European Car Rental Acquisition Integration


A private equity owned European vehicle rental company was acquiring the European division of a global competitor.  While enough work had been performed up front to develop a reasonable valuation model, there had been minimal planning for integration and benefit realisation.


We were engaged to structure the integration programme and provide advice to the directors and teams responsible for executing the acquisition.

Engagement Duration

Seven Months

Our Role

Act as the Integration advisor to the MD, Group FD and the Directors of the combined business.  Our responsibilities included: 

  • Developing the programme governance framework
  • Coaching people on their integration roles and responsibilities
  • Setting-up and mobilising the integration programme
  • Setting-up and managing the Integration Project Office
  • Leading functional teams to:
    • Understand Day 1, Transition and Transformation requirements
    • Identification, validation and prioritisation of cost and growth synergies
    • Review operating model and change roadmap for the combined business - locations, processes, technology, etc.
  • Developing new organisational structure and group operating model
  • Consolidating and supporting execution of the overall 100-day transition plan
  • Identifying risks and issues, and helping the management team mitigate them
  • Working with key stakeholders to help the UK MD and Integration Director build engagement for  the key integration changes and helping them to manage the internal politics

Engagement Description

Deal Overview

Our client acquired a North American competitor’s European businesses for an enterprise value of €600m, including a transatlantic alliance for intercontinental sales.  This enabled our client to become the leading rental operator in the UK, and further strengthened the existing position it held in Europe. In addition, the transatlantic partnership enabled our client to gain increased access to the US market and take advantage of cross border rentals.

The acquisition enabled synergies to be achieved by:

  • Growing the B2B customer base
  • Optimising Fleet Management through a shared fleet
  • Sharing operational best practices
  • Headcount reductions in IT and Operations

Business Challenges - How These Were Addressed

Issue Description Action
Cultural challenges
  • The acquired business was more than double the size of our client in the primary country and was the lead country in the European business.
  • The expanded business required the acquired management team to refocus their efforts on the local country, as the other European branches were integrated into the country management systems.
  • Additionally, several of the senior managers within the acquired business were not supportive of the deal, which influenced acceptance within their functional teams.
  • A strong Strategic Rationale for the deal was established and the scope of the integration programme clearly defined.
  • Those parts which were in the scope and control of the local country business were identified and clear roles and responsibilities established.
  • While this could not wholly address the cultural challenges, it set a baseline for the integration and established clear expectations for behaviour and contribution during this transformational time.
Operating Model Changes
  • The acquired business was relatively decentralised, e.g. using the locally developed IT systems which delivered significant competitive advantage.
  • Our client managed several functions centrally, including IT, which caused a number of integration planning challenges.
  • Each functional team was supported to develop their own operating model transformation, informed by the strategic rationale and value drivers for the deal.
  • The MD and the Integration Director set overall direction for the teams and also made cross-functional decisions where needed.
  • Where centralised direction was received which would impact the value drivers of the deal, e.g. the adoption of standardised IT systems, we helped our client to make a case for the retention of capability locally where required, as a temporary measure until the centralised systems were updated to provide equivalent functionality.
People Retention
  • The cultural changes mentioned above led to significant challenges in retaining key people for both the short and long term.
  • It was clear to the management team that there were a number of duplicate roles which would need to be rationalised, and there was a risk that the preferred candidate would leave the business.
  • In addition, it was critical to retain knowledge within the business while the transition took place.
  • The business leadership team were advised on the options for retention of key resources.
  • Where appropriate, retention bonuses were paid, contingent on retaining with the business for the agreed period, and on achieving specific integration milestones and targets.
Private Equity Ownership
  • Our client was private equity owned, with a clear strategy of growth by acquisition.
  • This meant that there was a strong imperative to demonstrate benefit realisation and achievement of the deal value drivers.
  • The PE owner had a clear management system for reporting on the performance of the business.
  • We supported our client in establishing a planning, tracking and reporting system for the deal value drivers and synergy projects, aligning this to the existing business plans for the combined business, so incremental value could be demonstrated.
Lack of Synergy Detail
  • The pre-transaction valuation made significant assumptions around synergies, but with very limited detail to back this up.
  • Operational due diligence was extremely limited.
  • The information that was available was readily communicated so there were no clear expectations of the synergy targets within the team - these were introduced at a late stage of the deal.
  • Each synergy project identified pre-deal was a one line summary and number based on estimation with little concrete detail.
  • Each function team was provided with this detail as a starting point. We provded support to validate these assumptions, as well as identifying additional growth and cost synergy opportunities.
  • Using the strategic rationale and value drivers for the deal, these opportunities were assessed and prioritised in terms of cost, benefit, difficulty to execute, and risk to the business.
  • Once agreed, these opportunities were incorporated into the overall integration execution and financial plans, with a commitment from the work stream leaders to execute against these or comparable alternatives.
Poor Communication
  • In the early stages of the deal, there was very poor communication with the key stakeholders and the wider business.
  • This caused significant uncertainty and fear of the consequences of the acquisition.
  • An external consultant was brought in to develop a communication strategy for the wider business and customers.
  • This plan allowed consistant messages to be delivered, and addressed the uncertainty within the organisation, allowing business to continue as normal.

