Insights from the merger integration

Kearney was brought in to support this complex carve-out in all aspects of the acquisition, from due diligence to post-merger integration across all elements of the supply chain—procurement, manufacturing, and distribution. Our role was two-pronged: deliver immediate savings and develop a longer-term focus on building supplier relationships. Several insights resulted from this exciting journey:

Synergy summits are not just for discussing the numbers. Synergy summits are an opportunity for participants from both companies to get to know each other, to eliminate roadblocks, and to build momentum for the post-close execution. We held 50-plus summits across procurement, manufacturing, and distribution with a focus on interdependencies across these three areas.
Set up a room with a view (of everything). Capturing value across the different areas requires extensive interactions and those manning the integration management office (IMO) resolve many of the cross-team issues. A good IMO keeps a close eye on interdependencies and moves quickly to settle any issues that arise between clean teams.
Keep your assets working through smart TSAs. We moved quickly to evaluate all major manufacturing, distribution, and procurement processes, and secured 120-plus transitional service agreements (TSAs) prior to close. This gave us six months of business continuity (and breathing room) after the deal closed.
Learn to juggle. For the merger to appear seamless to customers and suppliers we had to meet our synergy targets, design a new organizational structure, and continue to run the business. Keeping all the balls in the air is essential to merger success
Assign success targets to joint teams. When all members of a team are accountable for delivering shared synergy targets, everyone works together toward a common goal. Taking a team approach averts ownership issues.

Impact and advantage

The results were impressive by all measures. The combined organization was fully functional after a three-week transition period. The entire carve-out transaction was executed without significant interruption of ongoing business. And the new organization design was built on best practices from both companies and leading practices provided by Kearney. Post-close, more than 150 pre-defined synergy projects were launched in the first 30 days, and within 100 days most procurement and contract manufacturing synergies had been captured. Many TSAs were retired early, as product and distribution adjustments were finished sooner than expected. Clearly, the foundation laid pre-close made it possible to exceed revenue and cost targets post-close.