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De-risking a Reverse Merger and Accelerating Integration and Value Capture (CS273)

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This story is for CEOs who

  1. Want to ensure value creation of a merger, acquisition, or reverse merger

  2. Need a new sourcing strategy to re-balance supply and demand

  3. Want an expert partner for boots-on-the- ground analysis of supply chain problems

The Challenges 

A leading Private Equity sponsor was planning a complicated reverse merger: carving out a global chemical company and merging it with a well-known family-owned business. As a long-time trusted partner of SGS Maine Pointe, the PE firm knew we could identify opportunities, challenges, and obstacles before the merger, expand on synergies, and accelerate value creation, even for two firms with very different cultures and even in a deteriorating global economy.

 

Providing enhanced tools and process to surge EBITDA

 

SGS Maine Pointe:

  • Established a unified vision, goals, objectives, and processes; clarified roles; and improved compliance and tracking through advanced data analytics
  • Initiated supplier optionality and strategic sourcing
  • Reduced both direct and indirect costs, allowing the company to reduce COGS and bill of materials (BOM)
  • Assessed and upskilled the procurement department, giving it a new organizational structure and mandate that aligned with regional and global needs
  • Brought procurement, operations, logistics, and finance together to create a single source of actionable information

 

Lessons learned for other executives

  • Even complicated mergers and reverse mergers create opportunities for value creation
  • Getting everyone onboard and thinking in the same direction is essential
  • Strategic procurement can levitate competitive strength even when the economy is challenging

 

The Results

  • Gained $30M cost savings in year 1
  • Reduced COGS 9%
  • Reduced BOM 20%
  • Reduced competitive gap 58%
  • Provided roadmap to $32M-$37M savings in year 2
  • Enhanced governance of the merged companies

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