Podcast June 7, 2024

Navigating the Operational Side of Mergers and Acquisitions


Mergers and acquisitions (M&A) represent a dynamic and crucial facet of the business world. This blog post and its accompanying podcast episode with LIDD partner Jennifer Hall discusses the operational and strategic intricacies that organizations face during M&A processes. For those immersed in the world of corporate mergers and acquisitions, understanding the key components and challenges can make all the difference in a successful integration. Here, we explore some pivotal topics highlighted in the podcast.

The Pre-Acquisition Heavy Lifting

Before diving into the operational specifics post-acquisition, it’s essential to acknowledge the substantial groundwork laid out prior to signing the deal. Lawyers, accountants, finance professionals, and bankers engage in meticulous efforts to ensure all legal, financial, and strategic aspects align perfectly. This phase involves detailed contract negotiations, treasury merging, and aligning the overall vision of the uniting companies.

Post-Acquisition Integration: The Real Challenge

While the pre-acquisition phase is complex, the real challenge begins post-acquisition. Merging two entities into one cohesive unit involves harmonizing different corporate cultures, infrastructures, technologies, and operational strategies. Here are the primary areas of focus:

1. Physical Assets and Infrastructure

One of the first hurdles is combining physical assets such as buildings, warehouses, and other facilities. Each company may have a mix of leased and owned properties, with varying lease terms and conditions. Deciding which facilities to keep, consolidate, or let go requires careful consideration of lease expirations, market conditions, and strategic value of locations.

2. Operational Differences

The merging entities often have different operational models, especially if one is predominantly wholesale and the other is retail-oriented. For instance, a company focused on wholesale might rarely break pallets, while a retail-centric company deals extensively with case picking. Integrating these different operational styles requires careful planning to avoid disrupting existing workflows.

3. Technology Integration

One of the most complex aspects of an M&A is technology integration. Companies often operate on different ERP systems, warehouse management systems (WMS), and other software platforms. Deciding whether to standardize on one platform, continue operating separate systems, or implement a new, unified solution is a critical decision. This process is often gradual, with immediate focus on financial systems integration while other systems like WMS and TMS (transportation management systems) might remain independent for a longer period.

Key Strategies for Successful Integration

  • Conducting a Network Study: A network study helps determine the optimal distribution of buildings and facilities post-merger. This involves assessing current assets, their locations, capacities, and operational roles to decide the most efficient configuration for the unified entity.
  • Balancing Short-term and Long-term Goals: While immediate integration may focus on financial systems and high-level operational alignment, long-term goals should aim for deeper integration of IT systems, operational workflows, and corporate cultures.
  • Prioritizing Communication and Change Management: Effective communication across all levels of both organizations is vital. Change management strategies should be in place to ensure smooth transitions and minimize disruptions.
  • Leveraging Expertise: Engaging with experienced consultants and leveraging internal expertise can provide invaluable insights and strategies for overcoming integration challenges.


Mergers and acquisitions are transformative events for any organization, involving extensive pre-acquisition preparation and complex post-acquisition integration. By focusing on physical assets, operational differences, and technology integration, companies can navigate the complexities of M&A more effectively. As we look to the rest of 2024 and beyond, the landscape of mergers and acquisitions continues to evolve, demanding adaptive strategies and a keen understanding of the multifaceted challenges involved.

For those keen on exploring more about the intricacies of mergers and acquisitions, staying informed through expert discussions and case studies can provide the knowledge needed to successfully steer through these transformative business ventures.

🔗 Check out the full episode:

Watch the full video below:

Listen: Anywhere you get your podcasts.



If you have more questions about the operational side of mergers & acquisitions or network studies, reach out to Jennifer directly at LIDD.com/contact.


[00:00:05.360] Hi, it’s the end of the week.

[00:00:06.870] It is Friday. We’ve made it.

[00:00:08.790] We’ve made it.

[00:00:10.150] And we’ve got a very exciting topic that we’re going to cover today.

[00:00:16.320] Inspired by that…

[00:00:17.880] Let me show you what it is. Indeed.

[00:00:19.040] Everyone always…

[00:00:19.830] We’re inspired by this Forbes article, which says, Navigating the Upswing.

