Rugs USA
Rugs USA exceeds M&A synergy targets by 60%
How do you extract more value out of a post-merger integration?
Rugs USA was embarking on its largest transaction to date and needed help quantifying the increase in EBITDA and defining an actionable plan to get there. The result? A focus on creating financial value that drove synergies by 60% over diligence targets.
Rugs USA exceeds M&A synergy targets by 60%
70%
additional cost reduction through freight vendor consolidation
114%
additional cost reduction through a revised sourcing strategy
29%
additional cost reduction by consolidating operations
The Challenge
Rugs USA, a rug and home accessories retailer, recently acquired high-end rug retailer Annie Selke, aimed at building their “house of brands” strategy with shared functional support. Rugs USA had to move quickly to consolidate a distribution center, update technology infrastructure, capture cost synergies, and deliver a multi-million EBITDA increase by the end of 2024.
This was their largest acquisition to date, and they knew they could count on West Monroe to bring the right multidisciplinary expertise—supply chain operations, digital strategy, retail industry, and M&A program leadership—to this challenge.
Project Timeline
4
Weeks
Identified synergies and developed an integration roadmap
2
Weeks
Kicked off integration management office and mobilized nine workstreams
7
Months
Planned and guided execution of value creation initiatives
2
Months
Guided redesign of e-commerce tech stack and vendor selection
An Undeniably Different Approach
Transitioning out of diligence and into planning is one of the most pivotal moments in any merger. With our focus on creating financial value, we put synergy at the forefront of the integration agenda with our value identification framework.
Rugs USA had previously identified areas of synergy across their supply chain and back office. After digging into their data and company operations, as well as meeting with stakeholders on both sides, we were able to build a path to a 60% increase from earlier diligence targets. Together, we:
- Established synergy targets for each function and developed teams to implement the integration plan.
- Partnered with leadership to design the integrated organization structure and modeled financial impact.
- Established an integration management office to oversee the first six months and assist with consolidating operations, using our integration program management platform, Intellio® Deliver.
- Partnered with the CIO to articulate an IT strategy with e-commerce capabilities that can flex across brands—and then secure leadership support and investment.
- Consolidated distribution centers and freight contracts to bring an improved customer experience to life while lowering costs.
- Evaluated vendors in partnership with Rugs USA for shipping and logistics efficiencies, global sourcing, and warehouse consolidation—setting Rugs USA on the course for successful implementation.
Real results
The two companies’ functions and cultures came together quickly to pursue a common vision for unlocking operational efficiencies and capturing new market potential.
We helped Rugs USA uncover a 60% increase in EBITDA synergies from diligence estimates, which further bolstered the acquisition value and represented a 10x return on investment.
Our work with the supply chain team facilitated the distribution center consolidation two months ahead of schedule and 30% under budget, providing a path for a better experience for both Annie Selke and Rugs USA customers.
Rugs USA now has a blueprint for streamlining integration of future acquisitions and managing other enterprise initiatives.
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