Post-Merger Integration - Specialty Chemicals
Situation
As part of a broader effort to build growth platforms in specialty chemicals and to create a strategic growth "roadmap," we helped the management team identify potential acquisition candidates, conduct due diligence and finalize the deal. There was cause for celebration when the deal was announced, but the excitement lasted only a few hours. The division president quickly realized that he did not have the organizational capability, processes or tools to ensure effective post merger integration. The client requested a one-day workshop to discuss merger integration best practices.
Observations
The client was investing $300 million in the transaction. The analyst community expected to see synergy benefits, and the company publicly stated a $30 million target. The internal savings target was $45 million. The client had a number of things in its favor – a dedicated, senior integration team, two businesses that had a good commercial fit, and committed management, but there was a lack of hands-on integration experience and an absence of formal program management, integration planning, benefits tracking and reporting, and focus on execution. The team needed some experienced hands to guide its efforts and ensure that the integration team developed reasonable and effective plans and put in place the execution disciplines around milestones, status reporting, action logs and review meetings.
Actions
The consultant team helped the client's management team create, staff, organize and launch an integration team comprised of corporate, business unit and functional staff with the required mix of capabilities and skills. Missing skills were provided by expert resources with deep experience in integration planning and execution. We worked side-by-side with the integration team to put in place a proven integration process, program management structure, and synergy tracking and reporting capabilities over a four-month period. The integration team was functional within approximately one month and was the driver of the process with the consulting team's oversight quickly thereafter. The scope of assistance to the team included training, coaching, report development, synergy analysis, integration planning and integration execution support.
Results
After our assistance was completed, the team continued to execute on the integration plan and developed plans for some more in-depth logistics and supply chain analytical work. The processes, approaches and systems developed in the project are now the standard for the company, and will be used on additional acquisitions that are currently being pursued. After four months, the integration team was well on its way to achieving integration success and the full synergy benefits. The team achieved $10 million in synergy benefits against a target of $4 million in the first four months, and is confident that they will exceed promised synergy savings.