[00:00:29.320] I mean, I’m I’m actually changing.

[00:00:32.350] You’re paraphrasing.

[00:00:33.460] Navigating the upswing in mergers and acquisitions from 2024.

[00:00:38.000] And it’s an interesting thing.

[00:00:41.590] In our world, mergers…

[00:00:44.130] I don’t know what a merger means.

[00:00:47.210] Mostly it’s a company buying another company, which to me is an acquisition.

[00:00:51.290] Can you imagine?

[00:00:52.430] I’m sure people might describe some things as mergers, but almost all the time

[00:00:59.920] it’s a company buying another company.

[00:01:01.470] You got to keep the peace, though.

[00:01:04.350] We’re merging to become one.

[00:01:06.010] We’re merging to become one.

[00:01:07.440] And this is something that I find really an interesting topic

[00:01:12.370] that’s great to talk about with you.

[00:01:14.230] You have in your much shorter career than mine, but still quite long career,

[00:01:20.210] have seen a lot of project work develop out of an acquisition.

[00:01:24.830] Yes.

[00:01:26.490] And I’m going to set the stage and then we’ll talk.

[00:01:29.440] Okay.

[00:01:30.210] So if we picture this, if you are a lawyer,

[00:01:37.840] or accountant, or you’re in finance, or you’re a banker,

[00:01:41.880] or whatever, a lot of times you think of all the heavy

[00:01:46.270] lifting of an acquisition coming before the contract is signed

[00:01:51.350] and the acquisition happens.

[00:01:53.130] And I don’t blame them.

[00:01:54.320] That’s where all their work is.

[00:01:55.810] And it’s tedious and there’s exacting language, and then there’s all

[00:02:00.310] these complicated treasury merging and other items of uniting two companies.

[00:02:10.410] But actually, from an operational perspective, all the hard work

[00:02:14.470] happens after the two companies have become a single entity.

[00:02:19.830] That’s when the fun begins.

[00:02:21.330] The fun begins because you’ve got these two separately functioning,

[00:02:26.640] different culture, different assets, different infrastructure, different

[00:02:30.290] technology, different everything.

[00:02:32.760] And the premise, very often, of the benefit of the acquisition

[00:02:40.370] or the merger is an efficiency that comes from becoming a single entity.

[00:02:45.970] But becoming a single entity ain’t no picnic, right?

[00:02:50.280] Indeed.

[00:02:51.170] So let’s just talk about what some of the major components are that you need

[00:02:58.640] to wrestle with When you find out, you wake up one morning, you picture the…

[00:03:03.890] I mean, wake up, they probably know, but the VP or COO or VP of operations

[00:03:08.370] wakes up and finds out they now are in charge of two companies, not one.

[00:03:13.680] Let’s go. Okay.

[00:03:15.070] Well, the first element that comes to mind, I mean, I wrote a blog a few

[00:03:21.750] weeks back for Network Studies, right?

[00:03:23.950] And that blog- Very popular blog.

[00:03:25.690] I do believe it had good stats.

[00:03:27.560] Yeah, but if you haven’t, you should go click on it.

[00:03:29.750] Click regardless.

[00:03:30.840] And in that- Wait, when did they say?

[00:03:32.510] Like, comment, follow.

[00:03:34.610] Subscribe, I think is the- Okay, subscribe.

[00:03:37.320] Thank you.

[00:03:38.600] But in that, it spoke about what are some of the triggers

[00:03:40.800] for doing a network study?

[00:03:42.050] Of course, there’s growth and getting into a new region.

[00:03:45.590] And then one of the others, primary ones, which I’ve been dealing with,

[00:03:49.310] is mergers and acquisitions.

[00:03:51.330] Help us first define what is a network study?

[00:03:56.170] I know everybody or lots of people know what it is,

[00:03:58.950] but let’s just put that on the table.

[00:04:00.930] We do have, just to remind you, an enormous audience of technology people,

[00:04:08.890] CIOs and others, and they may not know as casually as you the term network study.

[00:04:15.250] So tell me what that is.

[00:04:17.440] Well, good point, because when I’m talking about network, I’m not

[00:04:19.450] talking about the- An IT network. No, very much not that.

[00:04:22.150] No, you’re talking about- I’m talking about the building network

[00:04:25.570] or the distribution point network for a film and point network.

