Post Merger Integration + Turnaround = Success!

A Post Merger Integration under restructuring conditions – can it succeed? YES – if the “right” interim manager from HANSE Interim is engaged as CEO!

The situation – restructuring under its own steam involves high risks

The experts of HANSE Consulting, sister company of HANSE Interim, had prepared a reorganization concept according to IDW S6 for a medium-sized family business in the modular construction sector, considering the requirements of the Federal Court of Justice (BGH) with an extensive plan of measures. Although the liquidity planning still showed adequate liquidity – no (imminent) insolvency – for the restructuring, the reorganization by the company’s own efforts appeared so risky that the shareholder commissioned HANSE Consulting M&A experts, accompanying the implementation of the reorganization concept, to examine the sale of the company (“dual track”). A Northern European group finally bought the company.

As is so often the case, long and detailed negotiations were held on the purchase price, but no plans were made for integration. Unfortunately, the buyer had provided neither competencies nor resources for the PMI of the company and had almost left the acquired company to its own devices.

This led to a negative EBIT and to the self-termination of the CEO, who did not feel able to ensure the task of integration into the group. In order to keep the possible resulting damage as low as possible, the idea to engage in professional interim management quickly came up. Therefore, an interim CEO was initially provided by HANSE Interim for PMI.

The challenge

All the processes and structures that the group had already set up at other subsidiaries and expected here were missing.

There was no turnaround strategy, no inventory management system, no forecast procedure, no network to the group headquarters, no certification, inadequate internal processes and communication, and an IT landscape that was completely different from that of the group. Basically, the German subsidiary was a disorganized black box.

Due to the poor results, even a renewed sale and exit from the German market became an issue. Only an experienced restructuring manager (CRO) with PMI and corporate background could help here.

The following tasks had to be completed within a very short time:

• Leading the organization in the turnaround process
• Optimizing processes and procedures in the business operations to be stabilized
• Start of strategy implementation, aiming at a turnover of 50 million euros and a 10 % market share
• Annual financial statements, discussions with auditors
• Rolling liquidity planning and management
• Risk management, project management
• Sales and Fleet Management
• Internal Audit
• Implementation of ERP
• Supply Chain Management
• Digitalization projects
• Optimization of personnel and material costs
• Certifications
• Implementation of the prescribed “business principles”
• Budget planning, forecast, investment forecast

The Result

With the HANSE Consulting restructuring concept, the interim manager had a comprehensive roadmap for the operational profit improvement of the company. A classic and effective turnaround management process was set in motion. Sales were increased by 36% profitably during the integration and significant costs were sustainably saved in the short term.

After ten months, the interim manager was able to hand over management of the company to the CEO who had been hired in the meantime. The company was making a profit again and the team was motivated to move forward. Another sale of the company was off the table and the company was fully integrated into the group.

Conclusion

PMI under restructuring conditions succeeded and the new CEO was able to build on good foundations. The result is something to be proud of! But the case also shows how important it is to think about integration in good time during the sales negotiations in order to really leverage the hoped-for synergies with the right management team.

Your HANSE interim experts will be happy to assist you.

Andreas Lau and Christian Heuermann

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