Utilities Case Study
Case #5327: Acquisition Integration Planning
As part of its strategy to become the largest operator of natural gas utility assets in the eastern United States, a utility holding company agreed to acquire a northeast natural gas LDC. While it awaited regulatory approval from multiple state PUCs, the acquiring utility wanted to move quickly to identify those actions and decisions that would need to be made in order to begin efficiently operating the newly acquired entity as an integral part of its operations group as soon as the deal closed.
This required identifying those actions that needed to be taken to reconcile operating methods and measures, customer service, safety and technology practices with those of the parent company so that these could be accomplished in the first days of running the newly acquired operations. It also meant identifying the executive and managerial talent that the acquirer wished to retain in the transaction, and dealing with an extremely nervous workforce.
Questas was engaged to help organize and then project manage the approach and methods utilized to develop 90- and 120-day operational Transition Plans that would hasten transition to current acquirer practices and metrics, and then look for ways to improve those business practices. Templates were developed and completed for each business process-based team to use in identifying transition steps and the specific actions that needed to be taken to achieve transition objectives. These recommendations were scrutinized in terms of their sequence and timing, their operational and cultural impact, their inherent interdependencies, their regulatory implications, and their requirement for resources - especially technology.
Engagement Highlights
- Industry:
- Natural Gas Distribution
- Client:
- A Large, Regional Gas Distribution Company
- Approximately 2.2 million Natural Gas Customers
- Assignment:
- Create a method for rapidly identifying Transition Plans
- Develop a method for setting priorities and assessing impact of recommendations
- Identify the talent embedded in the acquired organization
- Develop Blueprints for operating the acquired organization upon deal closing
- Approach:
- Design non-invasive/non-threatening data-gathering templates and methods
- Organize teams according to processes employed in Gas Operations, Call Centers, Appliance Services, Operations Support, Field Services, Distribution Operations, Marketing and Sales
- Populate teams with people engaged in the processes, led by Team Leaders from Acqirer
- Create uniform Definitions and orient all Transition Team Leaders and Members
- Manage the collection and organization of data in extremely tight timeframe
- Facilitate Strategic Review and Approval of proposed Transition and Action Steps
- Develop Transition Plans for each Acquired Operating Entity
- Program:
- Transition Planning is first step in three-phased Integration program:
- Acquisition Transition Planning
- Acquisition Integration Planning
- Enterprise-wide Process Performance Improvement
- Duration:
- 16 weeks for completing Transition Planning phase
Results
- Transition Plans including 257 Action Steps to be taken in first 90 and 120 days
- Prioritized list of potential Process Performance Improvement Opportunities
- Identification and Retention of Desired Managerial Talent
- Smooth and Orderly Transition of Ownership upon Deal Close
- Clearly delineated Roles and Responsibilities and Consensus on Direction going forward