This brief case study highlights the role of M&A support services in the transportation industry. We look at the work our team did together with a logistics specialist to help a transportation specialist achieve their ROI targets in a highly diversified business model.
External factors are often blamed for the failure of an M&A team to hit the cost savings and revenue projections laid out at the onset of an acquisition process. RadiusPoint observed that in many cases, this common failure can be traced in part to a faulty due diligence and integration process. Our team has made a specialty of helping fast-growth companies to integrate acquisitions and divest businesses more seamlessly through support services.
Challenge
A transportation company needed support services (market research, cost benchmarking, business valuation) to achieve a clearer view of the viability of its highly diversified business model. Our client had five different service offers and was concerned that further diversification would have adverse effects on their P&L.
Additionally, their executive team was concerned that:
- They did not have the ability to perform efficient market research.
- They would be unable to identify and map out all growth opportunities in the transportation industry.
- They lacked an outsider’s viewpoint on their business model to identify which service branch(es) to divest.
Opportunity
Our client needed a clear roadmap to set out realistic ROI expectations during the due diligence phase. Their executive team recognized the need to hire third-party experts to gather the required business intelligence. They were also keenly aware of the need to “drive the transition“, a process that would be key to achieving their ROI targets for their divestitures.
Outcomes of Using Support Services
The due diligence process gave our client an outsider’s perspective on the market and the place of their diversified service offer. Two service branches were identified as possible divestitures with significant implications in terms of cost savings. Among the tasks accomplished during the due diligence process:
- Review of business plans
- Market research conducted for each service offer
- Road-mapping of the sale of the two ill-fitted service branches
- Road-mapping the growth of the other service offers
The process gave our client a clear perspective on the role of their service offers in the transportation industry. Three of them would be programmed for further growth by acquisition, and two would be divested. As part of the roadmap for the divestitures, market research was performed by a 3rd-party expecting to find out the right selling price for our client to achieve a superior ROI on the sale.
As part of the due diligence and transition phase, RadiusPoint helped this transportation company map its cost savings to ensure business continuity and hit its financial targets:
- Costs were benchmarked and brought under control to stop overspending
- A plan was created to move from some of the higher-cost space to lower-cost space
- Logistics was restructured and redundant warehouse space eliminated
- Processes were written to define procurement procedures effective at cutting costs
Onboarding RadiusPoint M&A Support Services early in your acquisition & divestiture endeavors will save time for your team, and help your acquisition process to move faster. It will also contribute to a smoother transition phase. Ultimately, it boils down to making sure your acquisition & divestiture strategy yields your ROI and cost savings targets.
Contact us to discuss how we can help your M&A team integrate an upcoming acquisition or divestiture.
Additional Resources:
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