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The impact of the global pandemic, volatile stock markets, and slowed economic outlook across the globe has hurt the performance of enterprises across the world. The scenario has forced leaders to consider undertaking Transformation of their strategy and operations significantly.
The strategy to buy out troubled businesses and determining to fix the issues that upset the target companies has been a focus of Buyers’ senior leadership for the past 2 decades. In the year 2017 alone, 36,000 M&A (Mergers & Acquisitions) transactions were announced globally. Acquisition of troubled businesses hoping to have a Turnaround account for around 50% of all M&A deals.
A Turnaround can be defined as the financial recovery of an economy or an organization after a period of inertia or Downturn. Several issues trigger a Downturn—issues pertaining to technological disruption, regulations, processes, organization’s financial health, management, business model, hierarchy, or competition.
The ratio of success for M&As is, however, not very healthy. Historical data of 61% of M&A deals based on a BCG’s study, carried out on 1400 M&A deals globally between 2005 and 2018, shows a high failure rate (61%), where they remained unsuccessful to show any improvement in financial performance.
The ones that do succeed offer significant revenue growth and profit margins—around 25% positive variance in TSR than unsuccessful M&As. However, buying and fixing a business under the weather isn’t an easy job. This necessitates a meticulous strategy.
In order to materialize a Turnaround, the leadership needs to thoroughly understand the root cause(s) of the Downturn, have a willingness and plan to reform or transform, and rigorously implement the strategy to rectify the situation (Transformation Execution).
Empirical Research demonstrates that the triumph of M&A Turnaround deals is attributable to 6 Critical Success Factors:
- Investment in R&D
- Long-term Horizon
- Clear Purpose
- Investment in Transformation
- Synergy Targets
- Quickness to Action
Deployment of a combination of these CSFs bring about more pronounced outcomes—in terms of positive 3-year TSR and overall Organizational Performance.
A robust M&A Turnaround Strategy—based on lessons learnt from empirical research—revolves around 4 key M&A Deal Characteristics. These M&A deal characteristics have a profound impact on the outcome of the transaction:
- Level of Performance
- Sector Alignment
- ESG Factors
- Deal Size
Knowledge of these key Deal Characteristics allow the senior leadership to ascertain the factors liable to affect the deal outcomes. Now, let’s discuss the first 2 deal characteristics in a bit detail.
Level of Performance
The performance of the Target company during 2 years pre-deal is a key point to consider for a M&A, as it is directly proportional to the deal success rate and Total Shareholder Return. BCG’s research demonstrates that M&A transactions where the target entity had a 2-year TSR decline of lower than 10% were liable to be more successful than deals where target companies were in more distress (a decline of ~30% or more).
Sector Alignment
Senior leaders should not ignore the significance of uniformity of sectors of the target and acquiring company. Based on research, the rate of success for an acquisition transaction involving the buyer and the target operating in the same industry is 5% superior to the rate for transactions involving the companies from different sectors. The reason for this higher success rate is attributed predominantly to similar business models, customers, vendors, and processes in firms of the same sector, which make the Post-merger Integration of the buyer and target a lot easier.
Interested in learning more about the other characteristics influencing the outcome of an M&A deal? You can download an editable PowerPoint presentation on M&A Turnaround Strategy here on the Flevy documents marketplace.
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A significant number of Mergers remain unsuccessful, because companies do not employ a thorough and disciplined approach to realizing Post-Merger Integration Synergies. In reasons for failure, we hear remarks like:
- Targets were set several months earlier by the top management without consulting the line managers, or taking ground realities into consideration.
- Assumption base for setting targets was untested.
- Targets were met but the timeframe for achieving them made them ineffective—in terms of diminished returns, shareholder disappointment, or depressed share value.
- Desired Synergies were achieved but at a very high cost or fairly weakened morale.
A disciplined and rational approach to pursuing Merger Synergies is key to successful Post-Merger Integration (PMI). Companies that authenticate and set pragmatic yet ambitious Post-Merger Integration Synergy targets do the following to exceed targets and achieve substantial share price premium and a significant Competitive Advantage:
- Advise Integration Leaders on how to aim high.
- Give managers—responsible for achieving targets—a say in target-setting process.
- Create detailed plans with built-in accountabilities.
- Pursue their targets aggressively.
