Buy and integrate: M&A advisory

We help enable strategic growth through better integrated and operationalized mergers and acquisitions, JVs and alliances. In particular, we help companies refine their growth strategy, perform deal sourcing, conduct diligence and valuation, and implement M&A integration.

The better the question. The better the answer. The better the world works.

Case study: How a Nordic SaaS player unlocked potential in a global lockdown

A bold strategy and deep, multi-disciplined M&A experience turned “it can’t be done” into a sale that facilitated outstanding outcomes.

The better the question. The better the answer. The better the world works.

How can M&A strategy help regional business grow in a global crisis?

An initial approach from an acquiror turned into two deals to complete a reverse merger, and all during a global pandemic.

Consignor, founded in 1997 by Peter Thomsen, had developed to become a leading Nordic Software as a Service (SaaS) player, offering multi-carrier parcel management systems to e-commerce businesses. However, in late 2019 Peter realized that the business lacked resources to take advantage of a significant developing global growth opportunity.

An approach from a rival looked attractive, but Thomsen wasn’t ready to retire and leave the business. He had bigger ambitions, so he reached out to EY teams for advice.

“I saw a compelling strategic rationale in combining Consignor with my competitor and become a leading global force,” commented Peter Thomsen, CEO, Consignor. “It was going to take time to extract the benefits of the combination, so it was important for me to remain actively involved with the management of the business as much as possible. I was also worried about teaming up with a partner who had a shorter investment horizon than mine. EY advised me to ‘take control of the situation’ by finding the right investor to back Consignor’s growth ambitions, both organic and inorganic.”

EY and EY-Parthenon teams designed and began executing on a transaction process that would meet Peter Thomsen’s ambitions to find a financial backer for Consignor that would help maximize its value creation potential, while participating proactively in the market consolidation. And then the global pandemic was declared.

Fishing boats in fjord, Austnesfjorden, Norway
The better the question. The better the answer. The better the world works.

A bold strategy, deep sector knowledge, and broad M&A capabilities were key

By being bold and innovative, EY teams transformed the bid process to create a smooth and engaging experience for seller and buyer alike.

EY teams were selected to support the whole of the sell-side mandate from strategy through to execution. The organization’s broad portfolio of experienced teams, including financial and tax, commercial, and technology professionals, in addition to the strength of their strategy practice of EY-Parthenon, were brought in to complete the full suite of due diligence requirements.

In March 2020, and as the World Health Organization declared a global pandemic, the preparation phase of EY process to find a PE buyer who could help Consignor secure their capital position and aid them to gain control to grow the business on their terms was well underway. Buyer interactions on the other hand had barely begun.

By this time the COVID-19 pandemic had gone global and the world had shut down. M&A activity ceased, debt markets shut down temporarily and economic activity dived globally. Despite this backdrop of intense uncertainty, EY teams and the leadership team at Consignor together took the view that due to Consignor’s exposure to the level of e-commerce activity that was surging during lockdown, revenues would hold up and the decision was made to move forward with the deal.

EY teams advised me to “take control of the situation” by finding the right investor to back Consignor’s growth ambitions.
Peter Thomsen
CEO, Consignor

Many may have challenged whether this was the right time to sell a valuable tech company, but Peter and the EY teams took a bold view that, as many other deals were put on ice, they’d be one of the only deals in the market. As such, they expected to capture a disproportionate level of attention among the target investor group.

Lockdown measures globally meant that there could be no in-person meetings or presentations to potential bidders — a major obstacle surely. But EY teams used this to create impactful, innovative video materials that accelerated and simplified the bidding process. Instead of the usual round of face-to-face presentations with interested parties, EY teams worked with the CEO to create a slick recording of the company presentation, that incorporated answers to pre-submitted questions. Once created the same presentation could be shared multiple times. “While we believed in our approach, because this had never been done before, we couldn’t be sure that we could attract commitment from a buyer without actually meeting the CEO,” says Eric Sanschagrin, EY EMEIA Head of Technology Transaction Advisory.

