Case Study

Nexi Group: How to deliver €30 million in value through post-merger integration

Words: Mert Erkan Alessandra Spreafico

Nexi is the leader in the European digital payment solutions market and provides consumers, companies, and institutions with payment services. It is shaping the future of payments and driving the transition to a cashless Europe by innovating technologies and simplifying digital transactions that can empower people and businesses to enjoy closer relationships. 

After its IPO in 2019, Nexi acquired two companies of approximately the same size: SIA, an Italian-based payment processor with operations in Italy and Eastern Europe, and Nets, the leading payment solutions provider in the Nordics and DACH (Germany, Austria, and Switzerland) region, engaging Efficio during the pre-merger phase to identify the synergies of these three large companies in a clean room.

Nexi had two clear objectives for our engagement partnership:
1)    Deliver €30m in procurement savings across the combined three companies by the end of 2022.
2)    Build a new procurement community and define the future operating model to support the combined Nexi Group.
 

Results

Together, the Nexi and Efficio team:

  • Delivered €30m in benefits, as of June 2022
    • The due diligence target was €20.8m, which was achieved within the desired timeline
    • Procurement had an additional target of €4m for 2021 in-year savings, which was overachieved, delivering €8.3m
    • Key initiatives overachieved the initial target, such as:
      • Terminals: €12.7m run rate savings leveraging the new cross-country price base
      • Professional services: €5.1m run rate savings leveraging both the new cross-country price base and the consolidated volumes across the Group
      • Software: €4.0m run rate savings leveraging contractual terms realignment and consolidated volumes
      • Application Development and Maintenance: €6.9m run-rate savings leveraging supply base consolidation, demand management and rate realignment
  • Improved spend visibility and spend management, with the creation of a consolidated spend cube categorized with a global taxonomy recognized by the global procurement team
  • Delivered an organizational sustainability workstream to make the procurement team independent and autonomous in delivering tangible benefits and results, elevating its value throughout the business

 

We are very pleased to have achieved our procurement savings goals at every stage – from our initial due diligence target of €21m to the overall Nexi Group target of €30m, which we expect to surpass by more than 25%. Our procurement community has been broadly recognized for its savings contributions throughout the business

Paolo Rosato, Group CPO, Nexi Group


Approach

When Efficio first engaged with Nexi, it had established a due diligence savings target of circa €20.8m.

During the initial phase of opportunity assessment savings were in line with the due diligence expectations, along with operating model improvement opportunities in three areas: People & Organization, Strategy & Process, and Technology & Reporting.

Nexi first asked for our support on the strategic sourcing stream, which in the first wave included 26 initiatives in Information Technology, Operations, and Indirects.

During a second wave, Efficio supported Nexi on the sourcing of new categories, plus the implementation of existing categories and an operating model for organizational sustainability. Efficio organized a series of category workshops to define the category strategy going forward, strengthening the relationship with the broader business. Spend visibility and management were broadly improved with the creation of a consolidated spend cube, categorized with global taxonomy recognized by the business-wide procurement team. In addition, Efficio implemented a knowledge database, with templates and material to speed up the sourcing process.

Our extensive experience in payment services and financial services – including having consulted previously for both Nexi and Nets – brought hands-on support and procurement expertise to introduce new competitive sourcing processes throughout the combined organization. 


Challenges

  • When Efficio first engaged on this project, the merger had been announced but the transactions had not yet closed. Therefore, the opportunity assessment was conducted with a clean room approach, maintaining necessary screens between the three companies. Further closing delays prolonged the necessity of the screens throughout the entire sourcing process. 
  • Spend visibility and control within the three companies was different and limited, which presented challenges to assemble a consolidated view of the spend and identify opportunities.
  • Workstreams that started sooner delivered benefits much more quickly, while other workstreams, such as IT, had a longer time frame to deliver. Expectations were high, as the anticipated benefits were communicated to investors during the due diligence phase.
  • From a cultural standpoint, Nexi, Nets, and SIA were companies of approximately the same size, with well-established but very different ways of working. Despite existing procurement departments having been in place in all three companies, they had different responsibilities. 
  • Procurement wasn’t previously generally perceived as a strategic partner in the three standalone companies, but the stakeholder’s perception and involvement of Procurement were very different.
     
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How Efficio can help

If you would like to explore the development journey of your procurement function and related value generation and cost reduction opportunities, including how we can support you with postmerger integration or any other M&A-related activity, please contact us by filling out the form on our M&A hub.