Supply chain analysis is key to a successful merger or acquisition: Phil Reuben

There’s no doubt that we’ve experienced a turbulent few years and seen the economy waver, but encouragingly, leading voices across Yorkshire and beyond predict that 2024 will bring boosted business confidence.

This renewed optimism could manifest itself in businesses seizing more opportunities and taking measured risks to futureproof and catalyse growth. In fact, a recent PwC report indicated that over half of firms in the UK view transactions in the form of mergers and acquisitions (M&A), divestments, joint ventures, or minority stakes as the best way to keep up with the changing landscape and secure long-term viability.

A merger or acquisition can offer an effective route to growth, and it’s a path which is being pursued by businesses in the region already, from Harrogate’s Rooster Brewery to Yorkshire-based Savoy Timber Holdings.

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For many businesses considering taking the leap, a level of caution will remain, and pre-M&A due diligence will be front of mind – particularly given the commercial implications of ongoing geopolitical and socioeconomic circumstances. But while financial and legal considerations are usually top of the list, reviewing supply chain and logistics operations is often overlooked due to tight pre-M&A timelines.

Phil Reuben shares his expert insight. Picture: Sally CranePhil Reuben shares his expert insight. Picture: Sally Crane
Phil Reuben shares his expert insight. Picture: Sally Crane

However, supply chain and logistics operations span from end-to-end and are therefore integral in making – or breaking – a business’ bottom line.

Disruption can cause significant financial ramifications; for example, we’ve recently seen the Red Sea crisis affect global shipping routes, causing costly diversions and delays to customer orders. Agility is business-critical, so it is in investors’ best interests to review potential acquirees’ networks and operations and identify any potential vulnerabilities posed by a deal.

In the same way that a business would enlist financial and legal support to get the best from such a transaction, seeking an objective, third-party opinion on supply chain and logistics can help businesses see the bigger picture. In the case of a merger, it can also help to mitigate potential conflict between the two entities.

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While this process can expose major risks and inform the decision not to progress with a deal, this isn’t always the case. Undertaking this type of due diligence can also underline the value of rescoping the supply chain and logistics strategy, as well as establishing a robust change management programme to help circumvent potential resistance.

Sometimes, this involves troubleshooting and dealing with the consequences of poorly informed decisions that the business has taken in the short to medium term. For example, analysis can highlight areas where a business is currently overspending and inform decisions to swap out inefficient processes for more effective ones, from streamlining transport routes to prioritising more strategically located warehouses. It can also help to pinpoint the business functions which are set to see the most significant changes to their day-to-day operations, from implementing automation to navigating redundancies. This enables managers to plan ahead and help make the post-M&A transition as smooth as possible.

Ultimately, in today’s business landscape, understanding what M&A means for supply chain and logistics operations is vital before undertaking a deal. Optimising operations and bringing employees along on the journey helps heighten the success of any deal and deliver the highest return on investment.

Phil Reuben is executive director at Huddersfield-headquartered supply chain and logistics consultancy, SCALA.

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