Moregate Consulting

Moregate Consulting was called in by the Managing Director to help with the integration of the two companies.

An Integration Steering Group was formed consisting of the board members and senior executives of both organisations. It was chaired by the Managing Director and led by Moregate in conjunction with the Integration Director.

Moregate provided the tools, techniques and advice to equip the Steering Group members to baseline the combined entities, to identify and sign off cost savings and shareholder value creating growth opportunities well in excess of  the deal value and restructuring costs.

The emphasis of the approach was to equip the management team to create value over and above the intrinsic value of the two businesses combined on a stand-alone basis.

Project background

In May 2010 Electrosonic (ES) acquired the DRV Group (DRV) for an undisclosed value.

Electrosonic operates world-wide in the leisure, command and control and corporate markets. The leisure market has an estimated £500m annual value,  the corporate AV and Support market has an estimated value of £3bn  world-wide and command and control estimated to be £500m

DRV focuses on the corporate market, but has recently started to diversify into the medical education segment.

The overall market for AV integration and services is set to change with the key drivers being globalisation, commoditisation and IT/AV technology conversion.

The acquisition of DRV was seen as a platform for growth by developing more long term relationships whilst integrating both organisations and developing the offerings available to both existing and new customers.  

It was important to retain all staff and their key relationships with both customers and suppliers during the integration process; this was balanced with the need to integrate both businesses into a single organisation and ensure flexibility was also retained and developed.  Electrosonic offered DRV structure and stability whilst having a strong financial position to underpin future growth opportunities in new geographic regions or by developing new offerings.

Approach

Moregate deployed its 100 Day Process with the objective to align and integrate the two organisations, identify the synergies and benefits targets and start the organisational structuring with the aim to optimise the operating model and working practises.

The 100 Day Process is a holistic approach to post M&A integration and is designed to address the six key factors of successful M&A into account. These factors are split into three “hard” and three “soft” factors:

The critical working assumption was to not disrupt the day-to-day operation whilst addressing the key consolidation issues immediately and head-on.

The programme was structured around four Updates:

1. Strategy imperatives and Baselining
2. Sizing the Prize
3. Design and Consolidation
4. Detailed Implementation Plan

At all stages in the process risk and change management issues were managed in advance through a combination of the 100 Day Processes acting as an early warning system and assisting the Integration Director with managing issues as and when they occurred.

The key principles upon which Moregate bases the 100 Day Process specifically deployed in this case are:

• Identification of synergies and benefits linked to the overall business strategy to ensure shareholder value creation
• Synergies and growth benefits are being tracked through the P&L
• Organisational consolidation addressed and executed very early during the process to free-up the way for strategic, organisational and operational change

David Ambrose Managing Director of Electrosonic commented “This is a very exciting phase for our business, the acquisition of DRV provides a platform for growth.  At the project outset we recognised the need for some experienced input to help provide a framework for the integration.  Moregate helped us develop this framework and guided us through the one hundred day plan to integrate the two organisations.  The short term injection of key skills helped us mitigate risks in the integration and remain focussed on our overall strategic objectives”

Success factors

·      Ownership and governance

·      Strict financial management

·      Communication

Results and benefits

·      Clarification of strategic and financial objectives

·      Cost savings unlocked and linked to the P&L

·      Shareholder value creation and platform for growth

·      Uncertainty reduced