[00:04:28.780] It doesn’t have to be your It could be somebody else’s.

[00:04:31.860] But ultimately, the network study helps you just decide where these buildings

[00:04:37.600] should be, who they should distribute to, how they should operate, how big

[00:04:41.070] they should be, and it sets the foundation for the network.

[00:04:44.000] Right.

[00:04:44.530] And so So when we end up in M&A world, often, sometimes it can be, okay,

[00:04:50.340] a very small acquisition, no problem.

[00:04:52.510] I’m actually going to just eat a single or a couple of sites into my larger network.

[00:04:58.090] And other times, you you ended up with two significant networks that then

[00:05:05.100] have to figure out how they go together.

[00:05:08.160] And so there’s one famous acquisition that happened in 2018

[00:05:13.360] with large beverage company And until last year, when I was chatting with those

[00:05:18.770] folks, it’s still fairly two independent networks because of the challenges

[00:05:23.420] that happen about physically, what do they want to do?

[00:05:27.210] How do they want to integrate two businesses together?

[00:05:29.920] So that’s the first thing when we’re talking about making

[00:05:33.250] two businesses or two operations into one, you have physical assets that

[00:05:38.470] you have to decide, what do I combine?

[00:05:42.400] You also have elements such as you own certain buildings So you’re going

[00:05:45.680] to lease certain buildings, there’s termination dates to them.

[00:05:48.330] And so figuring out how all of those merge into one is highly complex.

[00:05:52.290] And oftentimes there’s not one answer, right?

[00:05:54.910] There’s a whole proliferation of different approaches that folks can do.

[00:05:58.480] You just said a whole bunch of things there that are interesting, okay?

[00:06:01.560] At least. Yes.

[00:06:03.960] So let’s start with this.

[00:06:07.570] We’re going to talk about Company A, Company B,

[00:06:11.570] they merge to become the A/B Company.

[00:06:14.650] Very exciting.

[00:06:16.330] The stock market loves it or whoever.

[00:06:18.730] And Company A has six warehouses across the entire geography

[00:06:27.890] of the United States.

[00:06:29.410] Company may or may not have a national network.

[00:06:33.890] Maybe they’re strong in one region or in a couple of regions.

[00:06:38.200] So the first thing you say is, oh, let’s just put them all together.

[00:06:44.410] First hurdle, as you just said, not so easy, not so fast.

[00:06:49.730] What if they’re all leased buildings?

[00:06:52.770] So now I have a whole, I think in my example, we’ve come to 10 facilities

[00:06:57.470] that are all under lease, and the leasing Leases expire in different times.

[00:07:03.360] One could be just signed last year and you have nine more years on the lease, and

[00:07:08.950] one could be only coming up in two years.

[00:07:12.650] And so the first complication we have to think about in terms

[00:07:17.420] of the speed with which you can start getting efficiency is, well,

[00:07:22.590] the lease is either allow it or don’t.

[00:07:26.570] Or lease or free fail contract. Lease 3PL contract.

[00:07:30.150] Lease, 3PL contract.

[00:07:31.330] Even if you say to your point, you said you may own the buildings.

[00:07:36.040] And oftentimes it’s a mix of the two.

[00:07:39.170] Because one company B had one certain philosophy towards assets

[00:07:44.320] and the other company A had a very different philosophy towards assets.

[00:07:47.710] But just because you own the building doesn’t mean you can get rid

[00:07:53.320] of it that easily.

[00:07:54.320] It could be in a bad market, it could be in a bad condition, it could

[00:07:57.250] have no value, or it may, back to what something, pull you towards a solution

[00:08:03.630] that leverages the owned building.

[00:08:07.010] The other thing I think is interesting about what you’re saying

[00:08:10.230] is geography matters.

[00:08:13.410] So obviously the hotspots will be where geographies overlap between the networks.

[00:08:19.640] And it could be sometimes the default is if Company A is the big cheese

[00:08:27.790] and Company B is the little cheese, but But the little cheese

[00:08:31.860] may have more strategically valuable locations in the network.

[00:08:37.610] But that could be annoying because a site that we say this is the perfect location

[00:08:44.870] solution, but actually the expansion ability of that site is

[00:08:50.080] very limited and we can’t make use of it.

