When a Fortune 50 pharmaceutical company decides to divest an API (Active Pharmaceutical Ingredient) business that includes seven (7) manufacturing sites across the globe, over two hundred (200) IT applications, twenty-five (25) products in the supply chain, and transitions over 4,000 employees, they called EMS to develop a detailed DAY 1 and Transitional Plan for a critical successful divestiture /acquisition. EMS played a critical leadership role of not just defining, implementing, and executing a DAY 1 and transitional plan for the IT work stream (Systems and infrastructure) but also developed the entire business transitional plan involving all other key work streams (Finance, Quality, Laboratory, Production Management, Supply Chain Management, Environmental Health and Safety, Human Resource, and IT).
Success was achieved and measured based on a successful Change Management Plan that minimized business impact and/or interruption on the supply chain, zero quality issues, efficient transitioning of employees, meeting critical business milestone dates, and staying within the budgeted plan for both the divesting and acquiring companies. Clients are impressed with EMS’s IT staff’s ability to work and look across multi work streams to anticipate issues, resolve problems quickly and effectively before they impact the business.
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ACQUISITIONS & DIVESTITURES: CASE HISTORY 2
From time-to-time divestitures and acquisitions involving Contract Manufacturing companies are often fast-tracked and kept strictly confidential in the early stages of a sale. EMS was called to facilitate and execute such an international global Pharmaceutical deal involving one (1) manufacturing facility, ten (10) products in the supply chain, and transitions over 400 employees from a fortune 500 corporation. The acquiring company wanted a quick and accurate business and IT assessments of the total cost of ownership, business risks, and complete change management plan within four (4) weeks to determine if the sale was feasible—or not. Additionally, to increase the level of difficulty all assessment activities were completed while under strict confidentially agreements. EMS met and exceeded this fast-track and confidential challenge as the acquisition was complete as planned. Both acquiring and divesting companies DAY 1 and transitioning requirements were met as EMS IT resources led the sale activities from inception to completion.
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ACQUISITIONS & DIVESTITURES: CASE HISTORY 3
THE ART OF NEGOTIATION
Divestitures, mergers, and acquisitions come in all shapes and sizes. No two deals are the same and every deal has unique characteristics regardless of the buyer or seller. Both have high-priority business objectives and /or key sensitivities such as; understanding total cost of ownership, supply chain impact, compliance and quality concerns, reduced started up timelines, and manufacturing constraints, to name a few. Understanding how, when, and what to negotiate can makes all the difference in a successful deal that addresses common objectives and key business sensitivities. EMS was called to assist with negotiating and executing such a deal between a major Fortune 500 company and a Contract Manufacturing company where the objectives were to design a transition plan that reduces IT startup timelines and costs. Negotiating how best to prepare and transition IT assets (ERP, Quality, Laboratory, Plant Floor Manufacturing systems) to minimize costs and reduce started up timelines was a key sensitivity (deal breaker) for the acquiring company. EMS’s IT resources early engagement played a key factor with negotiations to address these issues head on by developing and negotiating an equitable IT assets transition plan that met both party’s key sensitivities which allowed the deal to be completed on time. Clients acknowledge EMS’s current relative negotiation experience plays a key role, especially when IT assets come into play on most deals. Negotiating IT assets that align for both parties to minimize key business sensitivities is a very high priority.
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ACQUISITIONS & DIVESTITURES: CASE HISTORY 4
EARLY IT ENGAGEMENT (WHY IT’S ESSENTIAL)
Too often mergers, acquisitions, and divestitures deals are set or completed before the most critical work streams are even notified or involved. The hype (buzz) around large multi-million-dollar divestiture / acquisition deals has everyone focused only on financial aspects, not knowing nor understanding important details or facts about IT infrastructure, applications disentanglement, transitional planning, and decommissioning of systems that costs buyers/sellers millions of dollars down the road or in the later stages of a sale. Early engagement is essential to align business aspects of the deal (Asset Sale and/or Supply Agreement) with IT planning to ensure the IT and other critical work streams align with the business plans. As a general rule, the earlier IT participates in mergers, acquisitions, and divestitures deals and engages with all other work streams, the better chance of a successful deal.