Post-Sale Integration

Situation

A long-standing Platinum client found a good strategic fit to acquire a business and, subsequently, Platinum assisted in an acquisition. Both Upper Midwest companies offer similar services in geographically adjacent markets, with combined revenues of $30 million. Given that most acquisitions fail due to cultural differences, Platinum was asked to conduct due diligence and guide both organizations through a series of integration steps to ensure success.

Challenges

• To communicate the change to employees and build trust as quickly as possible. In advance of the merger, both CEOs met with Platinum to develop clear-cut messages to employees. Same day of the sale, company meetings were held with both buyer and seller to assure people that jobs were not being eliminated, discuss growth and opportunities, and answer questions. Out of the nearly 300 employees, there were no resignations.
• Integrate financial reporting and control systems. Platinum guided a team formed from both companies to evaluate accounting and manufacturing/scheduling system inputs in order to select a single accounting platform and consolidate one set of monthly financial statements.
• Determine the best strategy for customer sales, service and suppliers. Again, Platinum facilitated joint sales and customer service teams.After evaluating their “go to market” strategies, they decided not to integrate into one team but, rather, coordinate sales with a single budget.This led to hiring a sales manager for one of the companies and coordinating business development efforts.A different team evaluated suppliers based on products, equipment and materials purchased by both organizations to determine which relationships to maintain.
• Provide accountability for implementation. Through weekly teleconferences with leadership of both locations, Platinum continues to track progress, break down obstacles and provide resources. It was quickly determined that management was understaffed. Platinum conducted an internal and external search to help select a new COO for one location, which allows the CEO to remain strategic.

Results

This 12-month process is delivering sustained, ongoing growth and profits.The newly merged organization has produced record unit volume and revenues every month since the February 2006 transaction, including winning two major new accounts. It is now positioned to be a leader in its market through a larger presence, better technology and an expanded product and service offering. Platinum will stay involved for another six months while all new teams are making mission-critical decisions. The fiveyear plan is to double the EBITDA.