News Analysis: M&A Specialist Says 'Change or Exit'
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The Enterprise Engagement Alliance was founded over eight years ago on the premise that the emerging engagement field would transform business, and evidence is growing that this assumption was correct. Now that multiple major pension funds and investment firms are calling upon public companies to recognize the importance of engagement, and ISO, the International Organization for Standardization, has approved the process to begin the creation of engagement standards, momentum continues to grow for this emerging field.
Despite such compelling evidence, however, it’s surprising how few of the traditional recognition, incentive and loyalty companies who could profit from this trend have recognized this growing sector. A recent report by M&A specialist Harbor View Advisors (See ESM, Top M&A Firm Sees More Roll-Up Activity in Engagement Space) helps explain why. The authors note that he field is populated by multi-generational, family-owned businesses facing “the challenges of rapid changes in technology and the convergent interests of traditional HR, SaaS delivery models and new entrants from sectors like wellness and more traditional HR.” The report says these traditional companies must change, exit, or risk going out of business.
Adapting to disruption and change is difficult for everyone, but especially for companies run by an older generation that has prospered under the status quo. The idea of investing in updated marketing, management, sales training and new methodologies and technologies is seen by some as an opportunity, but for many others it’s viewed as a burden. For companies that have sold recognition, incentives and loyalty programs based on the old methods, it’s difficult to give up a business model that helped raise families, put children through college and created a prosperous lifestyle for many employees. Many owners may simply hope that the engagement movement is just a fad that will go away and that they can continue down the same path. Owners of film development labs, print magazines and yellow taxi fleets probably hoped for the same in their fields.
The good news? The growing number of companies that see the future also see the value of the customer lists of traditional incentive, recognition, loyalty and other engagement services companies. They know that their customers are ripe for disruption as the new science of engagement replaces the traditional focus on carrots and sticks, and that many employ salespeople capable of making the transition from old to new.
So, to ESM readers who own traditional incentive, recognition and loyalty companies who either don’t believe in the rise of engagement or who don’t have the energy or resources to make the change, take comfort from the Harbor View Advisors report: there are a growing number of companies that just might want to buy yours.
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