CASE STUDY FOR ARTHUR ANDERSEN
AstenJohnson, Inc.
Two paper-industry giants had a vision. Asten, Inc. and the JWI Group realized that, together, they could become one leading industry supplier of a critical component needed in the paper manufacturing business. Under the same roof, the companies could benefit from their combined 300 years of experience. However, overlap existed in 92 percent of the combined business.
The merger resulted in the creation of the Charleston, South Carolina-based AstenJohnson, Inc. The company currently has plants in the United States and Canada, and throughout Europe.
Business Issue
Executives on both sides realized that amalgamating ideas and company philosophies would be difficult. However, integrating physical resources, including operational and distribution capacities, would be a monumental task.
Both had previously seen another paper-industry merger struggle. They needed professional consultants to make this work. They called Arthur Andersen.
During the first few meetings between Asten, Inc. and the JWI Group, Arthur Andersen began to help the two companies overcome what was perhaps their biggest obstacle -- each had its own distinctive, but successful, business culture and philosophy.
"Asten was a financially driven company and its culture represented more of a public company," explains Stig Lanesskog, Arthur Andersen project manager. "The JWI Group, however, was driven much more from a product and operations standpoint and had more of a smaller, private company feel."
Solution
Arthur Andersen helped managers of both companies create a central merger management group called the business integration leadership team (BILT).
"Our responsibility was to facilitate those discussions, starting with the mission and vision of the business," explains Scott Sims, Arthur Andersen engagement partner. He says that the BILT members analyzed specific lines of business, functional areas and different departments, and then chose people who would comprise sub-teams and cross-functional teams that were actually designing the new processes of the combined company.
But starting was the hardest part. "During our first BILT meeting, a number of the executives from both companies had never before sat across the table from one another,"
explains Sims. "Part of this initiative was getting the new executive team comfortable in terms of working with each other."
The BILT team created and helped formulate key strategic merger processes for the new company, including:
In terms of a timeline, discussions began in April 1999 with the merger taking effect September 8, 1999. Functional and cross-functional teams were launched a few weeks later. Those teams had 45 days to develop implementation plans, which they would then report to the BILT team. The implementation plans were activated by December.
"One of the important things for each team to determine was whether one company's processes were better or whether a new process was needed for running certain departments, such as the warranty department, sales office or call center," explains Sims.
Client Value Delivered
With the help of Arthur Andersen, the functional and cross-functional teams eliminated areas of duplication and formulated detailed integration procedures throughout the company.
"We set up the ground rules and structure. Then, AstenJohnson chose the walls and the hallways they should be walking down, and, even though they hit the walls once in a while, we kept them moving toward the goal of integrating the two companies," says Lanesskog. "They have developed the new organizational structure and staffing, and, simultaneously, they have also been able to streamline some of their operations."
Of course, it was critical for these two merging companies to integrate organizationally without disturbing business interactions with customers. So, the functional and cross-functional teams became responsible for creating project plans that would minimize customer disturbances.