Successful PMI Synergies—be it in Cost Optimization, Strategic Sourcing, Greater Revenues or any other Cost or Revenue realm—have the common characteristic of leaders pursuing synergies with speed, rigor, discipline, and pragmatism with lots of analysis, planning, preparation, and fine-tuning before the close.
Success can be ensured time and again if the 6 Strategies for Post-Merger Integration Synergies are followed to the letter:
- Link Due Diligence (DD) and Post-Merger Integration (PMI)
- Leverage Clean Teams
- Establish Stretch Targets
- Rapidly Iterate to Targets
- Pursue Both Revenue and Cost Synergies
- Institute Performance Management
Implementation of the 6 Synergy Strategies involves adopting High-Engagement and Rapid Iteration approach which yields effective Stretch Target Validation and High Level of Line Accountability.
Let us delve a little deeper into 2 of these PMI Synergy Strategies.
Link Due Diligence (DD) and Post-Merger Integration (PMI)
Linking DD to PMI ensures realistic estimates on part of the DD team thus avoiding formulation of broad-brushed and imprecise Synergies. Linking also guarantees greater amount of ownership and accountability at the same time enabling more compelling Stretch Targets. Linking of DD to PMI is necessary because:
- Under pressure to complete the M&A, Due Diligence teams frame assumptions with little knowledge of the levers influencing Synergies or the challenges involved in achieving them.
- Due Diligence teams typically project more value in Cost Reduction and enhanced Revenues based on erroneous assumptions—without taking into account either the Operating Model (of the former entities and the freshly created one) or the difference / overlap in Customer Base.
Successful Mergers ensure a harmonized hand-off from Due Diligence teams to Integration Planning teams by ensuring the following:
- Placing members of the Mergers and Acquisition team on the Post-Merger Integration (PMI) team to produce a greater degree of ownership and continuity.
- Involving Business Unit Heads in target setting at the Due Diligence stage and ensuring ownership and accountability.
- Linking of Due Diligence and PMI to enable setting of more profound Stretch Targets.
- Analyzing and detailing drivers of saving at a high-level for creating Synergy Targets and Ranges which make later improvements possible based on subsequent information. These targets and ranges enable evaluation of potential gains from new company’s Operating Model.
Leverage Clean Teams
Clean team is an independent group that is tasked with the collection and analysis of sensitive company data—pre-closure—with the guidance of management. Clean team may comprise of third-party members or employees who can be reassigned out of business in case of deal failure eradicating the risk of compromising confidential information. Clean team is formed by legal contract based on protocols agreed to by both company’s legal departments. Clean teams help by:
- Accelerating PMI planning.
- Enabling the acquiring company to have a clearer picture of the target company without violating anti-trust regulation or confidentiality agreements.
- Assessing risks and enabling companies to achieve Synergies faster.
- Keeping sensitive information of both sides safe—pre-closure—yet embark on planning and preparation even before close in order to save precious time and keep customer confidence high.
- Aiding companies accomplish 3 core integration activities before closing—compiling wide-range baseline data, vetting Synergy targets, and preparing options for key decisions.
- Empowering companies to avoid / diminish confusion caused by overlap in client assignments and sales people.
- Assisting provision of clear information to customers regarding products and services thus avoiding drop in sales.
Interested in learning more about the 6 Strategies for Post-Merger Integration Synergies? You can download an editable PowerPoint on Post-Merger Integration (PMI): 6 Strategies for Synergies here on the Flevy documents marketplace.
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M&A is an extremely common strategy for growth. M&A transactions always look great on paper. This is why the buyer typically pays a 10-35% premium over the of the target company’s market value.
However, when it comes time for the Post-merger Integration (PMI), are we really able to capture the expected value? Studies show only 20% of organizations capture projected revenue synergies and only 40% capture cost synergies. Not to mention, the PMI process is typically very painful, drawn out, and politically charged, often resulting in the loss of key personnel.
Learn about our Post-merger Integration (PMI) Best Practice Frameworks here.
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Post-merger Integration is a highly complex process. It requires swift action as well as running the core business activities simultaneously. There is no one-size-fits-
all approach to a successful PMI Process. However, careful planning focusing on the strategic objectives of the deal and the identification and capturing of synergies will help maximize deal value.
