M&A Integration: Client Examples

Multi-Deal Integration

Situation

The multi-billion dollar client is a leading North American publisher of educational materials and has a strong position in the emerging Digital Technology market for K-12 and Higher Education. Given the opportunities in the marketplace, the Board challenged the Company to increase its growth rate.  This resulted in a search for appropriate acquisition candidates to accelerate the plan.  Given the importance of success “out of the gates," they decided to engage Keystone to help with all aspects of due diligence, integration planning and post-close execution.

Approach

Keystone deployed an integrated team to work simultaneously across all three deals at the same time.  Keystone drove the strategic and operational diligence process, helping fine-tune the purchase models to negotiate better prices and structures for two of the companies.  The diligence also focused the teams on the critical integration issues.

 

For all deals, Keystone led the integration planning process, resulting in:

  • Seamless Day 1 transitions for customers, employees and suppliers

  • The development of  realistic synergy realization plans

  • Comprehensive organizational  transition and post-close communications plans

  • Complete “go-to-market” models to integrate the new businesses.

For the largest deal, Keystone assisted with synergy realization plans in back-office consolidation and customer integration and transition to a new product platform.

Results

The Keystone Group delivered the following results:

  • The deals met the Board’s expectations.

  • In the first six months post-close, the deals are on track to deliver the product extension and customer reach that were critical to doing the deals.  Customer and employee reaction was very positive, leading to expanded commercial opportunities.

  • The Company expects to meet or exceed its internal return on investment hurdles and realize the anticipated synergies.

"Keystone brought the expertise, straight talk, and proven approach we needed to make a smooth transition. Their focus and operational depth were great complements to our internal teams.”

- Client CEO

Competitor Integration

Situation

The Company is a $500+ million manufacturer of garage doors and home access products, servicing both the commercial and residential markets. The Company targeted a direct competitor with annual revenue of $400 million.  While the companies had similar business philosophies, their cultures and day-to-day operating models were very different.  There were significant risks in customer and employee retention, go-to-market strategies, and cultural integration, as well as $50 million in estimated synergies to make the deal a success. 

 

Approach

The primary objective of the integration planning phase was a seamless transition for both organizations and their customers.  Achieving this required thorough communication from the moment of the announcement through closing, and careful preparation for successful integration and rapid synergy realization. Key steps included:

  • Driving a pre-close planning process to ensure a proper balance between (1) running the day-to-day business, and (2) aggressively going after the identified synergies 

  • Evaluating key differences in the companies’ cultures and developing action plans for each functional area

  • Preserving the top line for multiple and potentially competing channels and brands. 

  • Managing critical operational synergy projects including multiple plant consolidations, sourcing decisions, and spend consolidation.Leading weekly Steering Committee and Team Lead meetings to effectively communicate and quickly address all integration issues. 

  • Executing a tightly coordinated communications plan for employees, customers and suppliers. 

Results

The first day of business for the combined organization was flawless.  The Company received tremendous positive feedback from customers, employees, and senior management.  Customer orders were processed and shipped with no disruptions, key employees knew their roles and responsibilities from the first day resulting in no unplanned turnover, and the Company is on track to achieve its synergy targets.

Transformational Acquisition

Situation

The company was a $3 billion integrated manufacturer of corrugated and consumer packaging looking to benefit from rising prices and increased consumption of containerboard. Demand for the specialized paper, used to make shipping boxes, was reviving as the global economy emerged from a recession. The company agreed to buy a $6 billion competitor who had recently emerged from Bankruptcy.  The combined company would be the No. 2 North American producer of containerboard and the No. 2 producer of coated recycled board.

Approach

Keystone was engaged to lead the integration planning phase and then execute that plan. The goals were to ensure the seamless integration of the combined entities’ procurement organizations and that the target of $50 million in synergies would be captured.

 

Throughout the pre-close planning process, Keystone worked to ensure a proper balance between running the day-to-day business and capturing synergies was maintained. Key spend categories were identified and a strategic assessment of the purchasing strategies for these categories were performed to maximize synergies. At the same time, key differences in the companies’ cultures were evaluated and action plans were developed for each functional area to address the identified gaps. Upon deal close, Keystone lead the integration execution process. This included executing a tightly coordinated communications plan across procurement, finance and operations employees as well as the entities’ suppliers, and leading weekly Steering Committee and Team Lead meetings to quickly address all integration issues.

Results

For several months after close, Keystone assisting the combined procurement teams in maximizing the targeted synergies.  The actual synergies captured of over $110 million greatly exceeded management and shareholder expectations. 

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