Success Stories


Organizational Integration (M&A, Restructuring)

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Pharmaceuticals

A large pharmaceutical manufacturer bought a smaller manufacturer with a complementary, but different, product set and consolidated it into their pharmaceutical business organization. The acquired company offered both prescription and over the counter (consumer) drugs. The pharmaceutical executives of the acquiring company were not familiar with the consumer business, leading to several problems with the acquired company’s consumer brands.

The consumer brands brought in considerably less revenue than the pharmaceutical brands, making them the stepchildren of the business. Cost allocations resulted in extraordinarily high costs of goods, lack of knowledge about consumer marketing made for packaging that was recessive on the shelf, out of stocks were common and the brand teams received insufficient funding for advertising.

As a result, the acquired company’s consumer brands languished under the pharmaceutical umbrella. At the same time, the acquiring company’s consumer healthcare business was growing at a healthy 7%. To grow the acquired consumer brands, the new parent company CEO decided that the newly acquired consumer brands should be moved to the parent company’s consumer business.

When a Harmonic Systems Consulting (HSC) partner took over project management, the consumer healthcare integration project was already four months behind, and no one had decided upon an approach for integration. The challenge was to integrate the newly acquired consumer brands into the US business, to get to “one order / one invoice” (where orders would come into the parent company, be shipped and then invoiced). Typically, such integration projects took 6 or more months.

The HSC partner and an internal project team took the following actions:

  • Led a meeting with the acquired company and parent company consumer healthcare teams to define a structural approach. Gathered costing information from various departments (e.g., IT and Supply) and recommended staffing. Worked closely with a parent company Vice President to recommend an integration approach and business case for the US business to the consumer healthcare executive team (CHXT) and the parent company’s CEO.
  • After acceptance of the proposal by the CHXT, formed a cross-functional project team and ran a kick-off meeting to develop an aggressive plan to integrate within 5 months.
  • Led the project team and executed the plan, managing issues and tracking progress throughout.
  • Conducted an After Action Review to capture learning for future integrations.

As a result of these actions, we successfully completed the acquired company one order / one invoice integration 2 months earlier than previous integration projects, and 1 month ahead of the already aggressive schedule. The President of the US portion of the business commented that this was the best acquisition project he had ever seen.

The parent company used this project as a model to complete the acquisition in the rest of the world. The company then began growing the acquired brands, using the acquisition as the basis for growth in a whole new category of consumer products.

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Healthcare Products

A healthcare products company established a tight timeline to assimilate a new business into their organization while seamlessly maintaining overall customer service levels. The new business introduced different products, a new supply chain, an increased international presence and new personnel to the healthcare company’s organization.

Considerable Project Management effort was required to meet the timeline and customer service objectives. Harmonic Systems Consulting (HSC) was hired to manage the organizational assimilation project.

HSC partners began by defining project scope and creating a task specific timeline in support of the overall timeline. A project team was created. Roles and responsibilities were established by department and by person. The project management effort consisted of weekly project status meetings with the entire project team (chaired by an HSC partner), weekly conversations with the client “project owner” (an executive level employee), personal conversations with individual team members and a variety of formal status reports.

During project implementation it became apparent that several components of the project were not progressing as well as originally planned. It was determined that strict adherence to all components of the original plan could put the most important aspects of the assimilation effort, and related timeline, in jeopardy. HSC worked with the team members to evaluate the pros and cons of several plan change options and helped in deciding how best to revise the assimilation effort. Organizational leadership accepted the proposed changes which allowed the most significant portion of the project to be completed on time with no disruption in customer service levels.

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Consumer Products

A global consumer healthcare company began execution of a new strategy to get the company focused for growth and leadership in the market which required the selection of product categories and brands upon which to focus and divestiture the rest. The company put the selected set of brands up for sale and went about the business of selecting a buyer.

The divesting company found a buyer for ten 10 divested brands in North America, including the US, Canada and Puerto Rico. The total value of the sale was approximately 800 million. The nature of the agreement was that the sale would be completed within six months, after which the brands would be fully separated from the divesting company. During that time, both the seller and buyer would operate under a Transitional Services Agreement (TSA) whereby the seller would provide services to the buyer for a fee in order to ensure the purchased brands continued to maintain ongoing sales and marketing activities while the transition took place. The project had specific milestones and timing which both parties were contractually obligated to meet.

