Acquiring or merging businesses has a multitude of benefits and is often a mark of success and growth.
However, some of the opportunities that arise from this process are often not capitalised on due to the intensity of the process and the need to merge cultures, people and processes.
During this time the benefits from the larger entity need to be identified to ensure that any financial growth is realised. Quite often the increased sales revenues are not returned directly to the profit line due to inefficiencies in ordering, pricing or process. Existing suppliers need to be brought into any transition where additional efficiencies can be realised together and a better margin achieved for all parties.
This process can also be an opportune moment to review existing suppliers and most importantly their service levels. Whilst contracts may be prohibited from being terminated, leverage can be used to achieve a better level of service or indeed price. Supplier are often keen to work with a growing business as it cements relationships but also business continuity for their own supply chain.
By understanding the suppliers cost base and the efficiencies they can make through logistics, administration, marketing and sales support can be utilised to drive a reduction in cost to the end business. These savings can be multiplied along the supply chain to all suppliers and discounts can be moved to a new level.
Pressure to deliver a return on any investment is never keener than at this time of any businesses life and examination of the cost lines should be undertaken at this time. It is the norm that financing has been used to make any acquisition or merger take place. Unforeseen costs such as redundancy, implementation of new processes and a normal downturn in production can all be by products of any merger / acquisition.
Balancing all these financial demands can reduce staff motivation and a downturn in business can occur whilst at the same time needing a instant return on any investment is required.
Bringing in expertise would deliver benefits and assist in achieving a quick return allowing a business to focus on increasing sales revenue and cultural integration.