Spearheading a Mergers & Acquisitions Consolidation Program for a Global Cold Storage and Transportation Provider
OVERVIEW
What happens when a 120-year-old temperature-controlled warehousing and transportation services provider undertakes the most audacious expansion in its history? It successfully acquired five companies over an 18-month period in a smart acquisition plan to accelerate growth. While this expansion fulfilled the mission-critical goal of expanding its footprint in international markets, these acquisitions brought on a host of integration challenges across its processes, technologies, and people.
Our client excelled in offering the food and perishable goods industry with cold storage solutions throughout their supply chain ecosystem. And now with over 200 warehousing locations, supported by 16,000 employees, the need to successfully capture synergies across their acquisitions was paramount. Maintaining business continuity with minimal business disruptions was critical.
This client had previously engaged G1 on a variety of projects, ranging from EDI implementations to the creation of business development and transportation strategies – but now they were reaching out to manage their integration team. We needed to help lead the acquisition through the myriad of integration challenges presented by so much expansion.
They recognized G1 as an unbiased third party with a long record of success as a trusted partner of their company. They knew we had the track record to provide the expertise needed to navigate these months-long, complex processes. We would spearhead the effort to bridge the gaps and connect the dots across cross-functional teams.
THE CHALLENGE
Our client was faced with the ambitious task of executing smooth integrations in which they would capture identified synergies across their five newly acquired companies. Compounding the issue was that one of their acquisitions was a conglomeration of separate entities that had been merged, ad hoc, over several years and would bring with it a number of complexities related to integration.
Not to be overlooked were the downstream challenges and business process impacts that also needed to be solved.
Integration obstacles would loom across HR, Business Development, Legal, Operations, and Finance. Some of these sticking points and rough patches would be widely known and well-defined; other roadblocks would not reveal themselves until the transition process was underway.
Thus, our client faced these specific challenges:
Systems Integration. One of the most immediate and obvious challenges was to consolidate several Warehouse Management Systems (WMS) into a singular, unified network. A similar ERP consolidation and synthesizing of IT Systems was required.
SOX Compliance. As a publicly traded company, SOX compliance was necessary even with the privately held acquisitions. This led to specific integration and communication challenges between IT and Finance. The SOX compliance presented strict timelines and critical deadlines that needed to be met.
Human Capital Management. The Selling, General, and Administrative (SG&A) reductions were a high priority as the organization sought to eliminate redundancies. Additional integration work was needed to smooth the interdependencies between IT & HR. Challenges would arise in open enrollment periods and regulation of labor hours.
Contract Migration with Customers. As a result of consolidation, modifications to pricing and standard labor agreements (SLA) were standardized to a single source of truth and implemented.
General Data Protection Regulation (GDPR). As some of the acquired entities had operations in Europe, the GDPR governing the use of data and the accompanying data privacy challenges had to be solved. Legal departments would need to work for comprehensive compliance to align with the EU as well as individual country privacy and protection policies.
Culture. Some of the unique cultural challenges centered on integrating operating processes and safety procedures to align with the umbrella corporate standards.
Branding Initiatives. With operations commencing in new countries, integration plans called for coherent signage and a number of language translation requirements.
THE SOLUTION
Although we had prior success helping our client with EDI implementations as well as business development and transportation strategy consulting, this new project was larger in scale and scope and required our integration expertise. We would be managing multiple work streams in parallel with cross-functional teams as we set up project plans and executed them against milestones.
Discovery and Assessment
In order to wrap our arms around all the challenges our client faced, we led multiple discovery and assessment sessions. We identified the missing gaps, critical milestones to drive towards, the cross-functional teams who would assist, and all relevant stakeholders.
We analyzed this information and consolidated our findings and best practice recommendations into our integration plan. Once we received plan approval, we set about the work.
Communication Framework
At G1, we believe that “Communication works – for those who work at it”. Accordingly, we developed the stakeholder communication strategy to keep all relevant parties informed of all key integration activities and milestones. This framework includes day-to-day tactical communications, such as post-meeting recaps, weekly status updates, as well as transparent milestone assessments, and reporting to executive leadership and the board of directors. Both were integral pieces of our communication protocols.
Leading and Managing the Integration
In close collaboration with the client’s internal integration team, we created the plan’s governance structure. We set the cadence for stakeholder check-ins and transparent assessments. We also established a standing meeting with functions. Our goal was to ensure the various work streams had a chance to interface and understand the larger picture of the integration - and how their specific function supported the larger effort.
As part of the integration, we tracked deal synergies and facilitated value creation. We realized profitability gains from headcount rationalization, consolidating employee health insurance and IT licenses with ERPs as well as capitalizing on increased purchasing power with vendors.
With a project of this size and scope, friction points and sticking points were unavoidable. We facilitated identifying issues and risks for our client - and then either resolving them directly or escalating them to the appropriate stakeholders when appropriate.
Facilitating Change Management
As the project progressed, the impact of our integration activities was felt across each department and function. Accordingly, we were able to facilitate change management protocols to assist employee acceptance. We set up training sessions for new operations processes. We also facilitated town halls to give employees the opportunity to voice their questions and ensure their concerns were heard. Our goal was to establish a high level of visibility and transparency. Accordingly, our integration road maps were created to minimize surprises.
By hosting town halls, we could gather feedback on what was working or what needed additional attention and then take our findings back to our client’s leadership team so they could address and move the process forward.
Refining Integration Across the Organization
Our best practices suggest how to initiate and execute an integration plan. Lessons learned and uncovered issues dictate changes in how we lead the program. For example, we learned that some of the acquired personnel were slow to adapt to new technologies. There was a desire and a tendency to move back to previous ways of operating, eschewing software in favor of email, phone calls, and spreadsheets. We understood leveling up to new ways of working was a sticking point, and our client learned not to front-load certain operational and process changes.
By placing special emphasis on a phased rollout, we could minimize process disruptions while ensuring that new system adoption happened at an achievable rate. From the time we started the project in January, through multiple acquisitions later in the year, we could draw upon several months of lessons learned to create a more effective cadence for efficient integrations. By delivering a tested, streamlined process, each subsequent integration was executed faster and with fewer friction points – everyone understood their core responsibilities related to integrations.
THE OUTCOME
The integration of five companies into our client's existing systems, processes, functions, and culture was a demonstrable success.
Post-acquisition analysis ticks off a laundry list of successful achievements:
SOX regulations implemented
Millions of dollars in SGA savings realized
Multiple IT system consolidations
Integrated communications
HR consolidations
Customer cost reductions
More important than the achievements was the newly created synergy found in the ever-increasing coordination across acquired entities and our client. It is one thing to do the work and lead the process which removes roadblocks within and between teams – a substantial win by any factor. But it’s another to witness our client and the newly acquired entities seek new and innovative ways to partner and further leverage their strengths. It is the greater measure of success as all witnessed the evolution of a continuous improvement culture that does business faster and better.
At G1, we pride ourselves on providing our clients with the flexibility they need. We can lead and execute integration projects onsite while working directly with stakeholders or partner with them remotely in these ever-changing work environments.
As a boutique consulting firm, we are able to bring the best talent to you without the high overheads of larger firms.
This successful integration project is reflective of one of our core beliefs: We recognize the greater value in investing in long-term, mutually beneficial partnerships with our clients rather than transactional, one-off engagements – your continued success is our ongoing sustenance, and that is something you’ll notice as soon as you begin working with us.