10 Keys to Success post-merger

December 18th, 2007 at 06:32am David Bush - Iasta

I find the topic of Fortune 1000 M&A interesting because we have over 125 customers, and in any given year, it seems like 5-10% of them go through a major structural change, as a result of a merger with another massive company. Many times there are conflicting technology directions that exist, which must we worked out. Generally, one company is tasked with the lead on these decisions. Some of the best results I have seen, exist when the decisions are made upfront with a plan that gets switched on once the merger is complete. We are actively going through one of these now and were selected as the eSourcing provider for the new joint entity and things are going very, very well, with nicely mapped out plan and execution.

Boston Consulting Group recently published 10 Keys to success in regards to these types of mergers, in ISM’s Inside Supply Management.

1. Consider all legal requirements during the process and ensure that policies are issued and enforced, and that processes are managed within the bounds of these legal requirements.
2. Ensure that a cross-functional approach is established, with appropriate interactions with stakeholders, including putting in place clear executive ownership and accountability at the category level.
3. Launch the clean team (resources working in an environment where confidential information from both parties to the merger can be analyzed subject to terms agreed to by each party) as soon as possible, but always prioritize the efforts before the launch, as time lines can change.
4. Before the merger commences, assess the supply management org structure, capabilities/best practices and interaction with stakeholder groups to highlight the “best under both organizations” supply management strategies, tactics and tools.
5. Avoid rushing to deliver head-count savings.
6. Gain support during the pre-merger time frame for structural changes in supply management’s role in the organization.
7. Consider all the supply management savings levers in parallel to ensure that the full potential is defined and a plan to realize it is developed.
8. Review and define reaction strategies/tactics and supply market/supplier risks to assure supply and minimize the opportunity for financial surprises.
9. Implement a strong project management office to ensure that the synergy capture process executed.
10. Consider how categories and suppliers can be managed in waves to ensure that suboptimal supply agreements are not entered into a rush to deliver near-term savings, while compromising future flexibility and the total savings potential.

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Entry Filed under: General, Supply Management Best Practices, Technology / SaaS