Speed and energy were critical. EY teams’ ability to draw on the wider organization’s capabilities, with its complementary services, meant it could perform the widest range of due diligence (financial, tax, commercial, technology) for its client at an expedited pace. Each team was project-managed and integrated to reduce the burden on the founder.

In the end the successful bidder, Francisco Partners, only required seven days of confirmatory due diligence before they signed. This happened just four months after EY teams were hired by Consignor, on a valuation of over NOK1 billion which was equivalent to EBITDA and revenue multiples at the top end of the range for similar transactions completed prior to the COVID-19 crisis. Peter reinvested a significant portion of the sale proceeds alongside Francisco Partners. The world was still in lockdown when the deal was inked.

Yellow truck crossing bridge by waterfall in norway
The better the question. The better the answer. The better the world works.

Intelligent M&A can transform the market, creating value for all

Not only did this deal win value for the client; it also smoothed the way for market consolidation across tech players in the Nordics.

This story doesn’t end with the successful sale of Consignor to a recognized leading technology PE firm. Within 6 months of completing the investment in Consignor, a merger was agreed between Consignor and its Swedish competitor Unifaun. This completed the story, achieving Peter Thomsen’s original objective of playing a proactive role in consolidating the sector and repositioning Consignor from a leading regional player to a global market leader. And who would lead the new combined entity as CEO? Consignor’s Peter Thomsen.

This story has a number of lessons.

  • First, deep knowledge and understanding of the market is an invaluable aid to a seller who benefits from a strategy that puts that market insight to work.
  • Second, never say “it can’t be done.” Courage to complete a major deal in the face of the pandemic won enormous value for the client.
  • Third, having a global, highly integrated organization with deep sector knowledge at your side to not only advise on appropriate strategic options, but who can help implement them, supports a transaction to be completed with speed and efficiency. For an owner-CEO, who has to continue running a business while selling it, this is a major benefit.
The Fredvang Bridges in the setting sun, Lofoten, Norway

What EY can do for you

Our clients enjoy the personalized attention of a full-service organization with access to broad intellectual capital, extensive relationships and leading‑class solutions to drive their growth strategies and fit their buy-side M&A needs. 

We are one of the only major professional consulting organizations that offers fully dedicated multidisciplinary M&A advisory capabilities. From strategy to execution, our services are underpinned by extensive financial, tax, commercial and operational experience.

Our M&A technology leverages machine learning and artificial intelligence, robotics and process automation, and data analysis and visualization. When combined with human insights, sector experience and functional knowledge, this helps deliver better decision-making and accelerated results.

We understand that every type of deal is different, requiring bespoke integration approaches, priorities and operating models. Our teams can help you understand what business to buy, how to value it and how to integrate it into your company.

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The better the question. The better the answer. The better the world works.

Ten essentials to running a remote M&A integration

EY helped execute a fully remote integration for a global transaction, spearheading the integration from deal announcement, to close and post-close.

The better the question. The better the answer. The better the world works.

How can we execute M&A transactions in a remote world?

The coronavirus pandemic has made M&A integration more challenging.

The coronavirus pandemic has made M&A integration more challenging, as the face-to-face meetings that help two organizations come together largely have had to happen remotely.

But, just as due diligence has become more virtual over the years with cloud-based data rooms, a virtual M&A integration is also possible. If executed well, it can become a competitive advantage for your transactions.

Synergies

40%

more synergies identified by the team than were identified in the deal model.

EY - Woman meets with colleagues virtually
The better the question. The better the answer. The better the world works.

A fully remote integration is possible

Barriers can be overcome with creativity to yield favorable results.

Ernst & Young LLP (EY) recently helped execute a fully remote integration for a US$1b+ global transaction, spearheading the integration from deal announcement, to close and post-close.

Despite virtual delivery, the coronavirus pandemic and volatile market conditions, the integration team closed the transaction ahead of schedule and identified 40% more synergies than were identified in the deal model.

The better the question. The better the answer. The better the world works.

Key learnings

What we learned while executing a remote integration.

