Article for translators: When Suppliers Merge: A Survival Guide for Clients

When Suppliers Merge: A Survival Guide for Clients

By André-Paul Pellet,
VP at Welocalize

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André-Paul Pellet photo Merger season is upon us once again in the localization industry. Since last year, there have been several mergers, including SDL and Trados, which has renewed the M&A buzz. The good news is that mergers and acquisitions are a sign of a healthy, growing industry. Such activity demonstrates that companies need greater resources and capacity to meet the needs of the market (or their investment bankers would never let them make the purchase!).

Unfortunately for the supplier that is being acquired—and that supplier’s clients—mergers can be a time of great apprehension, a time of real fear and panic. If you are on the acquired side, you might even be rethinking your plan to climb the corporate ladder through localization.

However, having recently experienced my own merger with Welocalize, I think a supplier merger provides a unique customer opportunity that is frequently overlooked. During a merger, you, as a client, have the chance to help form and shape the resulting company to meet your requirements and your needs. Knowing when to apply the lever and ask for a seat at the table can make all the difference in your relationship with the newly merged company. By understanding the phases that a merger goes through, you can be guaranteed survival— of your sanity and the business relationship with your supplier.

PHASE 1 – SOMETHING IS UP…

Savvy customers realize early that something is going on when they find they are being asked for forecast information repeatedly. And perhaps key personnel are out of the office a great deal. This is a normal part of the M&A process; the acquiring company is looking at the per-client projections, trying to determine what is vital to the business. This is a critical time; it allows the acquirer to determine the most important clients, the ones to keep happy. And, hopefully, you are on the list.

If you think this is happening to your supplier, you can help by preparing a full description of your expected work (but not guaranteed) over the next 12 months. In some cases, you might receive a call from a third party who wants to interview you about your relationship with the supplier. If you receive such a call, and you feel it’s legitimate, share your forecast and summarize the current relationship, but also outline the future needs that you see.

PHASE 2A – THE EXECUTIVE VISIT

By now, your supplier has signed, or is about to sign. Internally, your supplier is going through many mixed emotions. The executive visit is when the joint executives from each company visit key accounts to demonstrate the shared vision of the company and discuss upcoming needs.

For most customers, this will be the first official notice that the merger is happening—and this will be when the panic begins.

Depending on the merger, you might realize that you will not be such a big customer to the new company. You might realize your type of work is not the core expertise of the new company. You might even realize your favorite contact might not be staying with the company. On the other hand, you might learn how important your business is to the merger, or how badly the new team wants to keep your business. You might also learn that the increased capabilities and processes address your needs even better than before.

All of this information will be important when it comes time to apply pressure.

More good news is that you are not the only one who is worried at this point. You can be sure your supplier’s staff is also in a state of shock. And no one is clear on what the future holds. This state of confusion beneath the executive reassurance is normal—and it is where your leverage lies.

As the customer, use the visit to clarify how this merger needs to meet your requirements. You should be looking for answers:

Does the new entity have a vision for the next 30, 60, and 90 days?
Do all pricing and terms remain in place (during integration)?
Do they listen to you when you explain your needs?
How will your current projects be managed during the transition?
What will happen to your key contacts?
Why did the merger occur—and what additional benefits will you receive from the new company?

You should also convey your intention to be very hands-on in defining your requirements of the new company.

PHASE 2B – NO EXECUTIVE VISIT

It is possible that you will receive a letter, e-mail, or even a press release when the merger occurs. Don’t jump to the assumption you are not important to the new company. In any merger, there is a small handful of key accounts, and limited time to visit them. The fact that you don’t get an official visit doesn’t mean you don’t have leverage; it just means you will have to work a bit harder to grab the opportunity. Use the news as a chance to touch base with your point-of-contact to see how things are going.

PHASE 3 – PROJECT SURVIVAL

During the transition, you want to be sure your key projects, deliverables, and expectations are not lost in the shuffle. It is critical that you convey the “must haves” and leave the “nice to haves” for later. Provide a list to your supplier contact of what you see as critical in the next 60 days. Or provide it to the highest level executive you have contact with. Make sure your document identifies people critical to your relationship, key processes, and key languages you need.

This document is a great help to the integration team as they determine who stays or goes, and how the work will continue. It is amazing to see how well input from proactive clients is received during integration.

PHASE 4 – SHOULD YOU STAY OR GO?

By now, you probably have a good feeling of how important you are to the new company, where your requirements fit, and how you perceive the new relationship. The changes are just beginning, and the difficult decision here is how to move forward. If you are like most customers, you have deep ties at multiple levels to your supplier.

Switching horses in the middle of a race is difficult, if not impossible. However, you might come to the conclusion that the new company is not the right fit for you, and you should consider alternatives. But please resist this temptation.

Early in the transition, nothing has really been defined well enough for you to conclude whether or not this new team will be right for you. In many cases, people don’t know their own phone numbers well enough to be able to tell you where things will be in 12 months. As long as your key projects are secure (and moving), I suggest the decision be between (a) being fully committed to the new team and (b) taking a wait-and-see approach. Remember, the moment to use your leverage is coming.

PHASE 5 – LEVERAGE TIME

After the first 60-90 days, the dust begins to settle, the pieces are beginning to come together, and the initial shock has worn off. By this time, it is clear who will be staying in the new organization and who will be leaving. However, the processes, plans, and schedules for future integration have not been set. The goal of the initial 90 days is stability; only after things stabilize can there be discussion on future plans and processes.

This is your moment to request a follow-up meeting with your new supplier contact. At this meeting, you will outline what you want from the future relationship. Here is when you should address these items:

Staffing roles or positions you feel are necessary to support your requirements
Processes you want expanded to support your volume and requirements
New services you would like applied to your account
Identifying new key contacts from the merged company you should meet
Expanded integration between your team and the supplier team (training for example)
Expanded reporting methods (status reports, portals, etc.)
Creation of a 12-month implementation plan

When the merger switches from survival mode to true integration, that is the time of maximum leverage. The new company has demonstrated they can deliver on your projects, and they clearly hope to grow your business as a basis of the merger. Your input, suggestions, and plans can help the company develop its plans and future direction. Ultimately, your requirements, your suggestions, and your priorities will help to form the core DNA of the newly merged company.

Could any customer ask for a better opportunity with their supplier?

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