The merger of two major grocery companies held the promise of significant scale advantages, but its success hinged on the meticulous execution of integration. By diligently guiding Company through this complex process, we facilitated a transformative shift in its operating model, organization design, and the effective utilization of synergies across its expanded footprint. As a result, Company and its customers now reap the benefits of a merger that has generated remarkable efficiencies throughout the combined entities.
Mapping out a highly complex integration
Company’s merger successfully brought together a vast network of stores spanning multiple countries, establishing a unified corporate entity. Following the completion of the deal, Company’s leadership made the strategic decision to reshape the company’s operating model by streamlining and consolidating certain functions. With a strong commitment to achieving synergies amounting to approximately 1% of sales within the third year post-merger, our team played a crucial role in providing a comprehensive road map for this endeavor. Leveraging the expertise of our seasoned retail professionals, we identified key areas where value could be unlocked, including:
In addition to the aforementioned sources of value, our comprehensive analysis revealed additional avenues for Company to capture savings and generate synergies. These included leveraging capability transfers to optimize operational efficiency, rationalizing IT infrastructure to eliminate redundancies, increasing market penetration of own-brand products, capitalizing on cash benefits from disposals, and improving working capital management.
Furthermore, the merger provided Company with enhanced buying power through the combined volume benefits from shared suppliers. This advantage led to a reduction in the cost of goods sold (COGS), further contributing to overall cost savings.
Through our diligent efforts, we identified hundreds of millions of dollars in cumulative synergies that Company could capitalize on following the merger. The company has successfully reinvested a significant portion of these savings into strengthening its brands and fostering continued growth and success.
A closer look at one critical consolidation
The power of scale in M&A
Our involvement in supporting the Company merger extended over a comprehensive three-year period, encompassing activities ranging from pre-merger due diligence to post-closing strategy. However, it was during the crucial phase of merger integration that Company began to experience the tangible benefits that result from successfully executing a meticulously planned merger, particularly within the retail industry.
Through the implementation of a new operating model and the consolidation of its organizational structure, Company achieved significant cost savings, precisely as planned and within the designated timeframe. The company successfully attained its synergy savings target, equivalent to 1% of sales. Notably, 14% of these savings were derived solely from IT-related initiatives, underscoring the impact of the IT integration efforts.
Today, Company stands as a prime example of a retail company that has harnessed the operational efficiencies and bolstered competitive positioning promised by the initial merger thesis. The organization has realized the full potential of scale, ensuring a strong foundation for sustained growth and continued success in the dynamic retail market.
* We take our clients’ confidentiality seriously. While we’ve changed their names, the results are real.