Transformative integration lays the foundation for sustainable growth
Highly complex carve-out transactions call for prowess in managing critical integration points and risk factors while laying the foundation for sustainable growth. Such was the case when a $50 billion airline carved out its ground handling services subsidiary to create a $500 million joint venture with a private investor whose portfolio included complementary companies in the aviation space. Their goal: Combine strengths and service offerings to create a premier aviation-handling provider that can deliver an elevated experience to airline customers in the United States and abroad.
The deal positioned the new business to expand the breadth and quality of its service offerings while continuing to operate at its same airport locations. As the majority partner, the private investor would provide operational oversight and funding toward improvements while the airline company maintained visibility and input. As part of the transaction services agreement (TSA), a transformational integration needed to occur within 36 months. RSM was brought in to help navigate financial, operational and reporting considerations, culminating in a substantial collaboration to transition the business by means of:
- Speeding up the TSA exit to 13 months
- Shortening the month-end close to five days
- Modernizing talent management with better-quality data
- Automating the accounting process
- Integrating global tax compliance for 150 locations
Beginning with the end in mind
Understanding that speed of play was critical, RSM recommended a sprint assessment to quickly uncover integration requirements before designing a potential operating model for consideration. The client agreed; the process took less than a month to complete and revealed significant risk and unidentified opportunities across the finance, information technology (IT) and human resources (HR) functions. RSM then presented a road map to transform these key areas.
“RSM’s sprint process allowed our cross-practice, cross-functional subject matter professionals to obtain the deep knowledge needed to build the right approach and teams,” said Joe Ring, mergers and acquisitions director at RSM. “The continuity from diligence, to the sprint, then to the planning phase into the execution saved the client from having to re-explain everything, and the knowledge transfer across the board kept the momentum going through the execution.”
Another advantage of the sprint process was its accelerated business continuity planning to prepare for Day One. Through RSM’s integration management office (IMO), the team oversaw the execution of solutions across finance, HR and IT to resolve latent issues from gaps and legacy systems requiring constant support. They operated as the consolidation mechanism to bring all of the services to bear on the integration while providing complete visibility to the client so that management could anticipate problems, respond quickly and drive profitability. This helped ensure a smoother execution and sped up the time needed to exit from the TSA.