1. Leveraging due diligence and setting up a virtual clean room

The integration team leveraged the two virtual due diligence data rooms that were already established to populate remaining sensitive data. This was important for the EY clean-room team to jump-start the analysis. EY created a 100% virtual clean room by utilizing the cloud-based tools from due diligence and conducting the relevant analysis prior to the deal close. We were also able to perform analysis to exceed planned synergies and timing.

2. Coordinating executive and team engagement

Executive engagement in integration planning is even more important in a remote environment. Early on in this transaction referenced above, the executive in charge established the foundation for the value drivers and guiding principles and drove expectations and accountability throughout the process. The executive participated in all one-on-one, integration management office (IMO) and Board meetings, which allowed for consistent touch points and overall program alignment.

Frequent touchpoints are essential during integration, especially when integration is being done in a virtual setting.

These frequent touch points with members of the C-suite and integration leads generated engagement and, we believe, were essential to the integration’s success. At workshops, the executive clearly articulated critical path, project scope and clear expectations, even in a completely virtual setting. Selecting an executive to lead the integration can be paramount in engaging and guiding all workstreams in the right direction.

3. Establishing teaming and trust

Building trust can be the foundation of a successful integration, particularly when working virtually. Selecting integration leaders who are well-respected in the organization and deal advisors who are trusted throughout the process can be key. Without the subtle nuances of nonverbal communication in a conference room or hallway chats, companies often need to establish an environment with rapid and trusted, top-down or bottom-up, safe communication to get the job done.

Assimilation often happens through conversations and taking time, even just for a moment, to encourage casual, informal dialogue and connect on a personal level. It is important to embrace healthy conflict to allow gaps and tensions to be resolved immediately. In a remote environment, it can be easier to have miscommunication because body language, attitudes and demeanor are difficult to decipher and interpret through the screen or over the phone. Further, it is difficult to compare notes and mismatched information in a remote setting, so it is important to address discrepancies and disagreements in a timely fashion.

  • Encourage team members to turn on their cameras during video conferences in order to create an in-person atmosphere
  • Exchange phone numbers, when applicable, to text and less formally check in with one another on a day-to-day basis outside of calendar invites
  • Host one-on-ones with each team member to learn more about his/her career interests and development goals, as well as a bit more about hobbies and life outside of work
  • Make an effort, when possible, to engage in casual conversation at the beginning of team calls, such as asking the group about their weekend or following up on a team member’s earlier comment about upcoming plans
  • Create an environment where all team members contribute regularly on team calls, whether it is a quick status update or a question to pose to the group; participation will increase engagement
  • Check in with colleagues after project or client calls; if there is any question that information was interpreted differently or that directions may have been ambiguous, follow up immediately to clarify
  • When issues arise, address them immediately to maintain productivity and engagement moving forward

4. Driving internal communications and change management

In the remote environment, overcommunication and getting in front of how companies will drive culture, change management and executive engagement throughout the integration process and for Day One is important. To bring two companies together throughout the integration process, as well as for Day One, we recommend regular CEO communications to both companies, which could include videos and virtual townhalls with each leader at close. In the absence of communication, assumptions and rumors may occur.

For example, we hosted an all-day, open, “virtual conference room” for the integration team to allow team members to have ad hoc conversations throughout the day. The IMO had morning and afternoon check-in calls daily. These calls provide a forum for team members to provide updates, ask questions to the broader group, solicit feedback and report on the status of agreed-upon items.

An open-all-day virtual conference room, in addition to daily check-in calls, allows team members to connect throughout the day.

5. Increasing external communications

Consistent and clear communication with customers, regulators and suppliers throughout the integration, and at close, can help generate a positive experience and engagement. External communications may include an executive touch point planned right after close, particularly for the most important customers and stakeholders. Offering a change management process with Q&A for customers in a recent deal was helpful right after close to address items that had changed.

