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Winning the race for new talent, technology, and global reach

How a fast-growing start-up employed a bold M&A strategy

Client

Advanced technology start-up

Sector

Industrial manufacturing

Primary goal

Build capabilities and enter new markets to accelerate growth

Key KPMG services

Merger and acquisition (M&A) strategy, human resources (HR) strategy, financial due diligence, accounting advisory services, economic valuation services, and more.

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When an acquisition doubles your revenue in your largest market, there are some big numbers at play—especially when you’re a $48 billion CPG company. And the bigger the numbers, the bigger the impact of every strategic and tactical decision you make. You can’t afford to have your visibility clouded and your decision-making hampered by having two disparate financial operations functions each with its own systems, software, and people. So, when a global CPG company found itself in this situation, it called on KPMG to drive fast, smooth, cost-efficient integration of financial operations.

Key outcomes

1

Increased engagement 

and global alignment between cross-functional teams

2

Greater visibility

 into consolidated spend driving meaningful insights and more proactive decisions

3

Days shaved off

the monthly close cycle

4

More accurate

revenue and sales forecasting

Technological innovation is moving at warp speed—with rapid advances in everything from commercial space flight to vertical take-off and landing (VTOL) aircraft to autonomous vehicles. Our client, a fast-growing advanced technology start-up, was one company striving to win the race for innovation. They faced intense competition and pressure to gain advantage. Success required moving fast and combining a rare mix of world-class engineering, operational excellence, and access to capital.

To catch the competition off-guard, the start-up pursued an ambitious M&A strategy to rapidly build capabilities and reach new markets. Our client trusted KPMG to serve as their deal adviser throughout the journey—for industry experience in advanced technology, wide-ranging M&A experience, and an unwavering focus on realizing strategic value at every step of the deal.

Key outcomes

Making a measurable difference

Multiple global deals

closed concurrently

Billions added

to the valuation

Hundreds of millions saved

by avoiding financial missteps

Significant increase

in the engineering talent base

Leading technology

and support facilities acquired

First units acquired

for global expansion

New back-office operations

built from the ground up

Client transformation journey

Click on each part of the journey to learn more about our client’s transformation.

Client transformation journey

Before

Poor visibility threatened business objectives.

Acquiring a large organic food and beverage business helped a global CPG company expand its operations and nearly double its revenue in the U.S. However, as with most mergers, the integration posed some challenges. Two disparate IT environments with different accounting and reporting models, separate enterprise resource planning (ERP) systems, and multiple business intelligence (BI) tools required extensive manual intervention and offline data manipulation, preventing uniform reporting and analysis. Data was trapped in silos. Visibility was insufficient. A new CFO and the finance and accounting teams lacked the insight to support effective forecasting and both strategic and tactical decision-making. In a sector as competitive and fast-changing as food products, this company needed to increase visibility quickly.

After

Unified financial operations support global success.

While this CPG company’s business is spread across two continents (and originates from a number of acquired companies), its financial operations are now centralized and unified. A cloud-based platform extracts and loads data from numerous global sources, then configures and stores it in a central location. Accounting staff across multiple back offices work within a single governance structure and with a single set of streamlined processes, enabling effective reporting and supporting a swift, accurate close. Across the enterprise, visibility is excellent, and insights are at the ready, because analysts can perform real-time calculations and drill down swiftly to the meaning behind the numbers. Unified financial operations helps this $48 billion player predict accurately, plan effectively, and act swiftly—all crucial in a sector where windows of opportunity close as suddenly as they open.

Future

A strong foundation that can keep pace with continued growth.

There will be more acquisition targets in the company’s future. And with a cloud-based platform, governance framework, and standardized processes in place, integrating financial operations will be a swift, sure process. A successful integration inspired the CFO and global finance team to consider other areas for transformation. From evolving multiple layers of the target operating model within Finance, to jump-starting transformation across other functional areas, a powerful ripple effect began and continues across the enterprise. Having the right tools and processes to support a grander vision driven by meaningful insights will continue to empower positive change.

Before

Poor visibility threatened business objectives.