[00:08:52.690] And that’s all the things you wrap into when you’re thinking about there’s not

[00:08:58.170] really one perfect solution There’s a reality that you accept and you’re

[00:09:04.030] making best with the reality you’ve got.

[00:09:07.690] And so you cannot evolve into a perfect situation overnight, right?

[00:09:12.580] Definitely not. Right.

[00:09:15.130] Do you want to move to the next chunk?

[00:09:18.320] I mean, I could go on if you want to, but if you…

[00:09:20.480] Yeah, let’s talk… No, we have to be careful.

[00:09:23.320] This goes by so quickly, and it’s better to touch all the big

[00:09:27.290] points, and then we can go back.

[00:09:29.040] Okay, because there’s What is the other chunk we can get?

[00:09:31.010] No, no, no, throw it out. What is the other chunk?

[00:09:33.160] Well, the next one I was going to talk about was the operations

[00:09:35.120] within this building. So we talk about the buildings.

[00:09:37.040] Thank you.

[00:09:37.520] Actually, I do want to- The equipment, right?

[00:09:39.230] And how those buildings have been set up.

[00:09:41.470] I mean, the merger, the acquisition could happen between…

[00:09:47.010] There’s typically going to be some level of cohesion between the two,

[00:09:52.410] but one could be a highly D2C, one could be more of a B2B business.

[00:09:56.480] I think that’s a really important point. Yes.

[00:09:58.750] It sounds It’s obvious, and just so everyone is clear in everyone’s mind,

[00:10:04.730] if I am 70 % wholesale, and I just bought a company that is 70 % retail,

[00:10:13.440] meaning they own their own stores.

[00:10:15.050] And I actually want those stores, just for example.

[00:10:19.680] So it’s not even as stark a contrast as B2C and B2B.

[00:10:25.650] It’s like I do almost all my volumes wholesale.

[00:10:28.910] I rarely break a pallet, just to be ridiculous.

[00:10:31.700] I rarely break a pallet in my warehouse.

[00:10:35.050] And then the retailer, Company B, is like, well, we’ve never shipped

[00:10:41.190] a full pallet out in our entire lives.

[00:10:43.200] The two operations are so fundamentally different that

[00:10:48.270] the merger of the two is not obvious.

[00:10:50.440] In fact, it’s probably the case picking person who would have a better time

[00:10:55.060] adopting, absorbing the pallet guys- Yeah, because they have And vice versa,

[00:11:00.750] because it would be a little bit more…

[00:11:03.080] The change management would be much lower than if you had a large pallet in,

[00:11:08.600] pallet out operation suddenly doing case picking.

[00:11:10.630] Absolutely.

[00:11:11.690] It’s actually funny.

[00:11:13.190] We have quite a number of 3PL clients.

[00:11:15.710] And there has been, at least certainly over my 25 years

[00:11:21.050] of work, a definite shift of clients wanting case or less than case

[00:11:28.750] picking in in a 3PL environment.

[00:11:31.070] And the 3PL guys are always the same.

[00:11:33.350] They’re like, oh, so expensive.

[00:11:35.110] It’s so labor-intensive.

[00:11:37.440] It’s like, yeah, but that’s what it is.

[00:11:39.360] That’s what they’re getting it to you.

[00:11:41.070] What are you complaining about?

[00:11:43.310] Just set up a good pricing table and get the job done.

[00:11:46.630] But anyway. All right.

[00:11:48.630] So I’m glad you brought that point up.

[00:11:51.530] Well, then I guess the next one, I would take it to the application part,

[00:11:56.870] digital side of the conversation about So software portfolios.

[00:12:02.080] So very oftentimes you’ve got companies that are coming together.

[00:12:06.580] They’re operating different ERPs and a whole slew

[00:12:10.270] of different operations software.

[00:12:12.190] And again, it’s often not an overnight switch.

[00:12:16.120] You’re bringing these together and you’re having to make a decision of,

[00:12:19.350] one, do we put on the same platform?

[00:12:22.160] We’ll talk, I think, about data in a little bit, but one, do we

[00:12:25.070] put on the same platform?

[00:12:26.390] Is it one of the platforms we already have?

