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.”
An airline organization had performed a great due diligence phase before the purchase or another company. Twelve months into the transition of the new management team, put into place by the Private Equity firm was struggling operationally. Profits were down and customer perception was suffering.
A few other areas of concern were:
- No Post Acquisition plan
- The competitive position was falling
- Commercial issues caused customer perception to decline
- Lack of communication between new leaders and there was a cultural gap between local parts of the organization and global HQ
- Procurement, supply chain, and general operational perspective tasks were disjointed and costs were skyrocketing
- Improper Accounting procedures leading to over payments
There has to be a keen focus on mapping out the ROI and additional benefits that are to be driven post-acquisition. Bringing in experts for finance, regulatory and industry experts and generalists can help your team sift through information quickly and bring about positive results to meet and exceed projected profits. Having the right level of support will drive the project to a smoother finish that will result in meeting revenue and earnings expectations. Driving the transition is key to creating ROI as projected during the due-diligence phase. The first 3-4 months are critical to this transition.
The acquisition was twelve (12) months past the purchase so the 3-4 month critical transition period was long past. Dexter was brought in after the purchase and even though the situation seemed insurmountable, the areas of the issue were immediately identified and a path to resolution was created.
- Defined clear values for employees re-training
- Helped to build bridges and better communication between new management and existing staff
- Restructured the procurement and defined better processes
- Reviewed Accounts Payable invoices and contracts to identify overcharges
- Identified over $2MM in overcharges that were recovered
Dexter’s project evolved into a nine (9) month project that involved structuring their accounts payable processes and documentation was written for employee training. The restructuring of staff was also a part of the process that involved reviewing employee contracts, terminating certain staff and interviewing and hiring staff where certain expertise was necessary.
During the review of the invoices, an overcharge totaling over $2MM in Value Add Tax (VAT) was not being recovered. Dexter was able to research and recover the overcharges on behalf of the Client.
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 were benchmarked and brought under control to stop the overspending
- A plan was created to move from some of the higher cost space to lower-cost space
- Restructured the logistics and eliminated redundant warehouse space
- Wrote 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.