Setting Methodical Acquisition Tactics Pays Off for Unified

Seldom does an acquisition occur without the outbreak of quite a number of surprises.

No matter how penetrating the due-diligence phase prior to the acquisition, there will remain much the two companies don't know about each other until efforts to meld the companies are well under way. That's to be expected. Even a thorough due-diligence process is intertwined with the sale process. As a result, after the transaction is completed, there may be operational surprises, particularly those concerning technology and supply-chain procedures. Beyond operations, personnel issues can be especially challenging.

As the unification process between the merging companies goes forward, it won't be long before someone says something to this effect: “I wish we knew about that [insert any vexing situation here] before we started this process. If we knew how difficult this would be, we would have thought about this much more deeply. Next time, we'll do this differently.”

Well, as you'll see in the front-page news feature in this week's SN, one company applied what it learned during a merger process eight years ago to a second merger that's currently unfolding. Those learnings were described to SN reporter Elliot Zwiebach during his interview with Al Plamann, president and chief executive, Unified Grocers, Commerce, Calif. Unified is now engaged in the acquisition of Associated Grocers, Seattle. Both are cooperatives, which increases complexity. The $70 million deal closed in September. Unusual fact concerning those deals: They resulted in two name changes for Unified. In 1999 and earlier, the company was known as Certified Grocers of California. During that year, it acquired United Grocers, Portland, Ore., and became Unified Western Grocers. Prior to the acquisition of AG, it became Unified Grocers.

In any event, Plamann told SN that some of the experiences surrounding the earlier acquisition of United have resulted in lessons now being applied to the AG acquisition. Here's one: “From that experience [of acquiring United], we learned that we needed a transition team in place prior to closing the deal that included senior staff from different functional areas, to help us understand how their business works so we could establish communications to start the planning process for the actual integration. We also learned not to be too hasty in migrating systems and to determine which systems are best before implementing changes.”

Unified learned that to make an acquisition go smoothly, it's necessary to determine how the company to be acquired operates at many levels, particularly when it comes to technology. And, Unified learned that personnel issues pose special challenges. Here's more from Plamann: “We realized we had to have an easier process for hiring AG employees who would stay with us. To do that, we developed an online application procedure so we could complete all processing prior to the deal.”

Finally, Unified decided not to rush into changing supply-chain procedures too quickly.

In sum, developing methodical tactics concerning operations, technology, personnel and supply-chain management smoothed the acquisition process considerably, especially because some were in place even before the deal closed.