De-risking a Reverse M&A Integration and Value Capture (CS273)

Written by Maine Pointe | Jan 20, 2023 8:34:00 PM

This story is for CEOs who

Want to ensure value creation of a merger, acquisition, or reverse merger
Need a new sourcing strategy to re-balance supply and demand
Want an expert partner for boots-on-the- ground analysis of supply chain problems

The Challenges

A leading Private Equity sponsor was planning a complicated reverse merger: carving out a global chemical company and merging it with a well-known family-owned business. As a long-time trusted partner of SGS Maine Pointe, the PE firm knew we could identify opportunities, challenges, and obstacles before the merger, expand on synergies, and accelerate value creation, even for two firms with very different cultures and even in a deteriorating global economy.

Providing enhanced tools and process to surge EBITDA

SGS Maine Pointe:

Established a unified vision, goals, objectives, and processes; clarified roles; and improved compliance and tracking through advanced data analytics
Initiated supplier optionality and strategic sourcing
Reduced both direct and indirect costs, allowing the company to reduce COGS and bill of materials (BOM)
Assessed and upskilled the procurement department, giving it a new organizational structure and mandate that aligned with regional and global needs
Brought procurement, operations, logistics, and finance together to create a single source of actionable information

Lessons learned for other executives

Even complicated mergers and reverse mergers create opportunities for value creation
Getting everyone onboard and thinking in the same direction is essential
Strategic procurement can levitate competitive strength even when the economy is challenging

The Results

Gained $30M cost savings in year 1
Reduced COGS 9%
Reduced BOM 20%
Reduced competitive gap 58%
Provided roadmap to $32M-$37M savings in year 2
Enhanced governance of the merged companies

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