Summary: Megadeals by Christopher Engman and Johan Aberg

Recommendation

Megadeals define big business. And Megadeals defines these massive, multilayered transactions. Authors Johan Aberg, CEO of Next State, and Christopher Engman, managing partner at Megadeals Advisory, interviewed more than 60 megadealers. Each one spent from two hours up to 10 hours explaining how megadeals come together. Aberg and Engman report that megadealers who can master and win megadeals earn the “biggest money in the business world.” Megadealers and aspiring megadealers can turn to this expert book for help understanding the complex, convoluted and high-stakes intricacies of megadeals.

Take-Aways

• Managing a megadeal is not the same as complex selling. Megadeals are the peak test of business prowess – huge, unwieldy and risky.
• Successful megadealers align their offers with their customers’ key initiatives. Otherwise, finding the money for a megadeal is almost impossible.
• Megadeals have four core attributes and are based on five cornerstones.
• Megadeals are worth more than giant B2B sales and are more complex.
• Most megadeals depend on many entities beyond the buyer, including governmental authorities, suppliers and distributors. You must understand or be able to influence the ecosystem around the deal to close.
• A megadeal’s “messaging architecture” must fit the way large companies make decisions by providing support throughout the buyer’s decision-making process.
• Megadeals use account-based marketing (ABM), which involves shifting focus from generating lots of leads to nurturing highly targeted accounts.

Summary

Managing a megadeal is not the same as complex selling. Megadeals are the peak test of business prowess – huge, unwieldy and risky.

Megadeals are the biggest business deals. They run from $10 million to $15 billion or more, dwarfing the biggest conventional B2B sales. Planning and negotiating a megadeal is the Super Bowl of corporate negotiations, with complex terms, tremendous costs, and high risks for buyers and sellers.

Most major business deals focus on maximizing returns, but megadeal participants must also handle and mitigate enormous accompanying risks.

“The megadeals domain is so complex that it would be impossible for us to map out every aspect of it…That would be like trying to detail every system required for a mission to Mars.”

Megadeals, as the word implies, are economic undertakings with huge financial tallies and widespread consequences. Many of the world’s largest corporations became dominant due to megadeals. These corporations have sometimes relied on megadeals to finance their past, present or future operations.

Successful megadealers align their offers with their customers’ key initiatives. Otherwise, finding the money for a megadeal is almost impossible.

Corporations contemplating a megadeal must have all their plans lined up before they enter high-stakes megadeals. This requires well-developed sales and marketing initiatives. Megadealers must be well-informed about their partners’ leadership and business key initiatives. Such knowledge is necessary for developing enticing terms and making a compelling business case.

Winning megadealers tie the terms of their contract directly to how well the other side’s key initiatives perform. Megadeals are nearly impossible to conclude successfully if “the buying organization does not have a key initiative that matches what you sell.”

Megadeals have four core attributes and are based on five cornerstones.

Megadeals have four core attributes:

1. The deal is worth at least $10 million. One mega-megadeal clocked in at $15 billion.
2. Megadeals run from “high to ultra-high complexity.”
3. Megadeals always involve change management.
4. Megadeals often include “a mix of hardware, software and services.”

Megadeals can’t close if they don’t fulfill five “cornerstones”:

1. “Key initiatives” – Purchasers agree to megadeals only if their counterpart’s services and products fit their strategic priorities. Megadeal offers, which must align with the other party’s main initiatives, often serve a specific strategic purpose for both parties. Without alignment, companies will not be able to secure the funding for a megadeal.
2. Ecosystem – To participate in a megadeal, you must understand and map its ecosystem. That means identifying the best target accounts and prospects, and listing the stakeholders within affected organizations and outside them. Megadeals require vast knowledge. To make one work, the parties must understand its complex structure and the systems around it. Much of the difficulty of concluding a megadeal stems from its multifaceted ecosystem.
3. Consensus – Another challenging aspect of a megadeal is shaping and driving a consensus with your customer’s internal and external stakeholders, particularly when you can’t meet with them personally. Arriving at such a broad consensus among partners can be the hardest facet of any megadeal.
4. Trojan horses – Identify and create relationships with those who can act as Trojan horses inside your counterpart’s ranks, supplying you with important information you cannot get from official channels. Trojan horses want you to get the deal and are willing to help you understand whether you’re “winning or losing.” Megadeal champions and sponsors are also crucial. Get to know the people who could fill each significant role.
5. Risk – When dealing with a megadeal, it is crucial to prioritize risk management and mitigation for the customer. In the end, minimizing risk turns out to be far more essential than keeping prices low.

Your sales and marketing teams must have a thorough picture of a deal’s overall context and potential progression to give your company the right opportunities to shape the resulting ecosystem. Some megadealers deride any accompanying marketing because they believe it lacks business value. Based on results, that philosophy almost always proves remarkably shortsighted.

“In megadeals, your value proposition will get you in the door, and risk mitigation will get you the deal.”

