According to Deloitte, “Corporations and private equity firms pin the most blame on external factors, but recognize the need for more effective due diligence and integration to make sure revenue projections materialize.”
Divesting a group of locations or a company under your parent company may seem like an easy task. However, if your locations have consolidated invoices, the easy task can turn into a nightmare.
An international aviation company chose to divest over 100 locations and committed to supporting those divested locations for a period of six months while the services were transitioned to the new owner. The six-month process turned into a multi-year headache as no strict ground rules were set for tasks to be completed.
Issues to resolve:
- There were multiple consolidated invoices that had the divested location’s monthly charges included in the total charges
- There was no inventory that clearly defined the account numbers, billing telephone numbers or circuit numbers of the services that were being moved from the accounts
- There was no notification to vendors that a portion of the services and dollar volume was being moved off of the existing contracts
RadiusPoint suggested an inventory of the current services however the Client decided to just provide the new ownership with a file that included the phone numbers and suggested that they get with the vendor to move the services off of their main account. After the six months of transition support passed, the client decided to start canceling the services that had not been moved off of the account.
RadiusPoint was able to assist with the transition on multiple services to avoid cancelation, however, there were some services that were canceled due to the new owner not taking the transition seriously. The recommendations by RadiusPoint would have involved completing a full inventory that would have enabled the management team to provide a letter to the vendor with the consolidated accounts, of numbers and services that were being moved. This notification would have enabled the purchasing company to efficiently have the services moved to their own contract within the six-month timeframe.
Dexter provides a full-service acquisition service which includes pre-due diligence, due diligence, integration and post-transition efforts to ensure that the purchase meets or exceeds the earning and profitability expectations and transitions are completed seamlessly.
Partnered with RadiusPoint, Dexter hands off the Accounts Payable tasks during the integration phase to ensure business continuity with all of the invoices that your newly purchased company brings to your organization. RadiusPoint can provide:
- Costs benchmarked and brought under control to stop the overspending
- Plans to move from some of the higher cost space to lower-cost space
- Restructuring of the logistics and eliminating redundant warehouse space
- Processes to better define procurement to cut costs
Having Dexter and RadiusPoint on your Mergers and Acquisition team will save your team time, allow your acquisitions to move faster and transition move seamlessly.