Utilities Case Study

Case #5688: M&A Integration

A large Midwest energy utility company (primarily electric generation and distribution with a small natural gas distribution business) agreed to acquire a neighboring natural gas distribution company which had a larger customer base in the same service territory.

Because of the size of the acquired company's customer base, the transaction was treated like a merger between the two companies' gas operations. Integration planning and synergies realization were approached on that basis.

Questas consultants were engaged to assist the organizations with integration. We approached this assignment in three phases:

• an Executive Alignment phase in which we conducted a cultural comparison of the combining organizations and enabled senior-level participants from both entities to achieve agreement on long-term business goals and the strategy for achieving them, set transition goals for: operations integration, shared services, technology support, gas supply, non-regulated ventures, back-office activities, and cultural integration;
• an Assessment & Design phase in which co-led Assessment Teams from both organizations reviewed and documented current work processes in both organizations, compared these to benchmarks and best practices as well as the costs/benefits of outsourcing these functions, formulated a future state vision for integrated work processes, set improvement targets for merged process performance, and determined the charters and membership of Improvement Teams required to achieve target performance;
• and, an Implementation phase -- which began as soon as all regulatory approvals were officially received -- during which Improvement Teams were launched, Team leaders and members trained, an Integration Oversight Council created to manage all transition, improvement and integration activities, and reporting practices established. During the Implementation phase we assisted with a redesign of the organization structure based on agreed-upon process changes (including outsourcing decisions) and created linkages of metrics from strategic intent to process, work team and individual performance.