Because of the complexity of the PMI process, it is of utmost importance that organizations—both the Buyer and Target, the integration team, and integration manager—have a guide that will provide them the detailed requirements of the process. The Post-merger integration framework has a structured approach that can direct attention to important integration areas to maximize deal value and achieve Operational Excellence. The inability to focus on priority areas can be a waste of resources, time, and investments.
The 12 Integration Areas
The Post-merger Integration framework drives a structured approach to identify important Integration Areas to focus on during the transition. There are 12 Integration Areas that need to be prioritized.
The first 2 integration areas within the full checklist:
- Finance & Accounting (F&A). This is an integration area that is focused on establishing the financial sustainability of the new organization. Financial & Accounting needs clear instructions and templates for financial reporting at Closing. The better the information, the few surprises there are due to poor reporting or absence of data. Financial & Accounting has 9 sub-areas that are essentially important for organizations to have a good appreciation and understanding of.
- Legal. The role of the legal function does not end at the Closing. Many legal items need to be listed and considered immediately after the Closing. Special events, such as acquisitions of minority shares or the formation of joint venture companies must be considered. Legal is one vital area in building the sustainability of the new organization.
The next 2 integration areas within the full checklist:
- HR & Personnel. Integral in the Integration Process, HR & Personnel is a key area in integration. Management of the HR Integration Team is a primary responsibility of the Buyer’s HR manager. There are 5 sub-areas under HR & Personnel that must be given important consideration.
- Corporate Communications. Successfully using the Buyer’s and Target’s corporate communication functions for announcing and explaining PMI progress is a net sum of many factors. Essentially, communicating PMI progress requires the effective use of the corporate communication functions of both Buyer and Target.
The third 3 integration areas within the full checklist:
- Information Technology (IT). The goal of the ICT Integration Process is to link the ICT networks of the acquired entity with the Buyer’s corporate ICT network. It is necessary to facilitate access to systems and services provided by the Buyer and collaborate with business/market areas. Often, the integration process is let by an ICT individual from the Buyer’s corporate/company ICT or business/market area ICT.
- Corporate Culture. Corporate culture has increasingly become a critical factor in integration success, particularly in cross-border M&A. An M&A deal often impacts on corporate culture, both on the Buyer’s and the Target’s side.
- Sales & Marketing. This is a difficult sensitive area to be changed in the integration process. Sales & Marketing contribute largely to organizational financial stability, hence primary consideration must be undertaken.
The last 5 PMI integration areas within the full checklist:
- After Sales & Service. This is increasingly becoming important in value creation. It is an added-value that strengthens Sales & Marketing capability to sustain the market.
- Supply Chain Management (SCM). This is undertaken at a later phase of integration as the fundamental change requires detailed planning and calculation.
- Production. This is one critical area where more experience and planning are required in decision making.
- Technology. The extent to which the integration focuses on Technology and R&D depends on the M&A strategy. If the purpose of the acquisition is to gain technology or strengthen existing capabilities, then this is when the integration will focus on technology.
- Synergies. This an integration area that can mean new strengths and opportunities from combined knowledge and experiences.
Organizations must take adept steps in undertaking the Integration Checklist as this will enable both the Buyer and the Target to reach the most strategic state necessary for the 12 Integration Areas.
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Our framework Post-merger Integration (PMI): Financial integration is every organization’s guide to achieving the financial alignment of both Buyer and Target.
Post-merger Integration is a highly complex process. It requires swift action as well as running the core business activities simultaneously. There is no one-size-fits-all approach to a successful PMI Process. However, careful planning focusing on the strategic objectives of the deal and the identification and capturing of synergies will help maximize deal value.
Another critical factor in PMI is pursuing Financial Integration. Financial Integration is the alignment of the finance functions of the Buyer and Target.
Why Financial Integration?
Immediately from the start of the deal, the new organization gets to be dependent on the Finance function to ensure a successful integration process. Synergies must be captured in order to maximize deal value and provide combined organizations with the flexibility to grow.
When pursuing Financial Integration, there must be an integration of business operations, streamlining of the internal control environment, provision of accurate and consistent financial reporting, ensuring tax compliance jurisdictions if the deal is cross-border, and the founding of interim legal structure and business processes. When setting the right direction for a streamlined finance function, it is important that the organizations must already tackle critical matters while still in the early stages of a deal.
