Background and Challenge

L.E.K. was retained by a midsize public pharmaceutical company in the process of acquiring an Ireland-based counterpart on an accelerated timeline.

The goals of the integration were to combine the two companies in a manner that maintained compliance with SEC and FDA regulations, to avoid any disruption to normal business activity, and to quickly establish a platform for future growth as a specialty biopharmaceutical company.

Our client faced significant hurdles related to integration, including:

• Extensive commercial sales force organizational redesign to accommodate the combined product portfolio
• Comprehensive transition of all email and IT services within the first 72 hours post-close
• Rollout of a revamped contracting process related to new legal entity structure

As part of the client’s strategic vision, the combined company needed to be prepared for additional acquisitions over the subsequent six to 12 months.

Approach and Recommendations

• Mobilized and led an integration management team involving over 40 people to support the development of detailed integration plans for 16 functional teams during the period pre-close and shortly thereafter.
• Within the first five days, we drafted customized tools for the IMT and built out a complete project office infrastructure.
• Initiated and led a series of IMT and Steering Committee meetings to identify functional team needs and interdependencies.
• Provided dedicated planning and execution support to several functional teams, including commercial, communications, compliance, drug safety, finance, human resources, IT and facilities, medical affairs, legal, manufacturing, quality, and regulatory.

Results

The integration proceeded smoothly, and our client enjoyed a successful Day 1 in line with its publicly communicated timeline.

We helped prepare the client for a successful Day 1 and early post-close transition:

• There were no supply interruptions, and revenues were protected on existing commercial products
• Back-office operations in finance and HR ran smoothly during the transition
• IT support was effective Day 1, and all employees of the acquired company were transferred to client IT infrastructure within 36 hours of close
• External and internal communications were well-received and helped address employee concerns while establishing a sense of unity across the combined company

With our guidance and execution support, the client successfully maintained business continuity and commercial stability throughout the integration process.

In the post-close period, we refocused the client on its remaining integration activities, transitioning full IMT ownership to the client so all transaction-related objectives could continue to be monitored to completion and additional growth opportunities could be explored immediately.

Background and Challenge

L.E.K. was brought on to support the separation, integration planning and execution for a client that was to acquire a similarly sized drug technologies company from a global pharmaceutical company.

The deal was transformative, moving our U.S.-centric, research-focused client company to a global one that greatly expanded its capabilities, products and services, operational scale, and geographic footprint.

A critical first step was to separate from the target’s parent company before integration activities could be completed. Maintaining business stability upon transaction close and ensuring a seamless transition during the early post-close period was key.

Longer-term, the combined company needed to realize its synergy targets as it sought to transform the combined business.

Approach and Recommendations

• Helped mobilize the integration teams, and established an integration management office to manage and oversee the planning and execution of the integration
• Supported the development of a detailed transition service agreement to achieve a faster and cleaner separation from the parent company, which ensured business stability during the integration process
• Provided support to several functional groups in developing detailed integration plans, including HR, communications, finance, IT, R&D, facilities, manufacturing and supply chain, quality, and regulatory affairs
• Worked with R&D and IT leadership to identify needed organizational changes and supporting integration plans that would better position those functions for longer-term success given the combined company’s strategic direction

Results

The integration has proceeded efficiently and is on track to achieve our client’s goals.

We worked with the teams to develop comprehensive transition services agreements to adequately support the business during the near-term transition period. We helped prepare our client for a successful Day 1 and early post-close transition, with the following results:

• Synergy realization is expected to exceed the targets set during due diligence
• There were no supply interruptions, and revenues were protected on existing commercial products
• Back-office operations in finance, IT and HR ran smoothly during the transition
• Town hall meetings and employee communications were well-received and helped address employee concerns and establish a sense of unity across the combined company

We supported the development of detailed long-term integration plans across a number of functions.

