Overview
Increasingly, senior executives are turning to procurement as a potential catalyst for delivering significant enterprise value during a merger or acquisition. Yet, successfully delivering procurement synergies requires having a clear understanding of how the function must adapt its role, skills, and execution capabilities during an M&A event.
Axiom works with acquirers to collaborate with their procurement executives to execute practical and proven strategies to plan and deliver procurement merger programs that actually meet or exceed savings targets.
Solution Offerings
Axiom delivers targeted skills and expertise to help our clients accurately identify and capture procurement cost savings and other synergies in demanding M&A environments.
Procurement Synergy Planning (Pre-Deal):
Prior to closing we collaborate with our clients to conduct Procurement Synergy Planning, which involves:
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Rapid evaluation of the combined spend portfolio using specialized spend analysis tools and our proprietary Synergy Estimator, which leverages our database of sourcing benchmarks
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Review of key contracts
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Evaluation of sourcing practices and capabilities
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Quantified, validated, and prioritized list of post-M&A savings opportunities
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A detailed action plan outlining specific sourcing strategies, implementation steps and timing for capturing savings and optimally organizing the procurement function.
Value Delivered -
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Accurate assessment of the procurement-related cost take out opportunity to help identify or validate an investment hypothesis. On average, we have helped our client identify (and deliver) savings of approximately 20% of procurement spend
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Fast and accurate analysis resulting in accelerated synergy capture
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Due diligence support to mitigate the risk of overpaying and identify potential supply risks
Procurement Synergy Implementation (Post-Deal):
After closing, we partner with our clients to deliver selective portions of the Procurement Synergy Implementation. This first involves agreeing on the scope of Axiom’s involvement which could encompass any combination of the following:
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Sourcing a limited number of targeted categories
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Taking responsibility for sourcing the entire portfolio of categories
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Running the procurement integration Program Management Office
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Enabling the reorganization of the procurement function through training and recruitment
Value Delivered -
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Significant improvement in operating leverage resulting in major increases in shareholder value. For a company with EBITDA of 10%, a modest 5% savings across the entire spend portfolio yields an 45% lift in EBITDA -- with no change in sales volume
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such value can be reinvested in the business, or used as part of an exit strategy to enhance valuation upon shareholder change of control
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We deliver additional value by securing proven procurement skills to build in-house procurement capabilities
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