Homing in on a Target for North American Expansion

A global industrial products distributor (“company”) wished to expand its capability in North America. It identified a privately-owned distributor (“target”) whose network included distribution centers and local branches that would be accretive to its operating model. 

The company’s diligence required an understanding of the target’s growth potential, margin expansion and where synergies could be capitalized upon to drive value. They hired A&M to support pre-deal planning, functional due diligence, Quality of Earnings (QoE) and integration planning to define the synergy targets, detailed execution activities, risk-mitigation and change management approach to successfully realize the value of the deal. 

Integration Planning and Opportunity Identification

A&M successfully assisted the client in bidding for and closing the acquisition. In the early stages, the A&M team conducted the due diligence, facilitated board review and approval, supported the Federal Trade Commission (FTC) antitrust filings, and led the overarching integration management office (IMO) in planning and executing the integration. Key highlights from the work include:

QofE

• Identified positive adjustments partly offset by benefits the company received because of rising material cost

Commercial

• Developed overall growth and commercial framework including organizational design, growth planning and strategy
• Optimized direct and stocking business
• Assessed impact from loss of minority ownership status

Operations

• Identified opportunities to renegotiate supplier agreements along four dimensions: rebates, discount terms, freight allowances and base price 
• Identified distribution productivity improvements and overlaps and consolidation opportunities (distribution center (DC) and last-mile delivery 
• Rationalized finance, accounting and other corporate headcount and identified opportunities for additional indirect spend reduction

Human Resources

• Identified savings from executive and human resources organizational alignment and rationalization
• Implemented retention plans for key employees
• Quantified the impact of merged medical and retirement programs on comp and benefit expense

Technology

• Identified renegotiation and cancellation savings for key IT contracts 
• Identified cybersecurity issues for remediation

Real Estate

• Identified market lease rates adjustments to drive savings

Environmental, Social and Governance (ESG)

• Evaluated target’s ESG capability and identified improvement opportunities for risk management, safety and training 

Communications

• Developed and executed communication plans and scripts for target and company financial markets, employees, suppliers and customers

Value Capture

As a result of our work, the client experienced a smooth transition and was well positioned to immediately initiate synergy-capture according to documented plans.