What is Acquisition Assurance?

Acquisition Assurance is a practice of collecting, structuring and recording information about product / portfolio value proposition during execution of business acquisition transaction.

It helps to achieve maximum performance of acquired businesses by ensuring integrity and consistency of product portfolio value propositions after M&A transaction.

Situation

Problem

	Inefficient Development Misaligned product direction means that effort and resources of product teams are spent on features and functionality that doesn’t have any positive business outcome, such as competitive edge, better quality, new and reoccurring sales.
	Inefficient Support With product teams tighten up with work on irrelevant features it drains product’s team capacity to address issues with existing functionality that customers use, which results in prolonged resolution times. Longer resolution times means that customers live with the issues and defects longer and that has negative impact on customer satisfaction, product reviews and future sales.
	Brand Deterioration Inefficient product development and support inevitably has corresponding negative impact on the brand. That jeopardizes not only revenue of the acquired portfolio, but revenue from other lines of business as well.
	Loss Of Competitive Edge Loss of customer focus and dilution of product value proposition is likely to cause diversion of investment in competitive features. This makes the acquired product on par with competition and less visible on the marketplace.
	Talent Attrition As product shifts further and further from its customer base harder it becomes to put it back on track. That nurtures frustration among product teams as tremendous effort and hard-work get business any further. As this situation continues lack of career development forces talented employees to seek opportunities for best realization of their talent elsewhere. Attrition of talent employees further worsens effectiveness and productivity in product development causing increased negative pressure on the brand and sales.
	Revenue Decline Unmet customer expectations delay purchasing decisions and forces customers to do costly market research to find right solution. This means that potential deals either never close or get close with the competitor.
	Negative ROI Healthy businesses that become acquisition targets sell at x10 revenue multiples (especially in technology sector). Such high multiples imply high expectations for great performance of target company for the transaction to be considered successful. With declining sales and revenue and increasing competition it’s getting harder and harder to payback the investment let alone fulfill lucrative ROI.
	Increased Costs Product teams are tempted to expand product portfolio in order to compensate for falling revenue and underperformance in core segments and to score home run with new product. While this is legitimate tactics with products in declining markets, such move on the healthy growing market results in unnecessary significant increase in both operational and opportunity costs.
	Stock Price Decline A word about poor brand / product performance on the market sooner or later gets spread between analysts on Wall Street. Image of business on Wall Street may be further worsened by missed sales targets. This inevitably results in lower valuation of the stock price and in potential closure of positions that in turn has cascading effect on the stock price.
	Increased Cost Of Capital As Wall Street valuation of the business stock price declines, so do the business capabilities for funds to finance its new ventures. Deteriorating stock price dynamics greatly reduces opportunities to finance through sell of treasury stock (further influx of stock on the market may cause panic and cascading sell-off) and access to lesser loans at higher interest rate.
	Drain Of Resources As all these effects start to take place the slowed down product performance start to drain management attention and product team effort to firefight these issues.

Solution

We at SBC decided to tackle this situation.

We believe that businesses should have on-demand friction-free access to product management and industry-specific expertise in order to help executive management teams to quickly and efficiently acquire all the crucial knowledge to not only successfully manage new product portfolio, but also leverage and fully realize its growth potential.

Symptoms Of Value Dilution

Should you consider Acquisition Assurance? Here are some of the symptoms that usually accompany businesses with lost product direction and customer focus.

	Frequent Product Value Proposition Discussions If on your product management meetings, you frequently hear ques-tions on product value proposition / messaging then chances are high that your product is losing its customer focus (unless these discus-sions are connected to significant shifts and developments on the market).
	Excessive Use Of “buzz” And Other Confusing Terminology If your executive presentations and product roadmaps are full of overly complex slides filled with charts and diagrams intermixed with whatever is “hot” buzz-words out there, chances are your product is losing its customer focus. These presentations also tend to lack summary and S.M.A.R.T. objectives.
	Frequent Changes In Product Strategy Attrition / frequent rotation of product managers and other key product development staff.
	Stretched Resources Inefficiency in both product development and, as a consequence, support functions results in discrepancy between product roadmap and customer requests (during PoC, in particular)

Comprehensive Impact

	Market Relevance / Table Stake Of course, having the product that meet customer expectations means that the acquisition becomes relevant on the market and keeps its table stake.
	Competitive Edge Accurate laser-sharp focus on customer preferences means that product’s principal value proposition message remains. It is especially beneficial for products that have thin segment boundaries and accurate value proposition prevents products dilution over multiple segments and retention of their competitive advantages.
	Customer Satisfaction With customer-centric product direction and clear value proposition customers get the product / services that meet their demand in terms of quality, costs and delivery times.
	Communities Customer satisfaction means that customers, our fellow members of communities, solve their present-day challenges faster and efficiently, exactly the way they want it to get resolved. This is a sound addition to CSR activities and give-back to communities.
	Strong Brand Needless to say that this has profound positive impact on brand as with positive customer experience the company’s brand gets appreciated.
	Net Promoter Score Matching customer expectations means higher Net Promoter Score that secures recurring business.
	Shareholders Laser-sharp focus on customer demand means efficient use of resources in doing business. That means improved profit and consequently strong stock appreciation.
	Employees Positive public perception of the company and brand, sense of purpose and positive contribution makes your business an attractive place to work at, attracting top talent and thus further advancing business performance.
	Effective Product Innovation Since initial product value proposition is known, the product team can confidently explore different pivot points for product evolution / development without reinventing the wheel.

Acquisition Assurance With SBC

We are management consulting company. For the last five years we’ve been active in the field of Private Equity investments connecting startups as well as established businesses with private equity funds. Our engagement projects range from customer electronics to heavy machinery in energy sector.