“Neutral” resource provides balance and focus for merger integration

“Neutral” resource provides balance and focus for merger integration

Halfway through an in-depth restructuring process, an international manufacturing company based in the Midlands seized a unique opportunity to acquire one of its main European competitors on the continent, whose parent company was divesting to focus on the American market.

The timing of this unexpected opportunity was unfortunate, as the previous year’s trading results had been poor, morale was low as a result of the ongoing restructuring, and a number of vacancies in the executive team and senior management had yet to be filled.

Our challenge

How could the CEO meet the complex challenge of restoring the company’s profitability and at the same time absorbing the proposed acquisition and integrating the two companies’ subsidiaries in nine countries across Europe?

What we did

We persuaded our client not to ask the company’s finance director to manage the business integration as well as his ongoing functional responsibilities. A member of our team with extensive experience of merger integrations was temporarily seconded as an interim executive integration director.

This allowed the company to focus on reaching its ambitious financial targets while the interim manager handled the post-merger integration process.

The clear segregation of responsibilities between day-to-day business and the organisational integration prevented any negative interference between those two streams of activity and allowed an orderly allocation and prioritisation of resources.

Moreover, the use of an external interim resource to drive the integration was instrumental in ensuring a high degree of objectivity and neutrality in designing the processes and ways of working of the future merged organisation.

This was critically important in allowing unbiased challenging of current practices and processes. It ensured that the integrated organisation would really build on the best aspects of each of the merging businesses, as well as capturing recognised best practice.

In addition to creating a more efficient and competitive company, this approach avoided a pitfall that often seriously undermines morale and effectiveness in companies after an acquisition: the splitting of the staff into two camps, the conquerors and the conquered.

The outcome

Within seven months of receiving clearance from the various national regulatory authorities involved in approving the acquisition, the company and its new acquisition were successfully presenting one face to the customer. The interim nature of the integration director’s role enabled an open and productive collaboration with the other members of the executive and senior management, as he posed no threat to anyone’s position in the company.

The integration took place as planned and on budget, in an orderly manner and without any unrest, despite the closure of one manufacturing plant. The acquisition placed the integrated company on a new footing, which generated a positive energy throughout the staff. In the first year after integration, the company actually exceeded its targets and posted a record profit.

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