In a survey by Ernst and Young the following pre-sale initiatives within the context of mergers and acquisitions present the missed opportunities for value creation:
The article published in CSCMP Supply Chain Quarterly presents an interesting way to think about prioritizing opportunities to enhance value during mergers and acquisitions:
The following tile diagram depicts an operating model for the supply chain and other functions from the people, process, and system perspectives. The figure enables the seller to present the current state operating model to the buyer.
Once the current state model and the transition operating model have been developed, supply chain professionals can plan the path from the current state to the transition state in detail, including specific milestones for Day One, Day 100, and other key milestones identified by the seller and the buyer.
The authors of the report emphasize the four key areas of plan (order, inventory planning, demand planning, information systems planning), source (assignment of contracts and ownership of procure-to-pay), make (management and planning of manufacturing assets) and deliver/return (consideration of models when the seller provides order fulfillment, such as disclosed agency, undisclosed agency, commissionaire etc.) in which supply chain executives should focus during handoffs. The authors notes that in an undisclosed agency model the seller continues order fulfillment as if it owned the business whereas in disclosed agency model seller acts as an agency for the buyer. In a disclosed agency model, it may be necessary to update invoices and shipping documents with appropriate disclaimers, the name of the buyer's legal entity, and other information, which creates the need for information system updates.
In the post-close stage, the buyer needs to consider the issues of stabilization, integration and optimization to make the overall transaction successful. In the stabilization stage, it is important to establish a governance structure that facilitates integration of the acquired asset, stabilizing the asset after the close by creating a "hypercare" organization to resolve problems, and by monitoring performance and regulatory compliance. The integration stage requires consideration of effective change management, standardization of business processes, and careful treatment of transition agreements, IT, and legal issues. Optimization encompasses development of a portfolio of supply chain performance improvements that can range from "quick hit" opportunities, such as the realization of sourcing synergies shortly after the close, to longer-term, transformational improvements, such as rationalizing the manufacturing and distribution footprint.
Sources:
Boodhoo, A., Varadarajan, G., Morton, J., Mathew, S. and Raghavendra, V. 2016. Divesting an asset? How you can maximize its value and sale price. CSCMP Supply Chain Quarterly, Quarter 3.
Boodhoo, A., Varadarajan, G., Morton, J., Mathew, S. and Raghavendra, V. 2016. Buying and selling an asset: How to prepare for the handoff. CSCMP Supply Chain Quarterly, Quarter 4.
Boodhoo, A., Varadarajan, G., Morton, J., Mathew, S., Raghavendra, V., Tennant, M., Woodcock, P. 2017. Supply chain integration and optimization: The keys of realizing deal value. CSCMP Supply Chain Quarterly, Quarter 2.