Does Creating the Ties that Bind Result in M&A Success?
In recent years, mergers and acquisitions (M&As) have been prevalent in the global chemical industry. With a positive economic environment, new tax legislation that financially incents businesses to add technology, and investors with movable cash, companies can transform their shareholder value and create sustainable profits by undergoing a merger & acquisition. A major detriment to M&A success is the ability to seamlessly integrate the businesses, from people to processes.
Think about it. Each company involved in an M&A will bring their own technology systems, applications and database. A primary goal should be to integrate all systems to either work in harmony or to transition the systems to a new platform and solutions. When applications and systems are integrated, operations are streamlined and efficiencies gained.
Another benefit of achieving these organizational synergies is the opportunity for data to be cleaned and enriched with standardized forms and data formats. Developing a single version of the truth avoids duplicate information, eliminates errors and makes sure the right data is used for strategic decisions that can lead to increased shareholder value.
Most importantly, an M&A program should be communicated well, monitored deeply and measured constantly. Early in the process, quantifiable KPIs with appropriate corrective actions should be selected and can include:
- Acquisition Rationale: Revenue expansion to new market segments of geographies; digital technology deployment.
- Integration Goals: Customer retention; employee retention; maintain current levels of sales, productivity; back-office consolidation; departmental/overall savings; supply chain network rationalization (location of DCs, warehouses, plants in new supply chain network).
- Business Synergies: Culture acceptance; expense reductions; cash flow improvements; market share increase.
Keep track of these measures over time to ensure continuing improvements that drive value for the new business. For communications, messages must be consistent and focus on what the M&A will bring to its people and its customers. Key customers need to be made aware of the goals of the new organization and where they fit.
Once the integration process is complete, evaluate the playbook to uncover areas of improvement and opportunities for change. Following a rigorous integration process or working with an experienced company that can push the M&A integration forward, you can be sure that “the ties that bind” trading partners with the new organization will be flawless, valuable and powerful.
Each company involved in a merger and acquisition comes with their own network of trading partners, which include suppliers, logistics service providers and customers. Because Elemica has an established Digital Supply Network, many businesses in the process manufacturing industries find their trading partners already on the network. If a partner needs to connect to the network, Elemica is the “fastener” bringing together trading partner connectivity using multiple methods for high degrees of automation and less manual intervention.
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