Case study

Two sides of the megadeal: How working on both sides of a multibillion-dollar transaction resulted in a transformational combination and accelerated time to value

Client: Global contractor to the energy industry

Our role: We leveraged our full M&A Integration service offering to help the client build and execute on an integration plan.

Industry: Energy, utilities and mining

Services: Acquisitions, M&A Integration, Strategy Consulting

Client Challenge:

How to quickly integrate a highly challenging target to achieve a new go-to-market approach and enterprise-wide synergies

Our client was a major global company and contractor to the energy industry. We had been working with them over time on various strategy and cost reduction projects, when a potential acquisition was identified that was almost three times their size and experiencing challenges delivering on some mega projects. Additionally, the two organizations were vastly different, and their operating models were almost direct opposites of each other: One was matrixed, while the other was organized around business units. And one other thing: The deal would require a massive amount of leverage. This was a risky proposition, which meant the integration had to be meticulously planned.

Our client’s management team worked with PwC’s Strategy& team on the overall deal strategy and was convinced this deal was the right move -- it was bold and opportunistic. As a management team, our client had executed a successful turnaround before lending credit to “pull this deal off.” This transaction would allow the company to expand their business considerably by integrating horizontally with access to new products and customers and provide customers globally with an end-to-end service offering. It would almost triple their revenue, give them the ability to cross-sell and present opportunities for multiple areas of cost synergies. Once the final “go” decision was made, the client asked us to bring in our M&A Integration team to help them build and execute on an integration plan.

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“Speed is often the key to a successful integration. The ability to draw upon a proven integration methodology allowed us to hit the ground running and accelerate time to value for the client.”

Chris Cook, PwC Partner

Approach:

Sticking to the plan while executing a dual-pronged integration

PwC is involved in hundreds of deals every year, and in the case of acquisitions, we are often asked to assist in the integration. For M&A Integration, we have a market-proven approach and methodology that is holistic. It goes all the way from translating the transaction rationale into integration strategies to organizing and launching the Integration Management Office (IMO) to formulating a plan for Day One and the first 100 days before establishing a longer-term integration plan and roadmap. We leveraged our full M&A Integration service offering with the client. And since we were already quite familiar with the client’s strategy and operations through our previous and ongoing work, we were able to begin executing the integration immediately.

After an initial meeting with the executive team to review the transaction in detail and establish guiding principles and value creation initiatives for the integration, we set up the IMO to drive the integration effort across the entire enterprise. Working closely with the newly appointed Chief Integration Officer, who reported directly to the CEO, we designed an integration management organization that covered all the functional and cross-functional areas for both our client and the target.

The next step was a bit different, but it ended up making a significant difference. We created a parallel integration team (with its own IMO) within the target organization. In this manner, we were able to “speak the same language” across both integration teams and leverage our standard integration methodology across both companies. This happened well before the close of the transaction and helped facilitate seamless Day One.

On a practical level, the integration involved a sequence of coordinated activities between teams on both sides of the transaction. With a common understanding of the integration principles, value creation initiatives and future operating model, each IMO identified specific actions that needed to occur within the two companies to execute the integration. Once these priorities were in place and leveraging PwC specialists across many functional workstreams, we worked with our client to launch the joint integration to align both sides. What followed was a detailed planning process to get from transaction announcement to deal close, where we worked across all functions and four geographies globally to identify Day One and 100-day “must haves” for the combined company, including immediate synergy opportunities. Day One included a company-wide event with nearly 40,000 employees taking place in local events. A proactive communications strategy helped make this happen, and everyone felt part of an exciting new opportunity.

Impact:

From transaction to transformation

The right deal offers a chance to fundamentally transform an organization for the better. This was the case with our client. While there was certainly an element of risk, they saw a bold opportunity to make their company a much more significant player in the market, and they went for it. The transformation is still ongoing, but the results so far are impressive.

  • Shortly after the deal closed, the company was awarded with a new $2.5 billion opportunity that leveraged the combined companies’ product portfolios, and the company now has the largest backlog of opportunities in their history;
  • The original $250 million synergy target was more than doubled in the first six months following deal close;
  • The culture of both companies was transformed, and new incentive programs were implemented to reinforce the new, desired behaviors.

While there’s still plenty of work to be done, the acquisition and rapid integration has greatly enhanced the client’s competitive position.

For more information, please visit www.pwc.com/us/deals

Contact us

Chris Cook

Partner, PwC US

Rahul Sood

Partner, PwC US