Three ways to manage a smooth post-deal transition for M&A success
Mergers and acquisitions can create a wealth of opportunities for growth, from improving productivity to establishing new product lines and entering new markets – even when the wider economy is slowing. Phil Reuben, executive director at global supply chain and logistics consultancy, SCALA, explains how to get the most from deals in difficult conditions.
The aim for business leaders managing the M&A process is to achieve synergy between the existing merged or acquired businesses – which can be particularly challenging given the complexity of supply chain and logistics operations. In fact, studies suggest that 70%-90% of M&As either fail or underperform.
Careful pre-M&A analysis and a clear strategy can help to protect and enhance supply chains after a deal is done. However, bringing in a third-party supply chain consultant to oversee the transition programme, providing the expertise needed to navigate and manage the process, can be key to nailing the process.
There are a number of considerations for business leaders to make during the early transition period to maximise effectiveness and optimisation – and it can be helpful to have an objective eye to monitor the process.
1. Analyse supplier networks
If this hasn’t been undertaken pre-M&A, conduct an audit of existing vendors to identify potential obstacles to the transition and minimise potential supply chain disruption. Analysing and reaching out to suppliers at the start of the process, whether to establish new relationships or exit existing contracts, is essential.
Navigating change, such as consolidating new transport providers, integrating new IT systems, or shifting away from existing interfaces, can be disruptive. Where significant changes are being made to operational processes, consider operating dual workstreams in the first instance; continue existing operations while distinct, new operations are established and bedded in.
2. Take people on the journey
As we discussed in our good practice guide, some of the biggest challenges post-M&A can relate to people, and managing change across workforces is vital to providing stability and support for colleagues – and operations in turn. Keeping people at the heart of the process is the key to driving success.
Effective communication and proactive engagement must be a priority from the outset. From handling the human impacts of redundancies, relocations, and warehouse closures, to empowering those with new job roles to take on different responsibilities and operate new systems, people must feel involved and engaged.
3. Continue to evaluate
Allocate resources to monitor and optimise what was unearthed during the due diligence period prior to the deal. Reviewing any potential challenges that were identified, such as bottlenecks in production, and seeking further improvements, which may include the opportunity to automate some tasks, can boost supply chain resilience and avoid a costly mistake down the line.
Ultimately, when it comes to M&A, there is no one-size-fits-all model. Every business has its own challenges and opportunities unique to its sector and organisation, which can be exacerbated in the face of a major business transformation. Every deal and process can look different, and while it is common practice to bring in financial and legal experts, enlisting supply chain and logistics expertise should be a major consideration given the complexity of the business function.
