I recently had the privilege of sitting together with some of the top global chemical industry executives. We had some highly interesting discussions about the industry and where it was going and what the current pains were for these companies. One topic that kept coming up was that of M&A – Mergers and Acquisitions. The industry has experienced massive structural changes over recent years and this consolidation is expected to continue.
Most recently, Dow Chemical of Midland, Mich., announced it would pay $18 billion for Rohm and Haas Co. of Philadelphia. One day later, Wilmington-based specialty chemical producer Hercules Inc. said it would be bought by chemical company Ashland Inc. of Covington, Ky., for $3.3 billion. The list goes on and on…
In the age of non-stop consolidation within the industry, one thing is clear – a clean ERP structure is a prerequisite when it comes to effectively integrating two companies in an M&A situation. The challenge is not just integrating IT structures. A single consistent organization needs to be shaped including business processes and assets. The need for fast implementation compounds these issues. Without this structure in place companies can expect expensive redundancies and delays in consolidating processes. With the right ERP template in place, companies can quickly copy this template to the new enterprise and adjust this to their specific needs.
It remains an exciting time in our industry and time will tell which companies are best equipped to successfully adapt to these challenges. Clearly those with the ability to adapt their processes and structures with quick agility will have the competitive advantage above the others.
It would be interesting to hear what experiences others have had in this area.