United, RSC Far Along with Integration Plans, United Officials Say

Although final stockholder approval is not until April 27, with expected closing on April 30, United Rentals and RSC Rental have been hard at work making preparations for integration since the acquisition of RSC by United was announced in December 2011, with more than 100 people involved in the integration planning, United Rentals officials said during its first-quarter investor conference call last week.

“From an integration process perspective, we organized our efforts into 14 functional and strategic teams,” United Rentals executive vice president of operations and sales Matt Flannery said. “All focused on a specific area of the business. These teams have a total of 25 sub teams working to assist them. Each team is jointly led by the functional expert from each organization to ensure that the end result incorporates the best thinking of both companies. One example of this would be the go-to-market strategy team. They’ve been focused on sales, structure and customer segmentation. As a first step, the senior vice president of sales from each team reviewed the best practices from both companies. Then we had multiple field leaders from both organizations break out into sub teams. Each sub team is charged with focusing on a single component of the sales approach. By having the sub teams drill down to the most basic customer touch points, we’ve been able to be very precise in identifying the challenges and opportunities that employees will face as the new United Rentals.”

Flannery explained that all field managers will be given a sales playbook on day one after the close, which will identify what issues may arise and how they should handle them in the field. Similar playbooks have been compiled for the business functions of operations, human resources and other departments.

“While these teams are working on building the best process, they also continue to look for potential synergies,” said Flannery. “In other words, follow the money. For the past 12 weeks, each team has had weekly meetings to provide updates on the synergy opportunities they found and they would then report them to our Integration Management Office. The IMO evaluates each opportunity and gives guidance on how each potential decision would affect the business. In other words, is this synergy reasonable to attain? The IMO then reports out to our steering committee for final review every two weeks. We’ve gone through this process methodically since February and we will continue to review opportunities long after the deal is closed.”

Flannery added that the efforts have resulted in each team preparing detailed action plans that have uncovered synergies in excess of original estimates of $200 million, also helping integration teams to identify best practices from both companies.

“For example, we are in agreement that RSC’s total control system is the best way to help our customers manage their equipment usage,” Flannery added. “And the FAST dispatch system used by United Rentals will help the combined organization operate its delivery vehicles in a more cost-effective and efficient manner. Another area where we spend much energy is on the people-selection process. Leadership teams from both organizations are very well represented.”

Flannery said the field leadership team includes 14 vice presidents heading up the branch network, seven from United Rentals and seven from RSC.

“It is very encouraging to realize that we are much more alike than we are different,” Flannery said.

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