Merger synergies yield significant savings
Client Results Story
A large defense contractor needed to reduce capacity redundancies after a merger. Bain designed and implemented an approach to consolidation that fit within the overall corporate vision. We helped the client develop ways to concentrate capabilities and simplify core processes, closed two facilities and reduced headcount by 12 percent. The result: Over $3 billion in projected integration savings.
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We take our client's confidentiality seriously and don't disclose their names. While the name is changed, the results are real.
MilSpace needed to leverage its recent merger by reducing capacity redundancies.
MilSpace, a large defense contractor, had recently been created by the merger of two defense and aerospace corporations. In its SkyCraft construction unit, the newly created firm had four separate manufacturing facilities with significant facility and capability redundancies.
Corporate management needed to know what consolidation option would best position the SkyCraft construction unit for the future - taking into account synergies, cost reduction opportunities, program life cycles and a culture resistant to change
Bain played the critical role as the "black box" supporting merger planning and implementation. It was asked to design an action plan that:
- fit within the overall corporate vision
- set aggressive but realistic targets based on robust data analysis
- included an implementation roadmap
A comprehensive model evaluated ten integration options against 27 criteria to identify the one offering the highest value.
Along with an overhead headcount reduction of 12 percent and closing two facilities, Bain recommended creating Centers of Excellence to concentrate capabilities and allow core processes to be simplified.
Eighteeen months after the merger, the integration savings targets were revised upwards again to total more than 5x MilSpace's original projections.
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