Acquiring a large organic food and beverage business helped a global CPG company expand its operations and nearly double its revenue in the U.S. However, as with most mergers, the integration posed some challenges. Two disparate IT environments with different accounting and reporting models, separate enterprise resource planning (ERP) systems, and multiple business intelligence (BI) tools required extensive manual intervention and offline data manipulation, preventing uniform reporting and analysis. Data was trapped in silos. Visibility was insufficient. A new CFO and the finance and accounting teams lacked the insight to support effective forecasting and both strategic and tactical decision-making. In a sector as competitive and fast-changing as food products, this company needed to increase visibility quickly.

After

Unified financial operations support global success.

While this CPG company’s business is spread across two continents (and originates from a number of acquired companies), its financial operations are now centralized and unified. A cloud-based platform extracts and loads data from numerous global sources, then configures and stores it in a central location. Accounting staff across multiple back offices work within a single governance structure and with a single set of streamlined processes, enabling effective reporting and supporting a swift, accurate close. Across the enterprise, visibility is excellent, and insights are at the ready, because analysts can perform real-time calculations and drill down swiftly to the meaning behind the numbers. Unified financial operations helps this $48 billion player predict accurately, plan effectively, and act swiftly—all crucial in a sector where windows of opportunity close as suddenly as they open.

Future

A strong foundation that can keep pace with continued growth.

There will be more acquisition targets in the company’s future. And with a cloud-based platform, governance framework, and standardized processes in place, integrating financial operations will be a swift, sure process. A successful integration inspired the CFO and global finance team to consider other areas for transformation. From evolving multiple layers of the target operating model within Finance, to jump-starting transformation across other functional areas, a powerful ripple effect began and continues across the enterprise. Having the right tools and processes to support a grander vision driven by meaningful insights will continue to empower positive change.

Client transformation journey

  • Before

    Poor visibility threatened business objectives.

    Acquiring a large organic food and beverage business helped a global CPG company expand its operations and nearly double its revenue in the U.S. However, as with most mergers, the integration posed some challenges. Two disparate IT environments with different accounting and reporting models, separate enterprise resource planning (ERP) systems, and multiple business intelligence (BI) tools required extensive manual intervention and offline data manipulation, preventing uniform reporting and analysis. Data was trapped in silos. Visibility was insufficient. A new CFO and the finance and accounting teams lacked the insight to support effective forecasting and both strategic and tactical decision-making. In a sector as competitive and fast-changing as food products, this company needed to increase visibility quickly.The preconfigured assets and technology accelerators delivered by KPMG Powered Enterprise let ambitious leadership teams take advantage of embedded leading practices to speed up the decision-making process while instilling confidence.

  • After

    Unified financial operations support global success.

    While this CPG company’s business is spread across two continents (and originates from a number of acquired companies), its financial operations are now centralized and unified. A cloud-based platform extracts and loads data from numerous global sources, then configures and stores it in a central location. Accounting staff across multiple back offices work within a single governance structure and with a single set of streamlined processes, enabling effective reporting and supporting a swift, accurate close. Across the enterprise, visibility is excellent, and insights are at the ready, because analysts can perform real-time calculations and drill down swiftly to the meaning behind the numbers. Unified financial operations helps this $48 billion player predict accurately, plan effectively, and act swiftly—all crucial in a sector where windows of opportunity close as suddenly as they open.

  • Future

    A strong foundation that can keep pace with continued growth.

    There will be more acquisition targets in the company’s future. And with a cloud-based platform, governance framework, and standardized processes in place, integrating financial operations will be a swift, sure process. A successful integration inspired the CFO and global finance team to consider other areas for transformation. From evolving multiple layers of the target operating model within Finance, to jump-starting transformation across other functional areas, a powerful ripple effect began and continues across the enterprise. Having the right tools and processes to support a grander vision driven by meaningful insights will continue to empower positive change.

Complex deals often bring both the greatest reward and the highest risk. Success requires a different level of insight, speed, and operational experience to meet adversity and surprises along the way. But, as our advanced technology client shows, complex deals done right can unlock unparalleled opportunities. It helps to work with experienced advisers who have done it many times before.

Kevin Prevost

Managing Director, KPMG Deal Advisory & Strategy

1.  Due diligence: Managing risk phase

During due diligence on one deal, KPMG discovered an unexplained investment line item in the financial statements. This was unknown to our client and not initially disclosed by the seller. After a thorough review to understand the implications, the team concluded the investment prevented certain future business actions and impacted deal value. With this insight, the start-up negotiated a substantial reduction in the deal price—avoiding a financial misstep potentially worth hundreds of millions of dollars.