Client Benefits

  • Helped the functional teams develop strategic plans that were consolidated into an overall operating model framework and the strategic rationale for the deal
  • Achieved a structured integration approach which enabled the client to prioritise the integration activities – faster execution, greater benefits and lower risk
  • Provided more accurate and structured governance and reporting, focusing senior management time on mitigation of key issues / risks
  • Identified and quantified double the synergies compared to pre-deal assumptions

Examples of Specific Contributions

Integration Governance and Management

At the point RitchieHogg were engaged, only the most limited integration planning had been performed.  This included the structure and planning of the integration programme.  One of our first actions was to establish the core project requirements of:

  • The Strategic Rationale for the deal - Why is the acquisition being made, and what benefits are expected?  What are the Value Drivers for the deal and how do these inform the subsequent decisions within the programme?
  • Integration Programme Structure - Establishing the governance bodies within the programme, including the steering group, project leaders and workstream level governance meetings.
  • Establishing the Integration Programme Management Office - As our client was not a project focused organisation, they did not have a standing change organisation.  We established a small and effective PMO team, establishing the standard Risk, Issue and Reporting disciplines, to oversee and manage programme planning and tracking.
 Acquisition Integration Governance Model

A regular cadence of project reporting was established, with weekly workstream meetings and monthly workstream lead and steering group meetings.  While the programme was established, these senior meetings were held more frequently.

Clear integration roles and responsibilities were established, with an Integration Director being appointed as the accountable executive for achieving the goals of the deal.  The workstream leads were the functional directors of the business, accountable for achieving a set of specific synergy opportunities and change projects.  As these workstream leads were also responsible for their ongoing business responsibilities, typically they appointed trusted deputies to deliver the workstream projects.  

The RitchieHogg team supported each workstream with advice and best practice around developing business cases for synergy projects, as well as support in the ongoing execution.

Financial Planning, Tracking and Reporting

The Group Financial Director was concerned that there was no mechanism for planning, tracking and reporting on the financial progress of the integration.

We developed a structured end-to-end approach for this, taking the currently committed business plans, and layering the prioritised synergy projects over these to develop a consolidated financial plan for the business and integration.

 Acquisition Integration Financial Planning

Alongside this model, we created the business case templates to ensure a consistent approach to the development, tracking and reporting of the synergy opportunities and other projects, such as operating model changes.  Actual results were layered on top of the ongoing business plan to track:

  • Business As Usual (BAU) performance
  • Synergy actual results
  • Integration costs
  • ‘Embedded Benefits'

The concept of 'Embedded Benefits' was established as an agreed mechanism to track variance from the BAU business performance, but which could be reasonably argued to be aligned to the impact of the integration on the business, whether positive or negative.

This approach allowed the business to meet its external obligations in terms of:

  • Private Equity controlled board reporting
  • Business performance KPI reporting
  • Financial tracking and EBIT reporting for statutory accounts and audit
  • Intra-group recharges
  • Determining cost of financing for fleet acquisition

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