The Benefits of a Savings Audit Before a Merger

If your firm is considering a merger, then this is the perfect time to bring in procurement specialists to carry out a savings audit to review both firms’ outgoings and assess where reductions can be made.  The procurement function can be relatively pain-free and usually costs nothing unless savings are made.  Procurement specialists can start generating real savings almost immediately.

Mergers have always been the more practical trigger for pursuing much needed procurement synergy, and as most business owners soon realise, pooling buying power and concentrating volumes are some of the most effective strategies in use by advanced purchasers.

Certain parts of the company may have to undergo thorough complex restructuring, but strategies such as harmonising company-wide specifications are pretty basic and require little effort to implement. These strategies result in establishment of long-standing value for the business.

Some of the common sought after synergies in mergers include purchase process consolidation and scale buys, which can sometimes contribute half of all targeted M&A results. Not all companies manage to achieve the goals, and even when they do, a lot of the time, they have to settle for rudimentary improvements as consolation for the disappointing deal.

In order to clearly realise the synergies, start with early procurement and keep in mind that inadequate planning adds up to disappointing results. Procurement organizations like The Procurement Group can control up to 90% of overall expenditures, so in order to experience actual savings, it is advisable to have a savings audit as early as possible.  In addition, they can also review billing and administrative procedures to ensure that they are as stream-lined as they can be.

By managing supplier relationships, handling paperwork and watching for new opportunities, procurement specialists can free up your staff to focus on creating a smooth and trouble-free merger.