The establishment of clear reporting lines must already be agreed upon and set up. Accountability for financial operations, management reporting, control of expenses, and accounting closing procedures must already be established and clear between the Buyer and the Target. These play a vital role when the organization undertakes a Strategic Planning geared towards the development of a Financial Integration Strategy and Plan.
The Financial Integration Strategy: What We Need to Know
The Financial Integration Strategy can only be defined and crafted only when immediate areas that require action have already been identified. The Strategy must be developed based on 8 key areas of focus.
- Overall Organization. As the first key area, this focuses on the overall set up of the Financial Integration processes. This starts with establishing the reporting lines from Day One of the PMI process. This also includes the establishment of a transition plan that is aligned with the process and systems migration plan.
- Internal Controls Environment. Once the overall organization has been set up, it is important that the internal controls environment is established. This will entail setting up the control procedure from Day One. It is of importance that the controls environment is established since this will mitigate risks and ensure regulatory compliance.
- Cash/Treasury. This is the third key area that looks into the cash position of the organization. It is at this point wherein the organization must be able to plan out its cash flow requirements and be able to gain assurance over adequate funding. This key area is very critical when it comes to the financial sustainability of the organization as it ensures that treasury policies are aligned, cash controls are established, cash forecasting and cash management have commenced, and there is an alignment of investments, foreign currency, and any hedging arrangements.
Aside from the 3 focus areas, the development of the PMI Financial Integration Strategic Plan must also give serious consideration on Financial Statements, Procurement, Financial Planning, Cash Controls, and Tax. These 5 focus areas are essentially important as it ensures that Financial Integration essentials are met.
When this is achieved and the 8 key areas of focus are integrated into the Financial Integration Plan, the new organization gets to prepare itself towards a larger scale Business Transformation in the future.
Interested in gaining more understanding of the Financial Integration component of PMI? You can learn more and download an editable PowerPoint about Post-merger (PMI): Financial Integration here on the Flevy documents marketplace.
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When organizations go through a Post-merger Integration, often management realizes that it is never a simple undertaking. It is a highly complex process. Swift 
action is required as well as being able to run the core business activities simultaneously. There is no one-size-fits-all approach to a successful PMI Process. However, to maximize deal value, there is a need for careful planning focused on the strategic objectives of the deal and the identification and capturing of synergies.
The PMI Process requires a Strategy Development approach geared towards unifying 2 organizations into one new organization with a common culture, equipped with the right people and good leadership in place. It is a challenging journey where organizations, both the Buyer and the Target, must take on the appropriate approach to be able to start off the process and close the deal with the expected results in place.
New organizations often benchmark Post-merger Integration Process leaders to guide them through the process. By following best practices, new organizations will have a better understanding of how to approach the PMI process in a more strategic manner.
Achieving PMI Success: The Top 10 Tips
There are top 10 tips that can help organizations conquer what could be a complex integration process. Following the top 10 tips will enable organizations to successfully traverse through the process.
Let us discuss here 4 of the top 10 tips to achieve PMI success.
- Focus on Key Sources of Value. In focusing on key sources of value, we need to be able to communicate how the value of the deal will be captured. Success organizations often structure integration teams based on key sources of value. They make teams understand the value for which they are accountable and how this will be unlocked via the PMI process.
- Clearly Define Nature of the Deal. Often successful integrations are achieved when the nature of the deal is clear. Organizations need to be able to determine what is to be integrated and what is to remain as stand-alone. They need to have a good idea of what the adopted culture will be and which people are to be retained. This way, organizations can easily jumpstart the PMI process in the right direction.
- Have the Right People in Placed. Needless delays in the implementation of the PMI process can exacerbate anxieties amongst staff. This can cause speculative conversations or result in staff insecurities. To address, organizations focus on the immediate mobilization of the integration process. One way of doing this is having the right people in placed. Selecting people who are enthusiastic about the new vision and are happy to contribute it will facilitate a good start for the integration process. However, there is a need to maintain balance. People from both the Buyer and Target must be selected and appointed.
- Get the Buyer up-to-speed. This is one important tip that will jumpstart the process. Get the Buyer up-to-speed. This can be done by encouraging the Buyer to begin planning the integration process even before the deal is announced. It is of great advantage if the Buyer will identify everything that must be done prior to closing. Active participation of the buyer is essential to keep the PMI process on high gear.