A strategic project manager (now an HSC managing partner) was assigned by the seller to manage the project from the time the agreement was reached until full divestiture. As project manager, the HSC partner faced several major challenges:

  1. The work to transition the brands had to be completed to buyer’s satisfaction while meeting all of the deadlines and contractual obligations.
  2. Since two of the seller’s plants that produced the divested brands would continue to be owned by the seller, the seller became a third party supplier, and would have to change internal processes and systems in order to comply with the sales agreement.
  3. The seller’s Canada and Puerto Rico divisions did not do business the same way as their US operations, so there were significant differences (such as regulatory issues) that had to be addressed.
  4. More than half of the seller’s project team was told beforehand that they would no longer have jobs after the project was complete. The Vice President for the selling company originally responsible for the project on a full time basis was reassigned one month after the sale was agreed.

In order to ensure that the transaction was completed to the satisfaction of both the seller and buyer the HSC partner took the following actions:

Conducted an internal planning session with the seller’s project team to lay out the project milestones and tasks. Defined roles and responsibilities of the workstream leads.
  • Conducted a joint kickoff meeting with seller and buyer to define a joint plan for transition. Requested a counterpart to manage the project on the buyer side.
  • Conducted regular project status meetings and a meeting of the projects governance board (consisting of executives from both companies). Maintained a key issues schedule both internally and externally to ensure major issues, risks and decisions were addressed.
  • Developed a change management process and template to document agreed changes to the TSA by both companies.
  • Maintained morale on the 75 person team by listening to and addressing seller team members’ issues and escalating as appropriate to the seller executive team. Recommended approaches the executive team could take to keep the team motivated. Also maintained buyer’s satisfaction with the project by regularly meeting with the executive responsible for their project management and addressing issues she raised.
  • Scheduled and ran meetings to address specific major issues, as needed, including negotiating a resolution to a significant supply challenge. Ensured that new third party manufacturing processes and systems were defined and executed.
  • Developed separate workstreams for Canada and Puerto Rico and managed their interfaces with the rest of the team.
  • Conducted internal and external after action reviews to capture learning for future projects.

RESULTS:

  • Successfully addressed nearly 130 major issues and 10 major changes and completed 555 project tasks on time and within the terms of the contract.
  • All but one of the seller’s project team members stayed actively engaged throughout the project and team morale stayed high.
  • The selling company’s US President said it was the smoothest and most successful disposition project that the company had ever done. The buying company’s executives commented that the project was best experience they had ever had with an acquisition.
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Healthcare Products

A global healthcare products company acquired a business in the same industry with a new category of products that could significantly grow the acquiring company’s revenues if aggressive goals established for the acquisition could be met by both U.S. and Canadian operations.

Harmonic Systems Consulting (HSC) was hired by the acquiring company to manage the Organizational Integration project. Serving as project manager, HSC partners worked with the internal integration team to ensure the following:

  1. Full development of plans to transition the business within 90 days of signed closing agreement
  2. Successful positioning of the integrated business during the current fiscal year to achieve the next fiscal year’s financial targets, including cost savings
  3. Thorough communication of project progress with appropriate elevation of issues/opportunities
  4. Filling of all key positions in the newly integrated business

The project impacted human resources (including hiring 23 people), sales, marketing, finance, regulatory, R&D, supply chain (including manufacturer and distributor changes and a warehouse upgrade), information technology, legal and quality assurance. The integration brought with it new customers, products and suppliers, and the company had to sell one of the acquired products to meet regulatory requirements. The project was further complicated by the fact that this was the first integration project the acquiring company had performed after implementing a major new enterprise requirements planning (ERP) system. At the same time, the acquiring company was expanding its office space.

HSC took the following actions:

  • Coordinating closely with the project sponsor, built and managed a highly motivated and enthusiastic project team
  • Developed a comprehensive project plan, including timing, roles and responsibilities, risks and planning assumptions
  • Established weekly status meetings and a reporting protocol, including a hiring tracker, project team status reporting and an executive status report
  • Worked closely with the team to track and resolve key issues to ensure success of the project
  • Worked with the Canadian distributors to consolidate operations from two into one, deftly resolving delicate issues to get the transition completed on time
  • Worked with the executive team to resolve high level issues and make priority decisions
  • Recommended changes to address opportunities that arose because of the growth by acquisition

As a result, the project team was able to get to first consolidated shipments in record time (less than 2 months after Close versus an industry average of 6 months), hit other strategic milestones as planned and successfully integrate all operations on time, both within the US and Canada.

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