It is common knowledge that mergers and acquisitions require careful research and consideration in hopes that the end result is beneficial to all parties involved. During most M&A activities, companies will employ the support of M&A advisors—usually large investment banks because of their unique position to engineer the financial transactions needed throughout the deal.

However, companies should also consider using outsourcing advisors over the course of the M&A cycle because of their expertise in helping companies conduct an overview of business operations, including how the new company will move forward in carrying out its business processes as a complete and whole organization.

This is an interesting time because mergers and acquisitions typically result in the reduction of staff and companies are left with questions about if their operations will be successful. An outsourcing advisor can answer these questions and provide expert advice on what companies can do to make their workforce effective, as well as provide cost efficient outsourcing strategies to meet today’s diverse business needs.

Outsourcing advisors such as Alsbridge are equipped with functional expertise, vertical market experience, information resources and a proven methodology that supports the demands of any company. Additionally, companies going through an M&A deal get the added benefit of using these advisors for due diligence advice and post-close analysis during the life of the transaction.

With this in mind, these advisors are also able to execute transactions. As anyone who has participated in a large sourcing transaction knows, there is often a huge time commitment required to gather and analyze all of the relevant information, identify/communicate with and assess potential suppliers and then negotiate the transaction (particularly if dual negotiations are employed).

Under the best of circumstances, this is a full time job for what can be a sizable group of personnel. It is difficult, in these days of ever-scarcer resources, to borrow personnel from other areas within the organization for a full time commitment of several weeks, if not months, for a transaction. Particularly when the transaction may be a one-time endeavor and may also not be the most popular transaction internally, it may be difficult to get personnel and their managers to "volunteer" for this duty (especially if their position is at risk). While using outside resources does not come without a cost, it may certainly be preferable to poor execution, missed deadlines and incomplete or sloppy work product that is only going to disadvantage the company during the M&A cycle.Another subtle, but profound, reason for using an outsourcing advisor is to help develop and maintain internal support for the transaction. Companies should have a clear vision of their goals for the business at the beginning of the process. While different organizations will sometimes call these different things (e.g., mission statement, guiding principles, etc.), having executive support for what the organization is attempting to accomplish is a valuable tool in executing the transaction.

Outsourcing advisors bring an independent view to the process of developing these goals and can validate or invalidate assumptions that, without their expertise, may have been accepted without question. Indeed, the best advisors will sometimes recommend against an outsourcing transaction or, at least, significantly impact the initial view of its scope and execution. Politically, this independent view can then be leveraged by the corporate champion of the transaction as a validation of their business case. And as an added benefit, skilled outside advisors are helpful in identifying, dealing with and perhaps even creating a buffer against individuals that may (sometimes without even realizing it) be working to benefit their own department or people, rather than in the overall best interests of the organization.

This is not to say that the transaction can simply "be turned over to the consultants" and they will then serve as a teflon-coated magic carpet for the transaction. They can, however, provide material assistance in establishing the goals for the transaction, staying on point throughout the process and, depending on the institution and the personalities involved, possibly assist with the internal politics that often arise any time an organization attempts to significantly restructure itself.This assessment should not discourage companies who choose outsourcing as an option during their M&A activities from doing it in-house. But without a dedicated staff of sourcing professionals (whether from the inside or outside of the organization) with appropriate executive level support, it has been in our experience that the assessment, development and execution of, and the ultimate success of the transaction may be less than what the company would have desired for one of its most critical and complex corporate endeavors.

About Ben Trowbridge  

Best known as a thought leader in the evolution of Outsourcing, Ben Trowbridge is a proven leader with more than 20 years of diversified global experience as Managing Partner, CEO and Senior Executive with proven experience in hundreds of outsourcing, shared services and offshore transactions as a consultant and buyer executive. In acknowledgment of his achievements Ben has been nominated for various Innovations in Outsourcing awards and is a recognized leader in all areas of IT and BPO sourcing and relationship management. He has created a number of new, and now proven, sourcing models to include the Sourcing Alignment System (SAS)(TM), JVsourcing(TM) Methodology, FastSource(TM) and the Market Reality Assessment (MRA).

He has led and supervised sourcing transactions ranging from $150 million to $2.2 billion for a variety of activities such as F&A, HR and IT across multiple industries to include: transportation, consumer products, telecommunication, manufacturing, retail, technology, entertainment and energy/utility industries.

Ben previously served as Managing Partner and as a Founder of Ernst & Young's Outsourcing Services Business, which was sold, as part of one of the largest consulting services sale to Capgemini for $10.5B Euros in 2000. Prior to Ernst & Young, Ben served in a variety of executive roles at EDS during a number of high growth years. Prior to his civilian career Ben served in the U.S. Marine Corps attaining the rank of Captain.