Building a Plane Midflight
by Trevor Wirsig, MBA ‘15
Using what I learned at Johnson to make an impact during my consulting internship.
My project as a summer intern in Deloitte Consulting’s mergers andacquisitions (M&A) practice was to assist a consumer packaged goods (CPG) companyas they split into two. People say that a merger of two companies is like amarriage: brought together in holy matrimony, going forth into new markets andmultiplying shareholder value. They’ve got synergy to pay the bills.
So splitting a company into two is like a divorce, right?
Not exactly. During my internship I learned that a separation ismore like building two planes out of one, midflight.
Why the change in metaphors? Because by simply “divorcing” acompany destroys optimization and synergies, reducing shareholder value. Butthe purpose of a separation should be to increaseshareholder value.
To do that, the new companies need to retain the optimization ofthe parent company, even while operating independently. Two new planes aseffective as the first.
But a separation is even more complicated because essential functions,like procurement and finance, need to run uninterrupted while the operations ofthe parent company are disentangled. There’s no time for a layover in Kansas.
I admit that separating a company isn’t nearly as impossible asbuilding a plane midflight, but I like the metaphor.
So what impact does a summer intern make on the separationprocess? Surprisingly, more than I thought I could.
I was asked to evaluate the effect of separation on a few hundred-milliondollars in cost savings initiatives that the client had announced to WallStreet. Even though I was only just learning the basics of M&A, the coursesI had taken at the Samuel Curtis Johnson Graduate School of Management gave memore than enough foundation to be successful.
For instance, marketing gave me the framework to understand theCPG space, Sustainable Global Enterprise (SGE) practicum showed me how tooutline a consulting project from start to finish, and Management Cases taughtme to always ask “What keeps the CEO awake at night?” so I stay focused on themost relevant issues.
These courses shaped my analysis throughout the summer and helpedme develop an impactful final deliverable: a presentation for the board ofdirectors describing the implication of separation on the announced costsavings initiatives, and a recommendation for moving forward.
In a way, it was my own version of building a plane midflight:joining an ongoing project, trying to learn as much as possible about M&Aand the separation process, all while developing a recommendation for theclient.
I admit that it is not as impossible as building a planemidflight, but I still like the metaphor.