That’s just one way KPMG advised on financial, commercial, and operational due diligence. Additional assessment areas included:

  • Integration strategy
  • Quality of earning
  • HR
  • Information technology (IT)
  • Tax
  • Finance processes
  • Product technology

2. Integration for human resources: Retaining top engineering talent phase

Onboarding top talent was a key objective for our client, but deals always risk employee attrition. Rivals waste no time trying to recruit from acquisition targets, especially in the highly competitive advanced technology job market.

The KPMG HR Center of Excellence helped our client secure employee retention and enable recruitment. For instance, with extensive Silicon Valley experience, KPMG helped align the compensation approach and structure of the combined company to leading practices in advanced technology sectors.

Moreover, KPMG helped plan and execute HR integration for a smooth Day 1—building trust and credibility with employees. These efforts included:

  • Modeling and identifying key talent for retention and transaction success
  • Recommendations on design of compensation packages and benefits
  • Management and execution of the offer letter process
  • Strategic communications to keep employees informed throughout the deals

With our support, our client realized strong employee retention that exceeded industry benchmark.

3. Integration for operations: Building new back-office functions phase

While our client acquired new units in targeted geographies, they lacked robust administrative functions to support the core business. Back-office operations had to be built nearly from scratch.

KPMG helped to establish fit-for-purpose administrative operations—to ensure business continuity on Day 1 and optimize for the long term, with solutions carefully phased to mitigate risk and cost. For example, KPMG designed a solution that enabled the company to begin receiving onboarded employees from the acquisition while new permanent processes and infrastructure were being established.

Moreover, during one sign-to-close phase, KPMG identified that the seller’s system separation approach was unworkable. KPMG recommended what seemed to be the only viable alternative: global deployment of a new Enterprise Resource Planning system for both the target and legacy business. With our client’s approval, KPMG delivered on-time and on-budget, designing and implementing the system in about three months—greatly exceeding client expectations.

KPMG helped stand up operations for HR, IT, accounting and finance, and more, delivering the base capability to operate the global company and support continued growth.

4. Valuation: Recognizing the underlying value in the business phase

With rapid M&A growth, our client needed to update its valuation, as a non-publicly traded entity undergoing material events. But when the KPMG Economic Valuation Services team first valued the company, the results were disappointing. It is not uncommon for an emerging technology start-up to have difficulty communicating its true value.

The KPMG team provided recommendations for a stronger valuation. These included tactical changes to optimize the balance sheet, which had a major impact on how the value was recognized. Moreover, the KPMG Strategy team worked with management to better articulate the business plan—supported by a rigorous, data-driven model.

With recommendations implemented, the start-up’s valuation improved by billions of dollars. This would help build confidence with counterparties, such as investors and potential employees, for easier access to capital and more success competing for talent.

Turning insights into opportunity

Winning the race for innovation with continuous value creation Working with KPMG, our client completed multiple deals, entered new markets, enhanced operations, and dramatically boosted the value of their business. Given these successes, they continue to work with KPMG for support with M&A strategy and designing and operationalizing future operating

New rules of business transformation

Lead with strategy. Enable with technology. Drive with data.

Read more

Meet our team

Do you have ambitious M&A goals?

We can work closely with you to identify the right opportunities, be ready to meet challenges head on, and drive value at every turn. Let’s start a conversation.

Image of Jono Anderson
Jono Anderson
Principal, Strategy, KPMG US
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Image of Charles Cochran
Charles Cochran
US Japanese Practice Advisory Leader, Principal, Advisory, KPMG LLP
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Image of Kevin Prevost
Kevin Prevost
Managing Director, Strategy, KPMG US
Read bio
Image of Jono Anderson
Jono Anderson
Principal, Strategy, KPMG US
Read bio
Image of Charles Cochran
Charles Cochran
US Japanese Practice Advisory Leader, Principal, Advisory, KPMG LLP
Read bio
Image of Kevin Prevost
Kevin Prevost
Managing Director, Strategy, KPMG US
Read bio

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Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

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