Pricing is always an important profit driver but even more so when determining the success of a merger or acquisition. If you get prices, discounting, terms & conditions wrong, then most likely you are losing millions if not billions. If on the other hand you reap the pricing synergies, considerable (and often additional) profits are to be made in M&A from price optimization and execution.

A well-executed pricing workstream in an acquisition includes the following areas:

1. Price Planning: get prices, discount structures, terms & conditions well-planned as early as possible. In some industries the prices can only be changed with long notices or annually, thus you may lose an opportunity if not planned in advance.
2. Pricing Strategy: set a strategy for how pricing, discounting, terms & conditions should work for the combined business, post-acquisition. Plan for how to reap pricing synergies (with possible legal constraints).
3. Terms & conditions: the new combined business will in all likelihood need to offer one single set of terms & conditions, instead of the two separate ones before the acquisition. The devil is here in the details, as some customers may benefit while other will suffer from this harmonization, and thus you need to be able to handle both situations. 
4. Training of sales teams: post-acquisition it is likely that your sales teams will be selling the combined portfolio of products or services. So there will be a lot of unfamiliar offerings to suddenly promote now. In some cases they might even have now to say nice things about something which they used to deride as a competitor in the past. Therefore, it is key to train the sales teams in value argumentation for the combined portfolio. Equally, they must be trained in how to sell the merger itself: how to prevent customers from exploiting harmonization of terms or reducing their engagement with the New Company, in order to get better prices/terms post merger.
5. Internal Communication: there are many stakeholders in M&A, and across various workstreams it is of course paramount to communicate well. This certainly also applies to pricing, where people who have influence over pricing (e.g. Marketing & Sales) in NewCo must be on board with the strategy and the execution plan. Sales often being the spearhead with the customers in M&A must in particular be well-equipped to defend the merged product portfolio, its prices, terms & conditions.
6. External Communication: At the end of the day, the success of pricing in an acquisition phase rides with the customers' acceptance of new prices, discount structures, rebate systems, terms & conditions. Therefore, it is key to plan an execute detailed communication to each customer, "sell" the merger and make sure to sell the combined portfolio. There is no longer "us and them", there is only "we". Communication needs to reflect that.
7. Roll-out management of everything to do with pricing: communication with each key account, monitoring of performance, negotiation support, etc. While planning and strategy are important, the actual execution is equally important for the pricing success. In industries such as FMCG / CPG, where often a handful of key accounts make up more than half of the market, it is necessary to make detailed account by account action plans for how convince them of the new prices, discounts and rebates.

Get in touch with us if you want to learn more or discuss your specific needs about pricing in M&A.