In addition, we provided key support to the R&D and IT leadership teams to develop the right organizations to support the strategy of the combined company for the longer term:

• We worked with R&D to develop a detailed database and supporting integration plans to leverage the combined capabilities
• We helped IT develop an organizational vision to enable it to more effectively serve the combined business

Background and Challenge

L.E.K. was engaged after our client, a global $10 billion scientific tools company, announced the acquisition of a competitor firm in an approximately $2 billion transaction.

The client had prior acquisition integration experience but none of the size and scale of the current acquisition, which had thousands of employees operating globally.

Approach and Recommendations

• Supported the development of detailed merger integration plans for the pre-close and  approximately 50-day post-close period, with a global integration team covering North America, Europe and Asia-Pacific
• Established an integration management office, including developing a tracking system to monitor milestones/risks/interdependencies for synergy capture and integration activities
• Provided dedicated support to several functional groups (including sales, service, marketing, product lines, operations, sourcing, HR, IT, finance, legal, real estate, audit, tax, treasury, intellectual property and risk management), and helped develop and implement integration plans and conducted integration-related analysis across groups
• Positioned the commercial teams to capitalize on the combined product portfolio and sales channels — the key focus of the integration, as the deal was positioned to primarily capture revenue synergies
• Identified particular risks such as the integration of sales forces and the reorganization of the marketing group to support the combined company

Results

The integration proceeded efficiently and achieved our client’s goals, including synergy targets, so that the combined product portfolio could be sold from Day 1, with we providing critical support to the commercial organization:

• Reallocated resources to provide greater support to the sales and marketing organizations, as these groups were forced to manage a heavy workload immediately pre- and post-close
• Worked with the sales leads to develop and execute plans to build an integrated sales force, including a lead exchange program, sales rep training and channel partner utilization
• Worked with the marketing leads to develop an interim and end-state vision for the marketing organization to best support the combined company
• Prepared our client for a successful Day 1 transition, including well-received town hall meetings and employee communications that helped establish a sense of unity across the combined company
• Worked with our client on talent retention efforts, resulting in no significant unplanned departures through integration
• Helped our client build a foundation of integration management to support ongoing integration work

Background and Challenge

L.E.K. Consulting's client, a leading manufacturer of professional audiovisual equipment and technology, had a strong portfolio of product brands.

The organization sought a transformation from product brand-centric to customer-centric in order to turn around the business’ performance.

The client faced tremendous pressure from its parent company to make a quick but sustained turnaround. Internally, changing the cultural norms to a customer-centric model required strong buy-in and trust in us.

Approach and Recommendations

• Identified current organizational challenges and strengths
• Designed new customer-centric global organization
• Developed a sales and marketing strategy structure focused on unique customer verticals, to drive customer intimacy and uniqueness where it mattered
• Helped engineering/R&D, operations and marketing communications structures focus on unlocking opportunities to leverage the organization’s scale
• Refocused back-office structures on how to best support the new organization
• Set up a project management office that defined work streams, mobilized teams, communicated the transition and completed effective change management
• Facilitated and tracked employee placements and sales rep account assignments
• Assisted in the redesign of numerous policies, processes and programs, including sales compensation and product pricing

Results

The new model was rolled out with very positive feedback from the business’s employees and customers around the globe. They fully understood the need for the change and were excited to see it happening. The new model allowed the company to bring the full range of its products and services to individual customer segments as solutions to their specific needs rather than simply a basket of products.

We were lauded by top management throughout the process for the strength, thoughtfulness and thoroughness of the work on the model design and implementation, and for working very collaboratively with their team.

“We had some ideas on where we wanted to go as we started, and L.E.K. brought strategic process around being focused and disciplined, especially given we were working with a tight deadline. L.E.K.’s experience with other companies and benchmarking and best practices provided a valuable perspective. I really enjoyed how in-depth L.E.K. got as a consultant. Oftentimes, bringing folks in from the outside, you get superficial analysis, but L.E.K. was able to get pretty deep in a short amount of time. The insights and information L.E.K. put together were great, and were shared with our chairman and CEO and were really well-received and respected at the highest level of our organization. We really appreciate the effort from the L.E.K. team; they really dug deep and got to the level of detail we were looking for.”
— VP of human resources (project sponsor), client

Background and Challenge

A leading high-tech engineering company needed to redesign its operating model and organizational strategy.

