Hello,
In your case, you would have to work on these steps:
1) Install the SEPM 12.1 on the VM Machine,
2) Either Run the SylinkReplacer Tool to get all the SEP 11 clients back reporting to the new SEPM 12 and then use the Auto Update Feature to get all the clients migrate to the SEP 12.1
You can find the SylinkReplacer Tool for SEP 11 clients on:
https://www-secure.symantec.com/connect/downloads/sylinkreplacer-tool-connecting-sep-clients-sepm
OR
Use the "Client Deployment Wizard" for Deploying the Latest SEP 12.1 package to all the machines.
Symantec Endpoint Protection 12.1: Installing the Manager for the first time and deploying clients
http://www.symantec.com/docs/TECH163580
Incase, if you have any issues, you can follow this Article:
Quick Access to Symantec Knowledgebase Articles of Symantec Endpoint Protection 12.1
https://www-secure.symantec.com/connect/articles/quick-access-symantec-endpoint-protection-121
Hope that helps!!