Procurement plays a vital role in determining the success of a merger or acquisition, and for a smooth post-merger transition, early engagement with procurement teams is crucial.
After a successful deal, CEOs must deliver the synergies and savings that 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.
Post-merger integration challenges
Integrating the procurement functions of two businesses can be challenging, but rapidly forming a new leadership body by blending the two legacy teams is an effective way to carry this out. Enabling a more natural unifying process and avoiding a divisive “them and us” mentality.
Speed is critical, especially when mergers cross international boundaries, and requires procurement teams to align from the outset. Similarly, if there is no clear post-merger integration plan to identify the new strategic direction, the best talent will leave the company. Without that focus, the savings delivery at the acquired company will consequently slip. Often, it is a case of adopting a strong internal communication role, which also helps raise the procurement function and CPOs profile.
Reducing M&A post-merger integration risks
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 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 due to poor procurement execution. We can assist by acting as an independent facilitator between the two merged companies, contributing the necessary expertise to overcome data issues, or helping devise the optimum organization structure across the two companies.
We help you 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 you to execute the procurement improvements by:
Acting as an independent facilitator between the two companies merging.
Having the arms, legs, and expertise to overcome data issues and other inertia that hinders execution.
Speeding up the timeline to results.
Using our independent and objective position to take the emotion out of organizational questions and help devise the optimum organization structure across the two companies.
Our experienced consultants take an in-depth look at the systems and processes of both businesses, effectively harmonising them to achieve the best results. Since the method of measuring savings between two different companies can differ fundamentally, procurement professionals may require a significant change in mindset.
Ultimately, mergers and acquisitions represent a considerable opportunity to share best practice in areas where some companies excel and others struggle. It is easier to introduce initiatives across the new organization, already embedded in one business than start from scratch in both.