A prior diagnostic by L.E.K. had highlighted serious issues with both efficiency and effectiveness of the existing organization — and a potential EBITDA upside of £100M per annum.

There was a need to articulate a clearer alignment between strategy and operating model and organizational choices, in particular the respective roles of the group, the business units, support functions and operating entities.

The company engaged us to address this fundamentally divisive, business-critical issue.

Approach and Recommendations

We knew from the outset that the success of the engagement would depend on ensuring all stakeholders contributing to the solution. We worked in close collaboration with a broad range of constituents throughout the organization to thoroughly understand the issues at hand, co-create solutions and test proposed recommendations.

Through creating a clearly laid-out framework to tackle the issues, we were able to navigate a minefield of complex business issues and management objections. A key challenge was to avoid the temptation to jump straight to the answer and create new roles and positions without a clear vision of the overall organizational strategy.

We created a rigorous process and structure within which to assess highly qualitative issues. We developed a detailed assessment of various operating models against key success criteria, as well as detailed decision rights to establish the key roles and responsibilities.

Working closely with the management team, we developed an end-to-end organizational strategy for the company, culminating in the design of an execution plan to embed proposed changes to the business’s operating model, roles and responsibilities.

Results

The outcome was an organizational strategy that allowed the company to truly execute against its strategic objectives. This included a detailed operating model, a clear and agreed-upon definition of various units’ roles, and unambiguous decision rights for all key processes across the organization.

Responsibility for delivering this plan was embedded within the business in the course of the design work, thus allowing for a seamless transition from design to execution.

Background and Challenge

The client, an approximately €900 million, global food ingredient manufacturer that grew through several acquisitions, asked L.E.K. to lead the reorganizational design process of the company, which wanted to move to a more efficient organization.

The client, a worldwide leader, faced several opportunities, such as industry consolidation, growing and highly profitable adjacent segments, development of African and Asian markets, and new segments (e.g., gluten-free, organic).

It also faced several challenges — such as its status as an independent BU organization without overall margin optimization for the group, the end of rapid growth in Eastern Europe, concentration of the largest players, payment terms imposed by larger players, key clients insourcing vs. outsourcing, and capital to finance development and industry consolidation moves — which it hoped to address with an organizational redesign process.

Approach and Recommendations

• Closely worked with the client to identify key strengths and weaknesses of the current organization, and based on that, defined key objectives for client organization and key roles for the company globally and for each function, with key decision rights allocated by function
• Agreed on a new organizational design, and detailed key new processes arising from this new organization
• Sized cost savings within the new organization, and defined a migration plan to set this new organization model, in order to facilitate the client’s successful transition from independent geographical units to a global company

Results

• We determined the most efficient organization based on both revenue and margin optimization from a global operations perspective
• We defined a new organizational design based on the creation of global support functions to replace functions that used to work separately in the different regions, which included determining the new organization’s key roles, objectives, decision rights and processes
• We also quantified cost savings within the new organization design and defined a high-level migration plan to facilitate the client’s transition

Background and Challenge

One of the leading global food ingredients companies sought our support to address perceived weaknesses in its go-to-market strategy: high costs, low customer intimacy and the perception that a “one size fits all” model was unlikely to be optimal.

Approach and Recommendations

We worked closely with a broad range of stakeholders to diagnose and understand the issues. An analysis of client profitability highlighted that the company was particularly strong in serving upper-midlevel clients: national champions, regional leaders and the like. Penetration of the world’s largest global accounts was, however, below expectations. And a long trail of small clients kept the sales force and supporting organization busy, without generating meaningful economic value.

Integrating market research, internal data and external data, we segmented the market and identified eight meaningfully different client segments that would need to be addressed in a differentiated manner. Half of these were short-listed as priority segments on the basis of both their attractiveness and the company’s ability to develop a winning differentiated value proposition.

