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Managing B2B deals post merger and acquisition

Posted by Andrew Butt on May 11, 2017 08:34:00

We are witnessing a huge volume of merger and aquisition activity. 2015 saw the highest level of merger and acquisition activity in the UK with over 6500 mergers and acquisitions being completed in the UK with a total value of £433bn.  

Fast forward to today and merger and aquisition deals have totalled $42.9bn (£35bn), down 69 per cent on the same time last year, according to data from Refinitiv. But despite the large drop in value, the number of deals has fallen only five per cent.

What are mergers and acquisitions?

Mergers and acquisitions (M&A) involves the process of combining two companies into one.  A merger occurs when two separate entities combine forces to create a new, joint organization whereas an acquisition refers to the takeover of one entity by another.

Mergers and acquisitions may be completed to expand a company’s reach or increase market share in an attempt to create shareholder value. Plus they could gain competitive advantages, or influencing supply chains.

If a company buys out one of its suppliers or distributors, a business can eliminate an entire tier of costs. Buying out a supplier, for example lets a company save on the margins the supplier was previously adding to its costs. Any by buying out a distributor, a company often gains the ability to ship out products at a lower cost.

What industries are involved?

For those in the wholesale distribution industry, building materials, food retail and others that sell or distribute finished goods, one of the main benefits a newly merged organisation is looking for is improved buying power.  But all too often the work involved in obtaining a consolidated view of purchasing requirements is delayed whilst business and systems integration work takes effect.

What can they use to manage B2B deals?

We have a software solution that enables newly merged businesses to reap the benefits of improved buying power without the impediments of disparate ERP systems and complex spreadsheets.

It is neither a data warehouse, nor a new breed of ERP, but an entirely new solution that helps businesses manage the following key areas:

  • Pricing management
  • Procurement contracts
  • Supplier management
  • Rebate management

…across multiple ERP systems.

And let's not forget the suppliers in all of this.  A supplier dealing with a larger organisation rather than several smaller ones sees benefit in economies of scale too. This forging of mutual commercial targets between supplier and buyer is often realised in the form of rebates, and this is where DealTrack excels.

If you are a post-merger business, looking to gain commercial advantage through enhanced buying power,  and you typically engage with suppliers by constructing deals that include complex rebates or retrospective discounts, our paper “Realising M&A synergies faster” represents a MUST READ for you.

Realising M&A Synergies Faster

Topics: Mergers & Aquisitions