WHITEPAPER

Sales Comp Practices for M&As: The Winning Edge

An In-Depth Analysis of Key Challenges and Best Practices

Alexander Group’s 2024 Sales Compensation Symposium session titled, “The Winning Edge: Compensation Practices for M&A,” delved into the intricacies of integrating sales organizations during mergers and acquisitions (M&A). This whitepaper expands on the insights shared, offering a comprehensive guide to creating a successful sales compensation integration framework. The symposium emphasized the need for a formal M&A Sales Compensation Playbook, a document that includes guiding principles, activities and compensation options for both pre-close and post-close phases.

The Importance of a Structured Approach

Mergers and acquisitions are complex processes that require meticulous planning and execution. A structured approach to sales compensation is crucial for ensuring a seamless transition and integration of sales teams. According to Alexander Group’s 2024 Sales Compensation Hot Topics Survey, 67% of organizations lack a formal M&A Sales Compensation Playbook. This statistic underscores the widespread need for better preparation and structured approaches in M&A activities.

Creating a Formal M&A Sales Compensation Playbook

A formal M&A Sales Compensation Playbook should outline the guiding principles, activities and compensation options for both the pre-close and post-close phases. This document serves as a roadmap for integrating sales teams, ensuring alignment with the company’s overall strategy and goals. Key components of the playbook include:

Strategic Integration of Sales Teams

The choice of integration strategy is crucial in determining the success of sales team integration. Alexander Group highlighted four main integration strategies based on buyer commonalities, product similarities, and cross-business synergies:

Standalone Sales Teams: Maintaining separate sales teams for each business entity.

Separate Connected Sales Teams: Independent teams that collaborate on certain projects or accounts.

Integrated Teams with Overlay Specialists: Combining teams with additional specialists to support specific products or solutions.

Fully Integrated Sales Teams: Merging all sales teams into a single, unified team.

The 2024 Sales Compensation Hot Topics Survey revealed that 54% of companies struggle with aligning sales compensation practices post-M&A. This statistic highlights the challenges organizations face in selecting and implementing the right integration strategy.

Case Study: Successful Integration

One notable case study presented at the symposium involved a technology company that successfully integrated its sales teams following an acquisition. By adopting a fully integrated sales team approach and developing a comprehensive M&A Sales Compensation Playbook, the company achieved a 20% increase in sales productivity within the first year post-merger. This success story underscores the importance of strategic planning and execution in sales compensation integration.

Addressing Key Challenges in Sales Compensation

Integrating sales teams during M&A presents several challenges, including managing territories and accounts, retaining top talent, aligning pay levels and plan designs, and minimizing customer disruption. Alexander Group emphasized the importance of conducting a thorough impact analysis to understand turnover risks, noting that 43% of companies experience higher turnover rates post-M&A.

Managing Territories and Accounts

One of the primary challenges in sales compensation integration is managing territories and accounts. Ensuring that sales representatives have clearly defined territories and accountabilities is essential for maintaining productivity and customer satisfaction. An impact analysis can help identify potential risks and develop strategies to mitigate them.

Retaining Top Talent

Retaining top talent is critical for the success of any M&A. According to the 2024 Sales Compensation Hot Topics Survey, 38% of companies cite employee retention as their top concern during M&A. Offering competitive compensation packages, career development opportunities, and a positive work environment can help retain key employees.

Aligning Pay Levels and Plan

Aligning pay levels and plan designs across merged entities can be challenging. It is essential to ensure that compensation plans are fair, competitive, and aligned with the company’s overall strategy. Alexander Group recommends conducting a benchmarking analysis to determine appropriate pay levels and plan designs.

Minimizing Customer Disruption

Minimizing customer disruption is another critical challenge during M&A. Maintaining strong customer relationships and ensuring continuity of service are essential for retaining business and driving growth. Effective communication and transition plans can help minimize disruption and maintain customer satisfaction.

Designing for the ‘New Company’

Designing for the ‘New Company’ involves promoting cross-training, ensuring that territory, quota, compensation and enablement programs support the new model. By taking these steps, organizations can mitigate risks and achieve a successful integration.

Practical Recommendations

The symposium concluded with practical recommendations for HR, finance and sales executives. Executives were encouraged to build or update their M&A playbooks, understand that each merger is unique, and align jobs and sales compensation plans accordingly. Alexander Group also offered to provide additional support through articles, case studies and project engagements.

Build or Update Your M&A Playbook: Building or updating M&A playbooks is essential for ensuring preparedness and success in future M&A ventures. A well-developed playbook can serve as a valuable resource for guiding the integration process and addressing potential challenges.

Understand the Unique Nature of Each Merger: Each merger is unique and requires a tailored approach. Understanding the specific circumstances and dynamics of each merger can help develop effective strategies for integrating sales teams and aligning compensation practices.

Align Jobs and Sales Compensation Plans: Aligning jobs and sales compensation plans is critical for ensuring a smooth transition and successful integration. By aligning compensation practices with the company’s overall strategy and goals, organizations can drive productivity and achieve long-term success.

Leverage Support from Alexander Group: Alexander Group offers a range of resources and support for companies undergoing M&A. From articles and case studies to project engagements, Alexander Group provides valuable insights and expertise to help organizations navigate the complexities of sales compensation integration.

Conclusion

The 2024 Sales Compensation Symposium provided a wealth of knowledge and practical recommendations for integrating sales teams during M&A. By adopting a structured approach, addressing key challenges, and leveraging support from experts, organizations can achieve successful sales compensation integration and drive long-term growth. Joining the Sales Compensation Community and participating in events like the Leadership Forum series, which boasts a 25% year-over-year increase in executive participation, can further enhance executives’ strategic and tactical insights, ensuring preparedness for future M&A ventures.
More Resources

Sales Compensation Practice

Sales Compensation: Test Your Knowledge

Global Sales Compensation Community

© 2025 The Alexander Group, Inc.® (AGI)