For each of these prioritized segments, we defined the necessary product and service value proposition, price positioning and commercial agenda. Critically, we also redesigned the commercial strategy, creating four different channels:

1. Two industry-focused sales teams dedicated to serving specific high-value segments with a full product offering and an expanded service model; our client went as far as developing full-service contracts for customers’ plants.
2. A generalist sales team dedicated to serving large regional clients along geographical boundaries.
3. A very high-touch key account management team targeting 10 of the world’s largest and most attractive global clients and prospects across Europe, Asia and the U.S.
4. A new online direct channel targeted at 80% of the firm’s existing clients — either too small or not service-sensitive; this offered a limited range of standardized products in standardized formats at predefined conditions, with a simple customer interface integrated into the firm’s global logistics operations.

We knew from the outset that the success of the engagement would depend on ensuring all stakeholders contributing to the solution in order to be fully engaged in its delivery and execution. We worked in close collaboration with constituents throughout the sales organization to thoroughly understand issues, co-create the necessary solutions and test proposed solutions.

Results

The outcome was a totally redesigned go-to-market model that dramatically increased the focus and effectiveness of the sales force, increased service levels for the client’s best and most attractive segments, and reduced headcount by over 150 FTE globally.

Background and Challenge

Our client, a leading provider of technology-based brand and packaging solutions, recently agreed to acquire a close competitor.

With a broader offering, the combined organization was expected to have a unique market opportunity to drive growth in several regions, as well as capture a greater share of wallet among customers.

However, in order to capture this opportunity, the combined company needed to redesign its commercial model to be customer-centric and ensure it was aligned to its targeted markets and customers.

In addition, back-office functions for both legacy companies were not configured to support the new company, which would have resulted in missed opportunities to scale the business and improve performance.

Approach and Recommendations

• Collaborated to define the right go-to-market strategy for the combined business, including defining multiple customer segments across regions to target the broader offering
• Designed a customer-centric commercial model, and supported the organizational cascading of reporting lines and positions
• Assessed current performance of the supporting functions — corporate center, HR, financial, IT, legal — including cost drivers, service levels provided, resource levels, and organizational strengths and gaps
• Developed design criteria, defined new governance and decision rights, and redesigned functional organizations to support the commercial organization across the regions
• Quantified resource levels, cost savings and timing to migrate to the new model
• Facilitated talent retention and organizational cascading

Results

• With a clear go-to-market strategy and a new customer-centric organizational model, the combined company was in a strong position to capitalize on its market position
• The new model represented a significant design departure from the previous approach and resulted in much stronger alignment with the strategic needs of the business
• The implications of each functional group’s redesign was considered across global, regional and local scales
• Within each geographic region, governance, service delivery and strategic alignment with the broader organization were key considerations
• Commercial integration plans were developed and carried out with very positive early customer feedback
• The new support function model was more cost-efficient (savings estimated to be  approximately 15% of baseline), while also striking a balance between corporate control and regional/local autonomy to support the service delivery model
• We worked with the client to ensure there was buy-in to the new design across different functional groups
• Decision-making power and internal politics were considered in collaboration with client stakeholders
• Our objective facilitation of organizational cascading efforts led to better decisions and greater acceptance by the broader manager and employee base, essentially de-risking significant people issues

Background and Challenge

A building products manufacturer wanted to evaluate its strategic options regarding existing and new potential routes to market.

Approach and Recommendations

• Development of business model disruption with hypotheses based on market experience and peer comparison
• End-customer segmentation and needs assessment within various channels and geographies
• Channel impact assessment to determine the relative importance, risks and customer dynamics within established routes to market

Results

• L.E.K. delivered an overall solution containing a prioritized set of strategies to undertake as well as an assessment of factors and capabilities required for successful execution of strategies
• We also provided the client with a comprehensive business rollout and implementation plan in specific U.S. regional areas

This case demonstrates our expertise in regional customer needs and drivers, value-chain dynamics, and channel strategy in the North American building products market.