Pre-Merger Readiness & Post-Merger Integration

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Overview

We have the acumen to evaluate and prioritize synergy value opportunities from a financial perspective, but this is only a fraction of the expertise required to actually capture value from a merger. We help combining and divesting companies design business structures that will meet regulatory approval, align cultural differences, capture international tax benefits, and prepare carve outs to stand up on their own. Once these major hurdles are met, DPO&Co has the expertise to operationalize the investment hypotheses identified during the due diligence stage to increase the likelihood that M&A deals will add long-term value to shareholders.  


CASE EXAMPLE
4-Week Diligence: Served as “clean team” prior to a combined $80B revenue chemical merger and subsequent carve outs, specifically designed to capture $3B cost synergies promised to the street   


Situation

  • Both companies were diversified companies, with lower economic profit and shareholder returns than specialty chemicals competitors
  • One of the two firms had spent significant effort on managing overhead, with a slightly higher focus on commodity items, while the partner had more of a specialty focus, but higher SG&A cost margins
  • Volatility in both the upstream and end customer commodity markets was challenging performance forecasting
  • Both companies were facing activist investor pressures calling for a breakup of the businesses and one firm had put one business line "in play"
  • In order to meet regulatory requirements and focus strategy, the combined companies announced plans to combine, but then immediately divide into three companies, adding substantial complexity

Approach

  • Conducted public desk research and gathered confidential data from each company in secure place, taking extra measures to safegaurd information in the event of a merger breakup
  • Designed three phase merger and separation plan for pre-close, interim structuring/transitioning and stand-alone business stabilization with a constant focus on the "to be" state
  • Identified strategies for the six things the companies needed to get  right to succeed

  1. Business Structure & Integration
  2. Synergy Capture
  3. Regulatory Approval
  4. Tax Structure
  5. Separation Readiness
  6. Cultural and HR Alignment

Impact and Results

  • Robust strategy to leverage scale on feedstock procurement to exceed synergies promised to the street
  • Overhauled supply chain to operate in end state business functions (post diligence)
  • Detailed growth strategy with broad product portfolio scope, improved channel position and strong R&D