How does a large, multinational consumer goods company with thousands of vendors who each have their own vendors know its supply chain is 100% free of exploitation? How does a big food producer reliant on grains adapt when Russia’s invasion of Ukraine cuts off most of the world’s wheat? How can companies model, understand, and plan for all situations, and know each department is purchasing quality goods? These questions tend to vex leaders across industries and many of them hire Bain to help figure it out.
Over the past few years, Bain’s Procurement practice has accomplished this by supplementing their expertise by bringing in supply chain and procurement technology partners. These companies not only help Bain’s clients adapt, but preempt and lead their industry by incorporating commitments like diversity, equity, and inclusion (DEI), and net-zero carbon emissions.
As demand for Bain’s Procurement practice’s work grew, they engaged Bain’s M&A team and others to explore building out an even more complete offering.
The Bain team began by exploring all relevant companies in the market, including many the Procurement practice had interacted with over the previous decade. Two stood out.
ArcBlue was a Melbourne-based software that helped companies make sense of, track, monitor, and direct transformation initiatives. For big companies, it’s difficult to initiate a sweeping change and then keep track of whether it’s really going according to plan. ArcBlue helps.
Proxima was a Kent, United Kingdom-based procurement software company with supply chain consulting expertise that helped companies reduce costs and increase the quality of materials they’d purchased.
The Procurement and M&A teams were curious, could these two capabilities on the opposite ends of the earth be folded into the Procurement practice?
Were the target companies open to a conversation?
What were their business models, and could they scale?
What were their technology stacks, and could those be integrated?
What was distinct and good about each culture?
What were the financials of both businesses?
If a deal were proposed, what were the tax implications?
How would Bain finance the deals?
Bain’s teams approached both companies to evaluate the mutual benefits of combining them. Bain's Product, Practice & Knowledge (PPK) team helped define a joint vision and actually ran multiple pilot projects, where the two companies partnered to deliver client work. Meanwhile, the Mergers & Acquisitions (M&A) team started to develop and test different options for how to structure the deal.
As excitement on both sides grew, all parties agreed on a letter of intent and Bain launched its diligence work to study the potential. Bain’s consulting teams, in partnership with PPK and M&A, improved the investment thesis and built a plan to help the combined entity reach its full potential. The Finance team examined their historical performance, assessed the tax implications, and explored financing options.
Bain’s Talent team met with both companies to understand the core of each culture. TSG, Bain’s technology experts, explored both companies’ technology stacks and software offerings to understand the complexities, risks, and best approach for collaboration post-close. The Legal/Risk team led a thorough legal and risk diligence process, and then led the process of drafting and coordinating negotiations on the purchase agreement with input from the M&A and commercial teams.
In the end, all teams provided critical input that convinced Bain’s board and investment committee to move forward. Both acquisition targets came with strong client and financial track records, highly talented teams, and compatible cultures that would fit well with Bain. With these added capabilities and expertise, Bain could help even more companies build adaptive and resilient supply chains, ensure the quality and cost of materials, and embed their DEI and sustainability efforts into all they do.
The Bain teams executed the ArcBlue transaction in February and the Proxima transaction in May. Throughout pre-deal diligence and post-deal planning and integration, hundreds of Bainies were involved in forging links throughout the companies.