However, the marketing required to win a megadeal contract is more akin to lobbying than to lead-generation sales and marketing. Being able to see the bigger picture and even predict how events will unfold is a crucial skill among megadealers.

Megadeals are worth more than giant B2B sales and are more complex.

Megadealers must analyze and understand their counterpart’s needs and moves. In a conventional B2B sale, you can query your customer’s needs openly. But in a megadeal, you must do sufficient research to learn their needs in advance.

Megadeals dwarf even extra-large B2B sales. The scope of the stakeholders in a megadeal is far greater, both in terms of the purchasing organization and the entire framework. In fact, megadeals almost always have more than 100 stakeholders – a factor that makes them particularly challenging. Participants can come from “many departments, countries, levels of hierarchy and even external organizations.” Typical organizations that engage in megadeals include major corporations, such as IBM, SAP, GE, SAAB, Lockheed Martin, Airbus, Skanska, Ericsson, Accenture, Tata Consulting Services and Siemens.

Megadeals usually take a cross-functional team “six months to a year of work.” These deals are so massive that companies can’t allow them to fail. This “can’t-fail” aspect also differentiates megadeals from giant B2B sales.

The degree of difficulty makes values a very critical factor. For evidence of this emphasis in action, consider corporations’ push in recent years to ask for a “declaration of values” in their requests for proposals (RFPs). Some organizations now refuse to work with companies that d0n’t uphold similar values. Since most megadeals establish long-term business relationships, the demand that all parties share the same values is a logical prerequisite for “long-term compatibility.”

Most megadeals depend on many entities beyond the buyer, including governmental authorities, suppliers and distributors. You must understand or be able to influence the ecosystem around the deal to close.

Most megadeals include a complex web – or ecosystem – of various dependencies, because these deals generally affect numerous organizations beyond the purchasing and selling companies. Business adviser James Moore explains that an ecosystem is a financial community with a common concern linked to a network of connected companies and people. He explains that all the members of an ecosystem work to fulfill shared objectives and ideas. Because he draws his analogy from biological ecosystems, he refers to the participants in a megadeal ecosystem as “organisms.”

“Over time, (these organisms) co-evolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies.” (James F. Moore)

A megadeal ecosystem can include various agencies from local, state, national or international governing or regulatory bodies, as well as members of the relevant supply chains, affected local organizations, clients, advisers and other participants. The terms of your corporation’s megadeal may – and probably will – directly affect all these different entities. Because of a megadeal’s multiple impacts, its ecosystem is more intricate than the network in a normal complex sale.

To maximize the scaling of a megadeal, focus on four areas:

1. Take any unnecessary tasks away from the megadealers.
2. Scale the megadealer by using marketing coverage and content – Your megadealer can’t be everywhere and is often crucial to selling deals. Make the most of your key person’s time by scaling his or her presence with marketing and content. For example, video record the megadealer going through a pitch and use the video to replace an initial meeting with a potential client. That makes it scalable to reach multiple initial prospects.
3. Learn individual megadeal-related skills.
4. Learn the “teamplay” around megadeals.

Of course, conventional B2B sales require building a trusting relationship with your client. But, establishing trust and mitigating risk are even more crucial in megadeals. One effective step in building trust with potential megadeal partners is to be the first to bring up and discuss risks.

“Risk mitigation: To win megadeals, you need to focus more on risk mitigation than on describing value and differentiation. Not because value and differentiation aren’t important, but because risk mitigation is more important. Risk mitigation includes mitigating both real risks and perceived risks.”

Consider all the potential risks, both genuine risks and those you perceive will concern potential partners. You must be deeply informed about the risks your megadeal partner might face, so you can address how your firm could minimize or eliminate them.

A megadeal’s “messaging architecture” must fit the way large companies make decisions by providing support throughout the buyer’s decision-making process.

This is called “fundamental messaging” since it is fundamental to be able to support the steps in a buyer’s decision-making process with convincing content.

Marketing and sales are so intertwined in megadeals that both teams must promulgate the same central messages. However, they often make a common mistake of developing messages centered around the product and the supplier as they try to answer the question “Why this vendor?” However, before mature megadeal organizations focus on that question, they first delve into identifying the change drivers that affect the buying organization, such as a pain it is experiencing and the current trends or influential events that affect it.

You must create fundamental messaging and content on this higher level. A megadeal’s messaging architecture – designed by the sellers to support the buyer’s decision-making process throughout the megadeal – has four layers. First, identify change drivers. Then address the reasons for using these category and subcategory choices in deriving your solution. Large companies (as opposed to smaller ones) tend to approach these decisions in such layers. Top decision makers inspect the three top layers – drivers, category and subcategory – before they get to the fourth consideration: the reasons for using a particular vendor.

Marketers need to develop content for “fundamental messaging” that speaks to each potential buyer’s decision-making process. That calls for developing the right messaging architecture with sensitivity to clients’ particular concerns. Your potential megadeal partners each will have different attitudes toward your product and your possible deal, and that will shape the communications you create.

