&l focus. And so they had a p&l before and all sudden, you bought them to integrate and to sell those services or offerings throughout your whole company. So you know, we got into a lot of legal issues with some of the owners that we bought businesses from, because we couldn’t measure that earnout as effectively, and you get into negotiation, what that would look like and so forth, we gain the benefit of the doubt. But that is just, that’s one of the things about earnout is if you’re going to keep them separate and measure the separate p&l, you’re not going to get the benefit as much, but that’s easier. But if you integrate these companies, you just have to watch out on earnout front, because we have had a few litigation issues come about.

Mark Donnolo
So basically, the playing field or the game changes a bit. So at the beginning, when you’re doing the acquisition, it’s like, here’s what we want you to do, that’s all really clear, because we have control over we can handle those things, we’ve done it before. And then everything starts to come together, and the game changes, and then it gets harder to measure.

Keith Conley
Yeah, and measure that specific business that you caught. Because you’re integrating, and you’re leveraging those resources across other areas, because of their expertise, and so forth. It’s good overall for the business. But if you’re if you were being acquired, and you’re expecting this payout, every third every year can be can be complicated. So that’s one of the risks.

Mark Donnolo
And any other watch outs for people, that kind of things that you’ve learned through experience?

Keith Conley
You know, this sales area, what I’ve learned is like, there is a role for the executives when it comes to sales during these acquisitions, right. And an executive needs to be proactive, engaging, like I would be on the calls of the top clients of the company that are required to speak through and still due diligence, and we’re asking questions about, you know, the, we’re letting them know, we’re buying this company, and but then then we’re finding out a little bit more about, you know, their business and how much revenue we might get over next year or so forth. But you know, it’s engagement. The executives, you know, going out there going on a call with your sales team, I would call my top salespeople every month, right. And I would send out notes to people that had, you know, exceeded their quota for the month, right. But just I think, really getting in touch with that that company you just acquired participating in and learning firsthand at the beginning, what the challenges are, because you have the resources to address some of these systemic issues. And if you always rely upon two or three layers below, in a major acquisition, it might be a missed opportunity. So you don’t want to be micromanaging. But at the beginning, he can communicate your values your mission with these people, you’re out in a sales call you're meeting clients, right and learning about the client. And then you’re hearing the salespeople talk and understand what challenges they have, then you can kind of bring that back, look for the systemic issues and drive some change on behalf of there to help help those sales reps and just overall help them become better as they come into the company.

Mark Donnolo
Yeah, yep. Staying close to the action.

Michelle Seger
You know, Keith, I think that’s probably one of the best pieces of advice that we could give a sales leader I’ll tell you from our own experience, so many things that we see, if a leader doesn’t have all the answers, sometimes they say nothing. And then all of a sudden, they’re being flooded with churn that they didn’t want from the top sales people from the company that they’re acquiring, in a water cooler talk. It just happens if you’re not leading the conversation. And that’s one of the first things that we tell that we talk to sales leaders about is just get out there, regardless of what you know what the message is. They just want to hear something from you and understand like, what’s ahead?