UNDERSTANDING THE M&A LANDSCAPE
There are many issues a supply management
professional must tackle during the M&A process,
and being aware of best practices in advance is
helpful during the stressful transition. K.O. Ansa
B. Yiadom, senior director, global procurement
for Pfizer Inc., understands this from experience.
“I have been on both sides, and I can say that it’s
an unsettling feeling when your company is being
acquired,” Yiadom says.
He characterized the goal of an M&A as “taking
1 plus 1 and making it 3, 3.5, etc.” Thus, he says,
there’s a great deal of pressure to hit targets as well
as achieve intended goals.
To understand the role supply management
can play in meeting M&A goals, it’s important
to first study the “landscape” of the acquisition.
“Understand the company’s short- and long-term
targets related to the acquisition,” Yiadom advises.
That can be done by participating in analysts’ calls,
talking with leadership, and reading about what
investors expect from the M&A.
How Supply Management Can Deliver
Procurement professionals agree that during an M&A, supply management
can deliver value or synergy through supplier consolidation, better
pricing and lead times, and improved stakeholder engagement. Karen
Fedele, Shire’s head of procurement center of excellence, says supply
management can start delivering value to the bottom line faster than it
takes other functions to add revenue.
She says that because functions across the business are seeking ways to
deliver value, internal business partners often turn to supply management
to help them reach their goals. “We saw a dramatic change in our
stakeholder relationships,” she explains. “Our role as a trusted adviser
Synergy is a term used frequently in M&A discussions because it
conceptualizes a combined organization with more value and higher
performance than if the companies remained separate. Listzwan says
external benchmark studies estimate procurement can deliver between
30 percent to 40 percent of the synergy expected in a successful M&A.
With that in mind, Listzwan says, his team estimated procurement’s target
goal of delivering business integration synergy, based on the organization’s
budgeted external spend after the acquisition. “It was an aggressive goal
endorsed by our C-suite, and our job has been executing against that goal
since the acquisition closed in June 2016,” he says.
a dramatic change in
relationships. Our role
as a trusted adviser
— — KAREN FEDELE
Creating synergy is not easy, especially as
supply management practitioners navigate
through the stages of an M&A. A veteran of five
M&As, Ric Freeman, vice president of supply
chain and procurement at Ennis-Flint, says
his experiences have helped him identify three
stages: observation, execution and post-op.
FIRST STAGE IN M&A: OBSERVATION
The observation stage is when both companies
“are kicking the tires” to determine if the
integration should proceed, he explains. This
is usually done in a secure, legally compliant
environment known as a clean room. From a
procurement standpoint, critical information
about spend, suppliers, sourcing and
specifications will be shared in the clean room.
Companies often hire a third-party adviser
to examine the information and review it with
designated company representatives.
At this stage, supply management organizations
at the acquiring company begin gathering
information to design a procurement strategy
once the M&A is approved. Bob George, head
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