M&A support services are among the BPO services increasingly used by organizations pursuing growth-by-acquisition and divestiture strategies. Business Process Outsourcing enables C-level teams to focus on their core KPIs and achieve business objectives faster. RadiusPoint offers integrated M&A support services to help clients hit the ROI and cost savings targets mapped out for their acquisitions and divestitures.
In this brief case study, we discuss two real examples where our M&A Support Services would have helped clients save costs and aggravation if they had onboarded our team early on in the due-diligence process.
M&A Support Services: Example 1
Two companies were about to finalize a divestiture-acquisition within a few short weeks, when RadiusPoint was hired to support the acquisition process with telecom expense management (TEM) services.
The seller provided RadiusPoint with a list of locations that would be transitioned off to the acquirer. The latter had three months to transition telecom invoices and would receive six months of support from the seller.
Hiring RadiusPoint at the last minute of the divestiture-acquisition process was not ideal: we first had to identify quickly all of the telecom service account numbers relevant to each location… We completed this step on time, but that proved to be the easiest part of the process.
Our next step was to get the Transfer of Liability documents signed by the acquirer for each telecom line transferred over. Unfortunately, we did not receive the full cooperation of the acquirer in this process. Our team had to spend an inordinate amount of time chasing after signatures.
Secondly, a dispute started between seller and acquirer over phone lines and wireless lines to be transferred: the buyer refused to claim a number of lines that the seller considered as transferable to them.
M&A Support Services: Other Applications
- RadiusPoint had not been hired to renegotiate existing telecom contracts. We could have obtain lower telecom rates from vendors.
- RadiusPoint had not been hired to inventory telecom services transferred over. That would have smoothed out the process.
- Some identified locations and telecom services were moved over that were not part of the deal. That would have been avoided.
- Telecom expenses of $15K were incurred that shouldn’t have been paid. That expense would have been avoided.
All these issues could have been avoided if RadiusPoint had been onboarded with the M&A team early in the project, not at the tail end of it, and if the scope of our TEM services had been expanded to fit the cost-saving objectives of the management.
M&A Support Services: TEM/UEM
How important is it for an acquirer or a seller to get an inventory of telecom and utility services done early the due-diligence process in the framework of a M&A or divestiture? In our experience, the right question is “What could be the cost of not knowing?“.
- An OEM automotive client completed 5 acquisitions in the same year
- No inventories were done of the telecom services at the acquired companies
- Telecom invoices were paid out and vendor contracts honored — without any type of review.
Yet, after RadiusPoint investigated the Accounts Payable (post-acquisition) we found out:
- 25 toll-free numbers had been transferred that did not belong to our client (cost: $1.5K/month)
- 400 phone numbers had not been moved to the corporate LD account (cost: $10K per month in excessive telecom rates)
- Multiple DSL lines had become unnecessary but had not been cancelled
Just by normalizing the situation, we helped our client achieve savings of $1.3M in Year 1 of their acquisitions.
Over the past few years, RadiusPoint has had the opportunity to be hired in multiple M&A and divestiture projects to help with the due diligence process and to “drive the transition“. Experience proves that onboarding RadiusPoint a part of an M&A team at the inception of a project makes a lot of financial sense.
Having RadiusPoint participate early on in your M&A will save your M&A team significant time, allow your acquisitions to move faster, and contribute to a seamless transition.
We can help your organization achieve greater cost savings and ROI. Contact us to discuss your merger, acquisition, or divestiture project early on.
TEM Service Vendors 2021 Reference Market Guide