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Distribution Software & Acquisitions
Acquisitions can be very profitable. They can also be very painful if pitfalls they are not planned well. Like the birth of a child, acquisitions are often seen as the panacea to growth. However, after the newness wears off, the whispers begin. The merged companies are still using separate computer systems; back office functions haven't been consolidated, and turf wars and in fighting are rampant between company personnel. This sort of negative activity can lower the stock price. Even for private companies, investors may start asking lots of pointed questions and put a lot of pressure on senior management. When this occurs, the most common solution is to bring in a new management team in an effort to clean house and start fresh again. This is an expensive, time-consuming process. It can all be avoided with proper planning. This article will explain some keys to dealing with acquisitions using software.

A key factor in a successful acquisition is for company management to seek out acquisition candidate companies with strong management teams who wish to stay involved during and after the merging process. The companies should share the same vision and have the same mission. However, when one company is a general-mill supply house and the other is a specialist, the merged company can't generate value if they aren't on the same page in terms of distribution software. Integrating the acquired company into the parent company's software system is a key step to success since sharing overhead and services will drive operating and transaction costs down. Converting the new company's software can be likened to a heart transplant, but proper planning, training and support can enhance the operation's chances of success.

If done right, unifying the two companies under one software distribution system can allow for inter-company sourcing, consolidate personnel, eliminate duplicate functions, and provide a wider range of services and products to customers. It also has the potential to facilitate e-commerce provided that the company is ready to make that move. If it's done incorrectly, the two companies will continue to operate as separate entities, with the right hand not knowing what the left is doing. Customers and suppliers will become confused as to who's in charge of what and a feeling of rivalry may even develop.

Successful acquisitions start with proper planning and selection criteria. A good set of criteria might include presence in a major industrial area, annual revenues of a certain minimum amount, good market position, excellent revenue growth, balanced management infrastructure, a diverse supplier and customer base, a focus on mid- and large-sized accounts, full-service distributor capabilities, outside sales force, up-to-date IT, good logistics, and established supplier relationships.

After the target company is selected and acquired, it is critical to convert them to the parent company's software distribution system as swiftly as possible. This can be done through pro-actively reaching out the IT trainers, training them in the new software system, and sending them to educate the acquired company's employees. With the rise of e-commerce, having newly-acquired companies on the same software page makes good business sense. The upside potential is huge, in that order processing and fulfillment are streamlined and integrated. By standardizing the distribution system of both companies and reducing redundancy, managers can realize a lot of value out of well planned acquisitions.



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