Procurement plays a vital role in determining the success of a merger or acquisition. Early engagement with procurement teams are key to ensuring a smooth post-merger transition.
After a successful deal, CEOs need to deliver the synergies and savings that will have formed part of the business case presented to shareholders. Such pressure puts procurement centre stage and creates several challenges. We work closely with you to tackle these challenges and improve your procurement functions by offering a range of services, including pre-closing clean room assessments and post-closing synergy implementation programmes.
Insight
Integrating the procurement functions of two businesses can be challenging, but an effective way to carry this out is to rapidly form a new leadership body by blending the two legacy teams. This both enables a more natural unifying process and avoids a dividing “them and us” mentality.
Speed is an important factor for this, especially when mergers cross international boundaries. Procurement teams must be aligned from the outset. Similarly, if there is no clear integration plan laid out to identify the new strategic direction, it is likely that the best talent will leave the company. Without that focus, the saving delivery at the acquired company will consequently slip. Often it is a case of adopting a strong internal communication’s role, which also helps raise the profile of the procurement function and CPOs.
Despite the need to move quickly, merging businesses in different parts of the world requires a delicate approach. Any attempt to bring functions together should not be imposed top-down from a global head office but should rather involve local teams, paying attention to cultural sensitivities and leadership styles.
External spend represents a significant M&A synergy opportunity yet often synergies do not materialise post-deal and this is due to poor procurement execution. Efficio can assist: whether acting as an independent facilitator between the two merged companies; contributing the necessary expertise to overcome data issues, or helping devise the optimum organisation structure across the two companies, we are ideally positioned to help.
Innovation
We help our clients derive the best possible savings estimate and add colour to an often limited data set, pre-deal, during a procurement due diligence assessment.
Post-deal, we work with companies to execute the procurement improvements by:
- Acting as an independent ‘facilitator’ between the two companies being merged
- Having the arms, legs, and expertise to overcome data issues and other ‘inertia’ that hinder execution
- Speeding up the timeline to results
- Using an independent and objective position to take the emotion out of organisational questions, and help devise the optimum organisation structure across the two companies
Our experienced consultants take an in-depth look at the systems and processes of both businesses to effectively harmonise them to achieve the best results. Common procurement processes need to be synchronised. Since the way in which savings are measured in two different companies might differ fundamentally, it could require a significant change in mindset for procurement professionals.
Ultimately, mergers and acquisitions represent a considerable opportunity to share best practice regarding areas in which some companies might excel and others might struggle. Introducing initiatives across the new organisation that are already embedded in one business is easier than starting from scratch in both.
