Rethinking M&A and Spend Management

As someone who has been a part of nearly a dozen acquisitions over the years from all angles, I found it interesting to read this guest piece in Supply and Demand Chain Executive that examines a new way to look at due diligence and merger synergies. In the piece, the authors argue that companies should "Consider applying the Supply Chain Reference (SCOR) model, a process reference methodology maintained by the Supply-Chain Council that allows companies to examine and measure their supply chain processes, determine where weak links exist and identify how to make improvements."

Increasingly, I'm seeing that companies and investors are looking more at procurement and supply chain areas when evaluating potential deal opportunities and in the due diligence process. What's telling here is that even private equity and buyout firms are getting in on the action, either hiring their own operational teams to target opportunities or bringing in expert consultants. It's even rumored that the venerable Kohlberg Kravis & Roberts (KKR) is moving past financial wizardry and going after Spend Management opportunities in their portfolio companies to increase value and their ultimate returns (not that they need any additional returns if you've ever seen the firm’s art collection, I might add). And turnaround firms like Alvarez & Marsal who also come from a financial -- not an operational -- background are increasingly investing in building their Spend Management talent base as well.

Jason Busch

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