Top tips for coping with an acquisition

24 May 2010
For most supply management professionals the question is not if they will be involved in an acquisition but when. And in my own experience it can be a significant opportunity for procurement professionals whatever side of the acquisition they are on. In fact, a sudden and unexpected enlightened response to procurement by senior executives, resulting in the beefing up of supply management structures, has sometimes proved to be a good indicator a company is up for sale as executives prepare the ground for investor scrutiny. SM recently highlighted that there has been a return to M&A activity in 2010 and cited a number of high profile acquisitions: Kraft’s acquisition of Cadbury; United Airlines and Continental Airlines; Hertz and Dollar Thrifty; and HP’s intention to buy Palm. Having been involved in three significant mergers through acquisition, I would argue that it is never too soon to start preparing your company’s M&A procurement strategy. Whether you are company predator or prey in an acquisition it can be a daunting time for procurement leaders. The opening of the books is a nerve-wracking moment where each side learns who has the best deal – and by implication who has the most effective procurement operation or CPO. So what can procurement professionals do to prepare for M&A success and increase their chances of playing a key role in finding the post-integration savings whoever is doing the acquiring? Here are my tips: Speed is of the essence. The pressure is on in an M&A to secure value from the first day of the acquisition. Whichever organisation you are in, it is important to get involved as soon as possible, ideally in the planning and due diligence phase. Adopt best practice. The procurement function with the most efficient spend management systems will have a distinct advantage. The ability to quickly identify contracts in place, terms, spend visibility, and clearly defined category strategies will be able to move more quickly than the party who struggles to pull together spend management information. The upper hand goes to the most efficient procurement organisation. Also, the organisation with the most clearly defined supplier strategies will have a similar advantage in integrating the supply base of the combined organisation. Have a plan. Before regulators approve the merger, use the time to prepare information and an action plan to define procurement’s role to capture the synergies to satisfy financial markets. This should cover risk management as well as cost savings, and be sure to back up your credentials to lead with examples of past successes. Perhaps the most important aspect under your control is to project a positive and open attitude demonstrating your readiness to contribute to the new organisation’s success, whatever the outcome. Remember, resistance is futile! A three-part guide to procurement capabilities in M&A can be found on Dave’s Buying Magician blog.
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