Acquisitions: Integration Period Key to Meeting Projections
Introduction
Discussing mergers and acquisitions, accounting and consulting firm Deloitte stated: “Corporations and private equity firms pin the most blame on external factors but recognize the need for more effective due diligence and integration to make sure revenue projections materialize”. During the integration period, especially in the first 3-4 months following the acquisition, the management team of the acquirer must be keenly focused on planning and mapping out the projected ROI and post-acquisition benefits.
Bringing in experts in finance, regulatory, technology, and industry issues can help management sift through information quickly. In this short case study, we will cover how the audit specialists of RadiusPoint helped our client meet and exceed their profit projections through vendor invoice line-item audit.
Challenge
A nationwide salvage automotive company completed 5 acquisitions in the same year. As these events occurred, the telecom expenses of the acquisitions were consolidated over to Accounts Payable. However, no inventory of the telecom services was carried out. All invoices were paid out and contracts honored, but without any type of financial or contractual term review at the level of the acquisitions.
Solution
RadiusPoint’s ‘Inventory & Audit‘ service team identified billing errors on telecom contracts signed by unauthorized personnel. Our team also inventoried telecom services that were no longer necessary due to the merging of locations, services and assets.
RadiusPoint defined the physical address of each of the 5 acquisitions, all phone numbers and circuits billed to each address with all features and charges billed for each service. This line-item inventory and audit resulted in savings of over $1.3MM across the 5 acquisitions in Year 1.
Results
- 25 toll-free numbers identified that did not belong to the Client – Savings: $1,500 per month
- 400 phone numbers moved to corporate LD account contract rates – Savings: $10,000 per month
- Multiple unnecessary DSL lines identified and cancelled
Other post-acquisition services
Through its partnership with a major full-service acquisition service provider, RadiusPoint handles all tasks related to Accounts Payable during the acquisition integration phase to ensure business continuity.
Additionally, to help the management team achieve projected savings, RadiusPoint provide these post-acquisition services:
- Costs benchmarked and brought under control to stop overspending
- Plans to move some of the acquisitions’ high-cost space to lower-cost space
- Restructuring of logistics and eliminating redundant warehouse space
- Processes to define procurement better and cut costs
Focusing on and measuring opportunities for cost savings
Partnering with a BPO specialist as RadiusPoint to audit utility, telecom and IT invoices and costs at the local level is a key step towards meeting cost-saving projections. Our Audit Specialists have years of experience in process automation extending throughout the life all such invoices, from receipt to payment.
Combined with the reporting capabilities of ExpenseLogic, our proprietary SaaS platform, RadiusPoint provides business intelligence at a very granular level to make quick and well-informed cost-saving decisions.
Because of the complexity of integrating a new acquisition, it is a savvy move on the part of the management team of the acquiring company to call on BPO service providers like RadiusPoint to take over specialized tasks like invoice processing and payment with a view to extracting all possible savings from existing telecom, IT, and utility vendors and services.
Other case studies about cost savings related to mergers and acquisitions