Megadeals use account-based marketing (ABM), which involves shifting focus from generating lots of leads to nurturing highly targeted accounts.

The targeted accounts or prospects are specific organizations and companies that offer the best possible fit with a customer’s product or service. Every megadeal has a finite group of potential prospects who are big enough to hear and understand the offer’s messages, to decide that your offer is more valuable than a competing offer and to pay more to get the deal.

While marketers generally try to reach a range of potential clients, ABM focuses on finding and persuading the specific accounts that matter most. It uses pinpoint approaches like IP-targeted ads, account-targeted social media posts, lunch and learn sessions, and direct mail, email or InMail.

Research indicates that 25% of the usual B2B company’s customer base generally contributes 80% of its revenue. However, megadeal companies often rely even more heavily on crucial accounts: generally, 1% to 5% of their accounts contribute more than 85% of their total revenue. Account-based marketing (ABM) identifies, targets and develops relationships with this limited number of prospects. It shifts marketing’s strategic focus from generating lots of leads to nurturing important, individual accounts. ABM marketers treat each account like a distinct market and tailor a strategy directly to it.

The four main reasons to use ABM when pursuing a megadeal are:

1. To position your company as crucial to helping a client accomplish important key initiatives.
2. To showcase your company as a market leader and as the targeted client’s correct choice in a megadeal ecosystem.
3. To build consensus around a megadeal’s four foundational issues: change drivers, category and subcategory, and vendor selection.
4. To reduce the perceived risk of your category, subcategory and company as a vendor.

Deciding which accounts to focus on and prioritizing them is pivotal in account-based marketing. Megadeal marketers must concentrate their efforts on, in most cases, fewer than 25 accounts, so they can focus their resources, target their communications and make a real difference.

About the Authors

Johan Aberg, CEO of Next State, and Christopher Engman, managing partner at Megadeals Advisory, have worked with more than 100 Fortune 500 companies whose marketing and sales focus on giant deals.

Review

“Megadeals” by Christopher Engman and Johan Aberg is an insightful and comprehensive exploration of the world of large-scale business deals. The book delves into the strategies, challenges, and impact of megadeals, which are high-value transactions that shape industries and economies. Engman and Aberg draw on their extensive experience and research to provide readers with a detailed analysis of the dynamics behind these transformative deals. Through real-world examples and case studies, the authors offer valuable insights into the motivations, risks, and potential rewards associated with megadeals.

“Megadeals” is an impressive and thought-provoking book that sheds light on the inner workings of major business transactions. Engman and Aberg have done a remarkable job of distilling complex concepts and presenting them in a clear and engaging manner. Their expertise in the field is evident throughout the book, as they provide a deep understanding of the intricacies involved in executing megadeals.

One of the book’s strengths is its comprehensive coverage of the subject matter. The authors leave no stone unturned as they explore various aspects of megadeals, including deal sourcing, negotiation strategies, due diligence, integration challenges, and post-deal value creation. By examining both successful and failed megadeals, Engman and Aberg offer valuable lessons and insights that can benefit executives, investors, and entrepreneurs involved in large-scale transactions.

The inclusion of real-world case studies adds a practical dimension to the book. Readers are presented with a diverse range of megadeals from different industries and geographic regions, allowing for a broader understanding of the factors that contribute to deal success or failure. These case studies serve as powerful illustrations of the principles and frameworks discussed throughout the book and enhance its credibility.

Engman and Aberg strike a balance between academic rigor and accessibility, making the book suitable for both seasoned professionals and those new to the world of megadeals. They provide in-depth analyses and frameworks while ensuring that the content remains engaging and understandable for a wide audience. The authors’ writing style is engaging, and they use vivid examples and anecdotes to bring concepts to life, making it an enjoyable read despite the complex subject matter.

The book also addresses the broader implications of megadeals beyond individual transactions. Engman and Aberg explore the impact of megadeals on industries, economies, and society as a whole. They discuss the potential risks of concentration of power, the effects on competition, and the role of regulators in overseeing megadeals. By doing so, the authors raise important questions and stimulate further discussion on the role and responsibility of corporate leaders in shaping the future of business.

If there is one area where the book could have been improved, it would be in providing more actionable takeaways for readers. While the authors offer valuable insights and frameworks, some readers might have appreciated more explicit guidance on applying these principles in their own deal-making processes. However, this is a minor limitation considering the overall depth and quality of the content.

In conclusion, “Megadeals” is an exceptional book that offers a comprehensive and insightful examination of the world of large-scale business transactions. Engman and Aberg’s expertise, combined with their engaging writing style and real-world case studies, make this book a valuable resource for anyone interested in understanding the complexities and impact of megadeals. Whether you are a business professional, investor, or simply curious about the forces that shape the business landscape, “Megadeals” is a must-read.