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Turning a Merger into Growth

BCG helps a packaged goods manufacturer integrate a merger and achieve more than twice the value anticipated prior to the deal’s close.

The inability to navigate postmerger integration is often the leading reason why acquiring companies don’t fully reap all the benefits they anticipated at the start of a deal. These challenges were carefully considered when leaders of two large packaged goods manufacturers in the food and beverage sector closed a more than $10 billion merger of their organizations. The merger had a lot of potential, including opportunities to capture increased revenues through new product offerings and expanded product distribution, as well as improved scale in operations and costs. Estimates prior to the deal’s close put the expected synergies at approximately $250 million over five years.

To help ensure success, the executive teams turned to BCG and its proven value-added approach to postmerger integration. BCG’s comprehensive postmerger integration method helped the companies address all aspects of the integration, from strategy and people to operations, cost structure, and synergies. Supporting the postmerger integration strategy is a suite of proprietary tools that help companies realize the full value of a merger.

To drive integration efforts, BCG created a large cross-functional team with leaders from both organizations. The approach included:

  • Starting a project management office (PMO) and specific initiative subteams with clear charters and objectives
  • Creating an integrated project plan with milestones, metrics, and detailed top-down and bottom-up targets
  • Establishing a disciplined system to track progress and give executives a visibility into potential problems

BCG conducted detailed planning sessions before the close date to ensure speed and decisiveness once the deal was formalized. The plan focused on revenues and costs, including how the merged company can best reinvest for growth. BCG also helped leaders focus on communication and culture to ensure successful operations after the merger.

The up-front planning paid off. The merged company achieved more than twice the value anticipated prior to the deal’s close.

Shareholders earned an average 61% return versus the market five years after the acquisition was announced. The organization also registered dramatic improvements in operating performance—top-line growth expanded to 8% and profits rose from 3-12%. The company successfully gained scale and efficiency without disrupting ongoing business operations.

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