Procurement must prepare for mergers and acquisitions

19 April 2010

19 April 2010 | Nick Martindale


Chief procurement officers need to start planning for the possibility of their company merging with or acquiring a rival as the economy picks up, Accenture has said.

The consultancy is urging senior purchasing professionals to identify people in their teams with the skills to manage a complex procurement integration and identify any contractual or performance-related supplier risks in advance.

They should also remain close to senior management to ensure they are aware of any potential deals and push to be involved as early as possible - preferably before the due diligence stage.

This year has already seen multi-billion pound mergers or take-overs agreed between Kraft and Cadbury, and Orange and T-Mobile.

Jeremy Robinson, UK sourcing and procurement lead at Accenture, said: “It is still common for procurement to become involved in M&A at too late a stage.

“Being part of the due diligence team and contributing to a pre-deal assessment of supplier contracts and spend data can help to build a post-merger savings plan which can commence on day one of the deal announcement.

“Having staff who are trained in project management and who have credibility with the corporate M&A team are the first steps in ensuring procurement is called upon at an early stage.”

Once a deal has gone through, procurement has a huge role to play in driving initial cost reductions and minimising disruption to everyday business, added Robinson, as well as undertaking a longer-term review of operating costs and suppliers.

Robinson added: “A project plan which accounts for how savings will be identified, with a timescale for when they will be delivered, is critical. A key component of this should be communications to all staff, internal stakeholders and suppliers as to what will be expected of them in the immediate post-merger period.

“Using the post-merger period as a time for suppliers to demonstrate their ability to add value to the new organisation is an effective tactic in deciding which suppliers can and should be retained long term.”

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