6. Prioritizing Day One on-site must-haves

Tasks that require in-person work (such as IT) can be identified early. The IMO may need to assess the risks and trade-offs to prioritize what can be done on or before Day One vs. waiting until after close. Organizations with clear work-from-home policies during the COVID-19 crisis may need to evaluate the possibility of bringing specific teams back to the workplace to streamline activities that require in-person collaboration. While some organizations may delay such activities, the financial impact of delaying synergies and savings from consolidation may need to be considered, as well as the potential health impact on team members.

7. Adapting culture and employee experience

Driving toward a new, cohesive culture is challenging in a remote environment. To engage employees on Day One, even in a remote setting, companies can set out a view of how the culture should look on Day One vs. Day 100 vs. the future state. In this engagement, we recommended a pulse survey before and after close to identify priority areas related to culture and employee experience.

Within the integration team, we profiled the value of engaging and developing employees by scheduling regular one-on-one check-ins for team members regarding their personal well-being. We also understood personal constraints that could occur during this unprecedented time. For example, we understood that several of our practitioners were parents navigating the challenges of working from home. With the blurred lines of work and home life, for both the EY and client teams, team members developed an understanding that there would be occasional interruption or technology issues. In fact, we believe this cultivated a culture of empathy and mutual understanding that further solidified teaming and trust.

8. Establishing a clear governance structure and cadence

The need to make sure that an integration is moving in the right direction can be even more urgent in a virtual environment. Without consistent, in-person collaboration at the client site, things can go off track without noticing until it is too late.

As with most integrations, we helped the client to establish a clearly defined governance structure. We assisted management in their creating an executive steering committee to help drive accountability and direction throughout both organizations. From there, we helped the client to quickly establish an IMO, and integration leads from both companies drove accountability, tracked progress, and helped keep momentum and motivation within the broader integration team.

Weekly integration meetings with functional work stream leads, as well as a weekly executive team and steering committee meeting, helped establish strong working relationships; provided important program updates; and addressed the relevant risks, issues and decisions.

In addition, more frequent one-on-one meetings with each functional work stream helped the teams to touch base on the functional area’s specific workplans, as well as to outline expectations and track progress. Since there was no opportunity to meet in person and see each other in the office, these one-on-ones allowed teams to more closely monitor delayed activities and course correct, when necessary.

Further, in order to work remotely on a tightened time frame, detailed workplans were created. Day One priorities had to be monitored and kept top of mind through regular conversations and meetings. Without regular, informal conversations, frequent touch points through regular meeting cadence are necessary to clarify questions and to understand that all team members are aligned.

9. Reimagining workshops and collaboration tools

Historically, within the industry, most workshops, particularly the integration kickoff, interdependency workshops and Day One readiness checkpoints, were conducted in person. Yet, for this integration, EY reimagined the workshop for a virtual format with specific attention to detail before, during and after the workshop:

  • Before: Poster boards were shipped to participants’ physical locations so that they could review the content and hang up the wall chart with the details that would be covered in the meeting – to have the same feel of in-person content.
  • During: All functional work stream leads and steering committee executives attended, enabling end-to-end participation led by the IMO, with understanding and accountability during the discussion. The team used virtual storyboarding software to draw on the screen and show relationships between key milestones.
  • After: EY shared a copy of a post-workshop virtual wall via PDF with full workshop notes and follow-up actions across work streams. EY then coordinated team discussion sessions to document and update workplans for identified interdependencies. These discussions clarified milestones and activities across work streams as well as cross-functional dependencies.

A virtual meeting room was used to facilitate the meetings and workshops.

10. Building in fun

Integrations are often challenging, with long hours and high stress levels. Finding ways to have fun, even while remote, is important. We recommend virtual happy hours and sending colleagues small tokens of appreciation throughout the process. This could include personal notes from the executive team, or food and beverage. These gestures can keep up morale in a tough environment and can help colleagues participate in and enjoy the process.

Following the Day One readiness workshop with our recent deal, the team hosted a virtual event to replicate a social setting that could have traditionally happened following an event on-site. The EY team hosted trivia with the client team, consisting of 30 people, including executives from both organizations.

Thinking creatively about how to bring engaging events to a virtual platform can go a long way for establishing rapport and building relationships.