[00:12:29.610] And And then beyond that, they are going to have to go through

[00:12:34.950] that transition, which is going to take oftentimes a fairly large lift.

[00:12:40.050] Yeah, I think it sounds to the layperson.

[00:12:45.230] It may seem obvious that you would want Company A and Company B to operate

[00:12:50.750] on the same technology platform.

[00:12:54.440] But that is not an obvious thing.

[00:12:58.830] I think best practice or long term, yes, we do.

[00:13:02.160] We would want the entire company be on a single platform.

[00:13:04.690] But let’s imagine there are all sorts of ways that’s complicated.

[00:13:08.530] This could be…

[00:13:10.170] Well, first, essentially, if I chose, let’s pretend Company A Company B,

[00:13:16.110] Company B is smaller, is what we’re doing in our little fantasy example.

[00:13:20.280] So Company A is doing the acquisitions, says, Well, you’re going

[00:13:23.430] to migrate to our platform.

[00:13:25.850] Now, imagine if Company A’s platform is a little bit archaic, a little bit

[00:13:31.830] old, that’s terrifying, right?

[00:13:35.130] So then it’s going to trigger, well, is that the right decision

[00:13:38.430] or should we both be migrating?

[00:13:40.810] I’m either doing a massive re-implementation of the system,

[00:13:45.810] of Company B system, or I’m going to look at it and go, well,

[00:13:51.510] actually, no, I’m going to do a massive re-implementation to Company B system

[00:13:55.850] because the technology is more modern and has longer legs, let’s say.

[00:14:01.810] Or you’re replacing it in both entirely with a whole new system.

[00:14:06.850] That is not an easy thing, right?

[00:14:09.430] It almost makes the buildings problem look simple.

[00:14:13.850] Yeah, I would have to agree.

[00:14:16.330] And so, okay, and then sometimes, well, very often we’ve

[00:14:25.270] seen companies actually not rush.

[00:14:28.570] Well, I think that’s part of it as well, that there’s some software that you want

[00:14:34.240] to get your financials together.

[00:14:35.710] You want to set that foundation early on.

[00:14:38.470] And then there’s other solutions, like warehouse management

[00:14:41.770] systems, picking on that.

[00:14:43.410] If you have independent sites, and the WMS is communicating with the ERP anyways,

[00:14:49.130] and there’s not too much communication between the sites, then yeah,

[00:14:52.870] the decision can often be, you know what?

[00:14:56.050] Let’s put that to the side for now.

[00:14:59.290] We will operate on multiple warehouse management systems for the foreseeable.

[00:15:04.310] The same could be said for the TMS, the YMS, whatever other acronyms

[00:15:09.630] you want to throw in there, but the ones that are more specific to singular sites

[00:15:14.030] as opposed to the entity as a whole.

[00:15:16.070] A hundred %.

[00:15:17.790] And this is back to the point you made about the operations and how

[00:15:23.410] you could easily see the two companies having very different operations.

[00:15:29.560] So just Just like they would have different material handling systems,

[00:15:32.530] different operating procedures, they would have different potential WMSs.

[00:15:36.490] They could have…

[00:15:38.770] You think about it, you could have the same WMS.

[00:15:41.730] They could both be running just to be so neutral about it.

[00:15:45.790] They could be both running Manhattan’s WMS, but they’re very different versions.

[00:15:53.850] And to a point where it’s not…

[00:15:55.810] If you’re running Manhattan in the cloud and you’re running Manhattan on premise,

[00:16:00.670] This is not a light choice to make between the two.

[00:16:04.830] And leaving them alone may be the right thing to do.

[00:16:09.320] Yeah, well, that’s- At least in the short term.

[00:16:11.040] Well, and a hugely good point, just because it has the same brand name

[00:16:13.750] on it does not mean that it’s the same one at all.

[00:16:16.280] Right.

[00:16:16.400] Just because it’s the same brand doesn’t mean it’s the same system at all.

[00:16:19.080] Yeah. Yeah.

[00:16:21.760] So is that enough? I would move on.

[00:16:25.240] I would move on. All right.

[00:16:26.150] Next.

[00:16:27.650] Well, the piece that ties into The into everything software is

[00:16:32.400] everyone’s favorite thing, which is data.

