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Fast, Furious – and Focused

Unilever sells two major shared services centers in the blink of an eye and refocuses on its core business


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Abstract

When Unilever, one of the largest consumer products companies in the world, wanted to sell two shared service centers in Brazil and Chile, it looked to Deloitte for help. Unilever expected that selling the centers would help them focus on growing revenue and profitability, but they also recognized that the sales presented some serious challenges. The centers had deep roots in Unilever's organization in Latin America, so a poorly executed transition could result in significant disruption. And the transition would have to occur quickly to achieve the greatest benefit. Deloitte helped Unilever in its efforts to finalize the contract at an unprecedented pace which facilitated immediate cash benefits and long-term cost reductions.

The Challenge

Selling off two significant shared service centers is a tall order for most organizations — especially when the centers provide financial services support to a total of 20 countries and employ 450 staff members, as they did for Unilever. The company wanted to receive the best possible upfront price for its assets and arrange a seven-year outsourcing deal for the buyer to provide ongoing financial systems support to minimize disruption to their business operations.

There were additional risks. For starters, Unilever had recently executed a similar strategy in the Asia Pacific region that had taken six months to complete — much more time than they had anticipated. Plus, the company lacked in-depth knowledge of the markets for shared services and business process outsourcing and wanted to make sure they secured fair value from the transaction.

Because the project was global, the team needed to be fluent in three languages. And everything had to be wrapped up in 12 weeks.

How We Helped

Unilever selected Deloitte because of our unbiased knowledge of the outsourcing market, experience in business process outsourcing and shared services, as well as our ability to support the company in their efforts to manage the overall process, structure the deal and finalize the contract.

We were involved in four stages of the project:

  1. Development of the business case.
  2. Management of the due diligence process and the data room.
  3. Design of the governance model to support management of the ongoing services contract.
  4. Finalization of the upfront sale agreement and ongoing services contract.

From our experience in similar projects, we decided that the best approach to providing our support to Univeler was to set up a highly integrated and experienced team across the globe to help them carry out as much advance preparation as possible as they established their key commercial positions ahead of their negotiations.

We established a team of eight consultants from the Deloitte Touche Tohmatsu member firms in the U.K., U.S., Chile and Brazil. The team worked closely together, providing support and advice based on their specific areas of experience, knowledge and skills. This cross-functional, multi-cultural team provided the most suitably skilled consulting resources exactly where they were needed, when they were needed. The team also participated in planning and negotiation preparation meetings held between Unilever representatives and their external legal team and helped everyone work collaboratively as they planned ahead and agreed on key negotiation points, resolved problems as they arose and kept the project on track.

In the first stage, we helped Unilever identify the key drivers and create the business case for selling the Shared Service Centers. Once they identified their preferred bidder, we helped them oversee the due diligence phase and develop a governance framework to manage the ongoing relationship between the two organizations.

In parallel, we helped them perform a significant amount of planning to agree on their commercial position in advance of their contractual negotiations.

We added considerable value in support of their efforts to structure and finalize the contract for the deal. Our team worked with them as they defined a strategy for negotiation and identified the key commercial terms that they would not concede and possible concessions they would consider, if necessary. Typically, requests for flexibility and the option to terminate a contract are thorny issues for any service provider. However, based on robust evidence and detailed analysis we helped them develop, Unilever had a strong position at the negotiating table and secured both of these valuable provisions.

Solution

By being prepared in advance with all the details, including 20 complicated annexes to the contract that included scope definition and Service Level Agreement performance, Unilever was able to conclude its contract negotiations over a one-week negotiation period.

The project successfully helped Unilever achieve its objectives of:

  • Enabling it to focus on its core business activities in Latin America.
  • Generating an upfront cash injection thanks to the sale of the two Shared Service Centers.
  • Negotiating a fair and flexible ongoing service agreement.

This was a complex, time-sensitive, pressure-packed project that required a high degree of interaction between Deloitte, Unilever and other stakeholders. A good working relationship was key. We invested a great deal of time in understanding Unilever's objectives so we could put the resources with the right experience, knowledge and skills in the right place at the right time, to help the company in its efforts to move forward in a structured, rigorous, professional way.

“Your team did an excellent job. They worked tirelessly to get their job done and managed extremely well in difficult cross-geographic circumstances within a tight timetable, to help us run a strict process and be well organized for the negotiations and subsequent contract signature.”
– Race Strauss, Corporate M&A, Unilever

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