Aside from the 4 top tips, the other 6 top tips are equally effective in guiding organizations to achieve deal maximization. These top 10 tips can be of great help to organizations when faced with challenging obstacles as they go through the process of integration. The PMI Process is a very complex undertaking but it can be achieved and be conquered with just the right approach and guide.
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Post-merger Integration is a highly complex process. It requires swift action as well as running the core business activities simultaneously. There is no one-size-fits-
all approach to a successful PMI Process. However, careful planning focusing on the strategic objectives of the deal and the identification and capturing of synergies will help maximize deal value.
It is inevitable that some elements of information will be withheld from a Buyer pre-deal. Further, not all the synergy benefits originally identified in the deal will prove to be achievable. The foremost challenge for management at the onset of the PMI process is to identify how value can be captured from the newly combined organization via synergies and cost savings.
Understanding Post-merger Integration
Post-merger Integration is the fundamental stage of realizing the value of an M&A deal. A highly complex process, it entails bringing together 2 companies experiencing change while ensuring that business continues as usual. A truly challenging undertaking that must never be underestimated.
When 2 companies agree to undertake a Post-merger Integration, its primary objective is to maximize synergies to ensure that the deal lives up to its predicted value. It is a phase during which the results of the Buyer’s M&A strategy and expectations for the closed deal start to materialize.
In the entire phase, Closing and Day One of change is the most critical. It is the initial starting point towards the change of ownership and where Strategy Development is at its core.
Closing and Day One
During Closing and Day One, Managers must focus on 3 important areas.
- Communications. Corporate Communications must be well planned and well implemented. This is to enable managers to lead an M&A project more effectively. Through structured communication, trust is built, motivation developed, and important information shared. In fact, it can prevent the negative impact of rumors and unify the different parts of the joint company.
- Operating Structure. New operating structures and systems are made once the joint company’s strategy and goals have been agreed upon. From Day One, it is important that new management and operational structure/reporting procedures are clearly communicated. In the development of the operating structure, it is important that a CEO has been appointed, the key personnel roles decided, and there is already an agreement on operative and statutory structures.
- Systems & Controls. A clear and detailed Systems & Controls must be established by Day One. This is essential for management to be able to gain control of the operations of the Target. If operational structures are not finalized at this point, a temporary management system and control need to be established.
The Important Role of a CEO and Key Personnel from Day One
The CEO plays a vital role in the joint business. The CEO or Managing Director is involved in the acquisition process. Hence, it is important that from Day One, a CEO or Managing Director has already been appointed.
Often the CEO comes from the Buyer or its group or corporate entity. If an existing CEO of the acquired entity continues the same role, then the Buyer must nominate a controller to ensure financial integration and smooth reporting.
The Key Personnel is also essentially important from Day One. In fact, there is a need for positions and roles of key personnel during the integration process to be planned in advance and communicated at closing.
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Takeovers can turnaround companies in a short period of time, but there is a significant degree of risk to be anticipated and mitigated prior to undertaking such transactions. Lack of careful deliberation of the potential risks, insufficient planning, weak execution, and lack of focus on Post-merger Integration are the major reasons why many Merger & Acquisition deals fail to achieve their desired goals.
The course of an M&A transaction has to be set at an early stage, way before the actual deal closure. The period prior to the deal approval by the regulatory authorities and while due diligence is being done is most critical, and should be utilized by the leadership to clearly define the goals of integration, the potential risks, and a layout for the execution of the actual integration process. It is the right time to perform a structured evaluation of 3 core pre-merger considerations associated with such deals, i.e.:
- Strategic Objectives
- Organization & Culture
- Takeover Approach
Understanding these PMI Pre-merger considerations helps the stakeholders ascertain the unique challenges and constraints related to M&A transactions and make informed decisions. These considerations assist in developing a systematic approach to undertaking a Post-merger Integration (PMI) — which is devoid of any “gut decisions,” and ensures realization of synergies and value. These considerations set the direction and pace of the post-merger integration process.
Now, let’s discuss the 3 core considerations in detail.
Strategic Objectives
Organizations undertake Mergers and Acquisitions as a way to accelerate their growth rather than growing organically. The foremost core consideration associated with an M&A transaction is the strategic objectives that the organizational leadership wants to achieve out of it.
