Deal results can be enhanced if acquirers focus on the supply chain during diligence and integration
Deals that involve complex supply chains often leave additional value on the table by overlooking the importance of a product flow analysis. Dealmakers need to collaborate with supply chain leaders to fully understand the future state supply chain network design, infrastructure and product flows. Doing so can improve profitability, reduce working capital needs, and more quickly achieve deal values.
Early in the deal cycle, acquirers should devote adequate resources to conducting diligence focused on identifying synergies in the existing supply chain and on future-state product flows. Supply chain focused due diligence can help companies gain a thorough understanding of both their own and their target’s current manufacturing and distribution footprint, which will give buyers the ability to identify both synergy opportunities and potential risks.
After gaining an understanding of key supply issues during diligence, acquirers need to design and map an optimal product flow early in the deal for a successful integration and an optimal supply chain function. This post-signing step is a key component for deals involving companies with multiple products, produced and sold across multiple regions. A mapping exercise can identify synergies across sourcing, manufacturing, distribution, and customer fulfillment, as well as pinpoint cost savings while meeting customer product demands and delivery windows.