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How revenue operations can unlock value in deals
Companies seeking to fuel their strategies through acquisitions have sharpened their focus on creating deal value through top line revenue growth. Often referred to as revenue synergies, this part of the M&A business case can be more difficult to achieve than cost synergies. Thinking of these simply as “synergies” understates the power of these levers.
Rising valuations are making it crucial to achieve revenue growth and profit improvement to deliver on the business case and realize the capital returns the market expects. Go-to-market (GTM) operating models combined with a detailed execution plan are essential to value creation. One way to increase the odds of successful business case attainment is to include the revenue operations (RevOps) function into your process.
RevOps is the orchestration center for growth in a company. It typically evolves from a sales operations (SalesOps) function and should serve as a cross-functional team providing the operational backbone across sales, marketing, finance, service and customer success. Though relatively new, companies appear to be rapidly adopting the function. Indeed, head of revenue operations is currently one of the fastest growing job titles in the market.
It’s essential for RevOps leaders to be engaged early in any M&A deal — including assessing the seller’s RevOps function and helping shape strategy and planning prior to close.
The rise of RevOps
While recent market volatility has moderated valuations, PwC’s 2023 M&A Integration Survey confirms that GTM goals and revenue synergies remain important.
The RevOps function orchestrates the core aspects of GTM strategy — including driving revenue, growing market share and accessing new customers. It oversees critical aspects like product offerings, revenue models, sales channel ecosystems and renewals, among others. While its importance is increasing, many companies are just beginning to recognize its potential.
Evaluating the maturity level of the target’s RevOps
A potential deal should trigger the question, “Is now the right time to update and strengthen our RevOps function?” The answer may require an assessment of the target’s RevOps function that identifies gaps in capabilities and opportunities for improvement.
Companies with low maturity levels generally have a revenue operations function with little to no accountability. They often lack collaboration across key GTM and finance functions, and as a result, operate with inefficient systems and processes.
Companies with medium to high maturity generally exhibit an established revenue operations function with clear roles and responsibilities. They also use collaborative revenue processes and systems. Highly mature RevOps functions know how the revenue engine was built and how to operate it efficiently.
The RevOps assessment should focus on people, process and technology attributes evaluated and scored on a spectrum of low, medium or high maturity. Once an acquirer has assessed the target’s RevOps function, the acquirer can determine how to more effectively leverage RevOps to help drive growth of the combined business.
The elements below provide a high-level starting point for performing a maturity assessment and some issues to consider.
People
Does the organization have a RevOps leader responsible for revenue growth across all channels?
Is the current RevOps function widely recognized as an essential component to the company’s revenue generation capabilities?
Do the RevOps team members supporting sales, marketing, customer support and finance have a clear sense of their roles and responsibilities and do they orchestrate well to help increase win rates?
Processes
Are sales, marketing, customer support and finance teams aligned on success metrics and do they understand how their metrics impact reaching revenue goals?
Are GTM processes agile and can they adapt to evolving customer needs?
Are the RevOps processes clearly defined and do they unite GTM and finance functions?
Technologies
Is customer data readily accessible from a single source of truth?
Does the organization have one centralized CRM system for customer touchpoints?
Does the RevOps team have a modern toolset that can scale with the business? Can improvements and enhancements to the toolset be made quickly?
Starting from scratch
For companies that don’t have a RevOps function, the easiest route may be to evolve the existing SalesOps team into a RevOps team. Here are some areas that should be considered.
- Sales operations
- Product release operations
- Reporting and analytics
- Marketing operations
- Partner channel sales operations
- Order operations
- GTM operating model
- Compensation and enablement
- Customer success
The goal is to coordinate across these areas. A mature RevOps team is likely to be more cross-functional than any other group in your front office.
What’s next
Three converging trends — the rising cost of capital, the importance of deal revenue synergies and the emergence of the RevOps function — should prompt dealmakers to consider these factors.
- M&A playbooks: Dealmakers should update their playbooks to weave the RevOps function into their plans. This function should be at the center of executing sales plays related to the transaction and should orchestrate efforts to achieve deal revenue synergies.
- RevOps maturity: Executives interested in further developing their RevOps function via a future M&A transaction should benchmark their existing RevOps function to identify strengths and areas of opportunity. Additionally, RevOps leaders should engage early and remain central to their company’s inorganic growth.
- Begin early: Revenue synergy planning and execution are likely difficult to achieve because they rely on enterprise-wide transformation of business processes. Dealmakers should begin GTM planning early in the deal cycle. PwC’s 2023 M&A Integration Survey found that companies are achieving success by investing in integration much earlier and developing holistic, cross-functional operating models to help implement large-scale transformation at speed.
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