Defining a merger integration roadmap to achieve quick synergies and long term benefits
Superior consulting services delivering successful business outcomes
A private equity backed midstream company acquired another midstream company, tripling the size of the asset portfolio. The acquirer originally began as a start-up and ran lean so did not have internal resources with the capacity to integrate an acquisition quickly. Having received assistance from Aventine Hill during the due diligence phase (learn more here), additional assistance was requested with the integration.
Aventine Hill assembled a team with the breadth and depth of experience to work both urgent and longer term issues the company would need to address to successfully manage the combined companies.
- A Corporate Development Executive Consultant led the engagement.
- One of our CFO Advisory Partners was assigned to focus on general accounting and finance integration.
- A consultant with deep expertise as a Midstream Controller was assigned to focus on business process integration across commercial, operations, plant accounting, and project/asset accounting.
- A consultant with broad experience in Human Resources assisted senior management with organization design and advised on personnel decisions and policies.
- CIO Advisory Partners were assigned to focus on IT integration, including an overall IT integration roadmap plus specific software application, infrastructure, and IT organization design roadmaps.
Aventine Hill utilizes a triage methodology that allows executive leadership to prioritize which areas of integration to pursue interim solutions for, which to focus on long term solutions for, and areas where new capabilities are needed. This company had some urgent areas of concern so where possible, discrete quick hit recommendations were provided and acted upon immediately.
Quick hit activities
- Payroll processes were reviewed and a recommendation to quickly consolidate to one provider was implemented. Related HR services were rationalized where possible and benefit plans were scheduled for standardization for the next plan year.
- Business process analysis was performed for functions where there were pain points now or were of concern because they would not scale up effectively. This consisted of documenting the “as-is” process in both the acquirer and acquired companies, then identifying options for consolidating processes. Some quick hit improvements required staffing changes to best implement and new employees with the desired expertise were quickly hired.
- Plant accounting methodologies and settlement statement reporting were simplified for the acquired company to quickly drive new value from the assets and standardize the accounting. These changes were coordinated with the Commercial organization to maximize the ability of the company to realize the desired benefits.
- A new cost allocation methodology was implemented for shared services costs so that profitability for the assets could be more accurately measured now and as synergies are realized.
- An interim approach for integrating email, file storage, and networks was recommended and executed to allow the two organizations to collaborate more effectively and to mitigate technical risks in a portion of the IT infrastructure.
Longer term recommendations
- An organization structure was designed that achieved synergies by consolidating locations and resolving redundant positions. A change management plan for executing the synergy plan was created and implemented.
- A data center and network consolidation roadmap was defined. A new co-location facility was selected to consolidate the primary IT hardware to one cost effective location. Options for additional IT standardization and improvements to be pursued after the data center consolidation were prioritized. The company can choose the pace of implementing the recommendations based on business conditions.
- Roadmap options for consolidating multiple accounting systems to one were defined and presented to executive leadership for a decision. Collaborative debate about the level of investment appropriate to the new combined company resulted in a roadmap that provides the primary value executive leadership seeks while deferring certain spend in IT.
- An overall roadmap of improvements was defined that would help position the company for an expected exit of the current private equity owners. This included reviewing internal controls to understand key steps that may be pursued if an IPO is eventually pursued.
With the help of Aventine Hill, this company was able to navigate the complexity of a merger integration successfully and begin driving new value from the acquired assets quickly. The executive team were able to “connect the dots” between the strategic and cultural goals they were pursuing and the practical day-to-day changes required to execute as a combined company.
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