[00:16:34.170] And we’ve just spoken about how you can end up finding yourselves

[00:16:38.400] with some things that are merged in terms of your software,

[00:16:40.710] some things that are not merged.

[00:16:42.730] And a large part of the repercussions of that is going to be the quality

[00:16:49.510] of the data and your ability to combine that data in order to gather

[00:16:54.960] your insights, make your decisions.

[00:16:56.350] And that can be sometimes easy, sometimes hard.

[00:16:58.930] So even if the system stays separate, even if you kept everything

[00:17:04.550] separate, everything is separate.

[00:17:06.510] But at the highest level of the organization,

[00:17:11.010] there needs to be unified data.

[00:17:14.040] And that means at minimum, the data warehouse and then

[00:17:17.530] all the processing and reporting that comes out of the data warehouse needs

[00:17:22.070] to have data that is coherent between the two acquired or merged entities.

[00:17:30.170] And you just got to think about vendors, customers,

[00:17:36.320] bill of materials, item master data.

[00:17:40.120] Is there anything I’m forgetting? Probably.

[00:17:42.160] Probably a whole slew of things.

[00:17:43.160] Probably a million things. Yeah.

[00:17:44.730] That that all need to be harmonized in order for us to truly

[00:17:49.350] understand the business.

[00:17:52.550] Well, and to understand the business, and there’s something to be said about

[00:17:58.600] you could understand understand the business in a…

[00:18:00.890] You could go the hard route and have a very heavy external

[00:18:07.040] reporting, you tie it all together.

[00:18:08.320] So it’s one about understanding the business, but it’s another about making

[00:18:12.000] your lives a little bit easier as well.

[00:18:13.690] Are you going to set this up such that there is a referenceable data source

[00:18:17.490] that is applicable to both of them?

[00:18:20.730] Or are you going to potentially kick the can on doing that and just create an

[00:18:25.790] offshoot headache for a lot of folks and potentially discontinuities between that?

[00:18:31.310] I mean, so to me, the key thing for a lot of people to understand is on paper

[00:18:40.560] in an Excel spreadsheet now, the benefits of an acquisition

[00:18:46.950] or a merger can look enormous.

[00:18:50.600] But the reality is you’ve got to have

[00:18:55.830] a patient composure because it’s a long

[00:19:01.710] horizon before the benefits get reaped.

[00:19:05.930] Yeah, and an understanding as well that, I mean, you said it at the start of the

[00:19:10.950] podcast, when there’s a whole lot of hard work that happens to get to the deal.

[00:19:15.350] And oh, my God, there’s going to be a whole lot of work after that.

[00:19:19.440] It’s not- Years. It’s not.

[00:19:21.410] It’s a marathon.

[00:19:22.890] It’s a multi-year effort to actually make whatever the investment bankers

[00:19:30.230] told you to make that actually come to fruition, you’re in for a long haul.

[00:19:34.360] And talking about hauls, Jennifer Hall is one of the best

[00:19:41.080] in the business to help make you happy. Oh, there you go.

[00:19:43.150] The pun came up, so I had to use it. Thank you.

[00:19:45.880] I appreciate the plug.

[00:19:46.990] Have a great weekend.

[00:19:48.970] Oh, can I say one thing about our To become One?

[00:19:52.120] Yeah.

[00:19:52.770] So my first ever concert, can you guess what it was?

[00:19:55.530] To what concert?

[00:19:56.990] To become one. I don’t know.

[00:19:59.730] S Club 7. Sorry?

[00:20:01.550] S Club 7.

[00:20:02.270] I don’t know anything about what you just said.

[00:20:05.200] That’s heartbreaking. All right.

[00:20:06.430] Well, with that…

[00:20:07.730] I’m an old man.

[00:20:09.530] I mean, if you made a reference to like Duran Duran, I could relate.

[00:20:13.910] I could say, Oh, I remember that.

[00:20:16.450] How is that…

[00:20:18.470] Who’s that person I really like?

[00:20:21.690] Oh, oh, oh.

[00:20:24.600] Well, see…

[00:20:26.250] All right. Well, then let’s…

[00:20:28.770] Have a great weekend. Yeah, have a great weekend.

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