M&A deals take place to fulfill one or more of these 5 strategic objectives:
- Reinforcement of a segment
- Extension in new geographies
- Expansion of product range
- Acquisition of new capabilities
- Venturing into a new domain
The PMI approach needs to be tailored in accordance with the desired strategic objectives of the deal.
Organization & Culture
The senior management should be mindful of the significance of organizational and cultural differences in the two organizations that often become barriers to M&A deals. Small companies, typically, have an entrepreneurial outlook and culture where there aren’t any formal structure and the owner controls (and relays) all the information and decision making. Whereas, large corporations typically have formal structures and well-defined procedures.
A takeover of a small firm by a large entity is bound to stir criticism and disagreement. M&A process often faces long delays between the offer, deal signing, and closing — due to antitrust reviews or management’s indecisiveness — triggering suspicion among people. This should be mitigated during the PMI process by orienting the people of the small firm with the new culture and giving them time to transition effectively.
For M&A deals to be effective, leadership needs to carefully evaluate the behavioral elements of the organizational culture and contemplate the overriding principles guiding a company.
Takeover Approach
Integrating the operations of two companies proves to be a much more difficult task in practice than it seems theoretically. Organizations have the option of selecting the takeover approach most suitable for them from the following 4 methodologies — based on their organizational structures, people, management, processes, and culture:
- Direct Hit
- Hiatus
- Deferred Decisions
- Quick and Unsympathetic Disposal
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Mergers and Acquisitions (M&A) are unique and complex endeavors. These initiatives demand tailored solutions keeping in view the varying environments, ways of doing business, culture of the two combining organizations, and internal and external forces influencing the deal.
These transactions necessitate making 8 important decisions based on thorough deliberation and analysis of all relevant factors well before the integration process. These fundamental decisions and relevant factors form the 8 decision levers of Post-merger Integration (PMI). These 8 decision levers of PMI are essential for devising an optimal integration approach and, subsequently, the success of an M&A initiative:
- Form of Synergy to Be Created: Cost-cutting versus growth
- Required Pace of Integration: Quick versus steady
- Degree of Integration: Extensive versus partial
- Nature of Integration: Buyout versus a merger
- Commencement of Integration: Urgent or delayed
- Integration Project Team Organization: Clean or shared
- Decision Making Style: Implicit and prompt versus lengthy and analysis based
- Transaction Change Management: Tacit versus one that requires comprehensive actions
These decision considerations facilitate Post-merger Integration across all industries and organizations of various sizes. Let’s discuss the first 3 decision levers in detail now.
Lever 1 – Form of synergy to be created
The foremost element of a PMI is deciding on the type of synergy to be achieved through integration. The question is to either focus on achieving cost reduction or growth synergies. If cost cutting is the objective of an M&A then the leadership of the combined organization needs to outline potential costing saving opportunities across the board. This should be followed by robust communication strategy to convey the implications of the M&A program. However, if the management’s objective is to unlock growth synergies from the acquisition, then the integration is to be treated as a strategic endeavor—e.g., understanding the customer needs, evaluating market potential, generating innovative business ideas, and developing execution plans.
Lever 2 – Required pace of integration
The 2nd lever demands from the senior leadership to determine the pace most appropriate for the integration of their newly combined enterprise—i.e., to choose between a fast track and a steadier integration approach. A majority of executives believe that PMI should be executed as quickly as possible, so that upon completion of the initiative they could divert their center of attention back to business operations. This approach, however, involves decisions that aren’t backed by detailed analysis of facts and data, and is likely to face increased risks and uncertainties. On the other hand, a slower pace of integration is beneficial in case of a friendly takeover or expansion in a new domain. A steadier pace of integration works well to reduce any apprehensions, cynicism, bottlenecks, and risks due to oversight.
Lever 3 – Degree of Integration
PMI necessitates gauging the appropriate degree of integration beneficial for the organization—i.e., choosing between extensive across the board versus partial integration. An absolute focus on cost synergies warrants an extensive degree of integration across all departments and geographies. This puts extra pressure on teams in terms of work and risks dwindling enterprise focus on the customer. Committing more resources and setting the priorities right aids in offsetting the risks associated with an extensive degree of integration. A partial integration, on the other hand, is simpler, less controversial, and predominantly warrants consolidation of sales or alignment of mission-critical processes. This typically works well in takeovers requiring new products acquisition or addition of new customer segments.
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