Integrating & Reducing costs after a dozen acquisitionsProfessional Services Company

Merger integration and cost reduction work drives a substantial increase in profits.

A two-thousand person professional services organization that provided back-office services to financial service organizations. The business was created via 15 acquisitions in less than three years with minimal integration between the disparate teams and locations. If their work was producing widgets, there were 25 separate and distinct ways to produce the same widget across seven different locations, meaning that even integration within the same office location was minimal. Our eight-month project spanned the entire organization and ultimately led to the consolidation to 5 business processes over three separate products which led to 40 Million dollars in annual cost savings.

problem

Our sponsor had rolled-up several companies that had also been acquiring. Very little integration had occurred to bring alignment across the new organization and now that sales growth had slowed the executive team needed to focus on integration, finding and realizing synergies and increasing profitability. As a result of the frantic pace, the company was losing 8 Million dollars annually, had over-lapping products and services, had operations in teams across three geographies and seven locations. It was a mess.

  1. Losing $8 Million Annually
  2. 25 different processes to deliver the same “widget”
  3. Differing levels of customer service
  4. Completely different sales processes and cost structures

solution

Working with a team of fifteen SMEs, we documented and analyzed the products, teams, and processes. We collected detailed data on complexity as well as processing times which enabled us to identify best practices weaving together the best of all the teams work into three products and five distinct delivery processes. From there we were able to relocate many tasks and activities from high-cost to low-cost locations drastically reducing costs and delivery time. Identifying and correcting numerous areas of “rework” along the process. Creating an organization-wide team enabled folks to interact, share and participate in the transformation process increasing acceptance and speeding the implementation.

results

Due to annual loses, cost reduction was the first and foremost goal. We achieved those by leveraging the best of each former organization into a new re-engineered and re-defined organization. Following that, we looked at product mix and market fit and eliminated the unnecessary or confusing. Finally, with better data on costing and market, we were able to radically change their pricing structure to more profitably match supply to demand.

Key Results:

  • Consolidating and closing locations led to a 3.5M annual cost savings.
  • Implementing best practices and process re-engineering led to 7.5M in yearly cost savings.
  • Dropping unprofitable products and services led to 5M in savings.
  • Shifting work to lower cost locations $10M

Radical Impact: Two years later the business was sold to a strategic buyer at a significant premium.

Financial Impact

  • Revenue
  • Costs
  • Profits
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