A chemical giant overcomes merger risks for global growth
To achieve the promise of its multi-billion dollar acquisition, this global chemical company had to avoid common post-integration missteps that undermine deals involving different cultures and organizations. We worked with the leadership of both companies to craft a shared vision, prevent business disruptions and bridge differences, creating a fully integrated enterprise that’s delivering results: dramatically increased sales and profits.
Acquiring a major supplier was part of ChemicalCo’s global strategy to grow its market dominance with an expanded product line, enhanced scale and stronger innovation abilities.
But ChemicalCo knew the risks. Too often strategically sound deals fail to live up to expectations because of three major stumbles: missed targets, loss of key people and poor performance in the core business. ChemicalCo faced an added merger complexity because this was a cross-border deal, which required addressing regional and cultural differences and geographically dispersed operations and employees.
To succeed, the CEO and senior leadership needed an integration plan that clearly defined the payoffs—and risks—and how to overcome them. Only then would the merged company be able to hit its performance targets.
View Approach
Working collaboratively with senior management from both companies, we assessed the biggest integration risks and provided options for mitigating them. Distinct differences emerged between ChemicalCo and the acquired supplier, which was more customer-oriented and focused on innovation.
We helped senior leadership tackle the three major risks:
- Clarify and define a compelling shared vision during workshops with both management teams.
- Plan for business disruptions by identifying people most impacted by change and organizational trouble spots; develop a short and long-term mitigation plan that mobilizes leaders and supports key employees.
- Prepare to integrate the cultures by prioritizing major differences and developing an action plan.
View Recommendations
We recommended ChemicalCo’s leadership adopt a two-part integration:
Pre merger would involve employee training, customer support and communications from trusted managers to prepare employees.
Post merger would include launching transformation initiatives that align organizations around a shared vision and changed behavior to deliver results:
- Transform the culture in priority areas; develop a vision of the future and a “one-team” attitude.
- Enlist Change Sponsors to win buy-in by creating a Sponsorship Spine—an unbroken chain of people who support change from the bottom up to the executive suite.
- Speed execution with decision planning that tracks progress and mitigates ongoing risks.
- Gain a sustained competitive advantage by building a repeatable model for change.
View Results
With our risk assessment and disciplined integration plan, ChemicalCo and its acquired supplier defied the merger odds. Both companies generated record quarterly results—even while still executing the merger.
Performance
- ChemicalCo’s sales surged 21 percent, with margins rocketing up 44 percent.
- Acquired supplier increased sales 14 percent, generating a 24 percent increase in operating profits.
Integration
- ChemicalCo’s acquisition closed on schedule.
- The new joint leadership team took over on day one.
- Initiatives to mitigate risks were put in place as planned.
The key to ChemicalCo’s success: recognition that change takes place over time. ChemicalCo’s advanced planning has allowed it to deliver on the merger’s promise—while protecting its core business, retaining talented employees and strengthening customer relationships.
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