Mergers and Acquisitions - 'Seize the Day'

This article first appeared on 4C Associates website, April 2013

Mergers and Acquisitions are a fact of modern business life and most employees will experience a number of mergers or takeovers throughout their career. Often they will view such activity as a threat to their position within their current organisation. This need not be the case.

The strategic drivers for a merger are varied, for example the acquiring organisation may be seeking to consolidate itself in the market place by removing a competitor. The company may be trying to expand into new markets or the acquisition could be opportunistic, taking advantage of a business that has gone into administration. Whatever the driver, there are few mergers that do not quote savings as one of the subsidiary benefits. This factor alone gives anyone in Procurement an immediate mandate and creates an expectation of delivery.

Making the most of the situation

I have compiled five tips on preparing for a merger. These apply regardless of whether you are the buying organisation or being acquired:
1) Know your numbers.
This should be part of normal Procurement life, but you should know your numbers inside and out, and ensure your team know them too. Category Managers should know their spend in detail, as well as the financial status of their key suppliers. A merger is going to put you in contact with new colleagues, at a senior level, at very short notice. You may have five minutes to impress them before they make a decision about your future, and fumbling around on a keyboard for your spend with IBM last year will not impress.

2) Communicate
Your team will be nervous and unclear about their futures and will think you know much more than you are letting on. Whether or not this is the case, share what you can, keep communicating. Paint them a vision of what you can deliver together and explain how you intend to position your department as the key component of the team which will make it happen.

3) Develop an Opportunity Assessment for the New Organisation
This should cover all spend, regardless of whether or not you currently control a category. Make a judgement on what the other organisation is likely to spend and include that in your analysis, even if you have to caveat it with assumptions. This becomes your USP, at the same time as senior management are telling the analysts they have a savings target; you will be publishing a document giving the means of achieving that target, should they give you the chance.

4) Be a Leader Not a Follower
Mergers reward those that take the initiative and are often an opportunity for significant upward mobility. Move your emotional loyalty from the old organisation (which no longer exists) to the new combined operation. Stick your neck above the parapet and be part of the engine of change for the new organisation.

5) Exploit the Spirit of Change
Takeovers are usually a time of great change for everyone. This includes internal customers who were on very solid ground and previously impervious to your advances, being open to change. If they visibly try to maintain the status quo they will find themselves replaced. You should revise plans to address new areas of spend. However, be sure that you have more than one sponsor, as senior staff can change very quickly and without a broad support base you can swiftly find yourself exposed.

In summary mergers provide fantastic opportunities for all staff, particularly the Procurement team. Whilst it can undoubtedly be a stressful time, M&A activity creates an environment for change that can be a platform to transform the way Procurement is perceived and operates in your organisation. Seize the Day!

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