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Mergers & Acquisitions No One Said It Was Easy - But You Can Do It Better

4200 Montrose, Suite 590 Houston, TX 77006(713) 522-9656 Phone (713) 522-9661 Fax

www.wjmurray-assoc.com

IDENTIFY INVESTIGATE IMPLEMENT INTEGRATE

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BENEFITS OF THE W J MURRAY & ASSOCIATES’ PROCESS• Fewer False Starts• Shorter Cycle Times• Acquisitions That Fit The Playbook• Fewer People Spinning Their Wheels• An Organization To Accomplish the Acquisition• Proven Partner Search Techniques• Tested Techniques For Valuing Companies• Successful Approaches To Acquisition Candidates• Proven Due Diligence Techniques• Effective Integration Techniques• Avoid The Pitfalls

LEADING TO: SUCCESSFUL ACQUISITIONS

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NO ONE SAID IT WAS EASY - BUT YOU CAN DO IT BETTER

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• Enterprise Strategy *The Vision *The Goals *The Playbook

• Acquisition Process Execution Team - APET

• Alternatives *Internal Development *Partnering *Joint Ventures • How Does The Acquisition Fit The Playbook?

• The Screening Criteria

• Engage the Search Vehicle

• Complete Initial Screen

• Anticipate External Opportunities

• Complete Business Evaluation

• Discuss with Management

• Gain Consensus On The Short List

• APET Game Plan

• Company Contact

• Business Analysis

• Management Review

• Letter of Intent

• Due Diligence

• Purchase Agreement

• Goals

• Gain Consensus On Implementing The Assimilation Plan

• Obtain Commitment To Execute The Business Plan

NO ONE SAID IT WAS EASY - BUT YOU CAN DO IT BETTER

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IDENTIFY

WHAT TO DO

• Confirm The Enterprise Strategy • The Business• The Vision• The Value Proposition• The Competitors• The Goals• The Critical Success Factors

• Demonstrate How The Acquisition Supports The Critical Success Factors And Goals

• Strategic Alliance Versus Joint Venture

• Select The Acquisition Process Execution Team (APET)

• Gain Consensus That Acquiring Is Superior To Internal Development Or Partnering

• Agree On The Screening Criteria

WHO DOES IT

Senior Managers

Senior Managers

Senior Managers

Senior Managers

APET

APET

OUTPUTS

• Acquisition Criteria

• Expected Benefits

• Decision On Strategic Alliance Or Joint Venture

• Purchase Price Range

• Reconfirmation Of The Enterprise Strategy

• Internal Commitment And Consensus To Acquisition

• Acquisition Process Execution Team

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WHY ACQUIRE VERSUS INTERNALLY DEVELOP OR PARTNER

DOES NOT FAVOR ACQUISITION

FAVORSACQUISITION

IS THE PURPOSE TO ACQUIRE ACQUIRE A

ACQUIRE KEY PEOPLE PEOPLE PROCESS

CORE, HIGHLY STRATEGIC HAVE TIME & LIMITED WINDOWDEGREES OF FREEDOM OF OPPORTUNITY

ACQUISITION ACTIVITY HIGH LOW

IN THE MARKET

ACQUISITION NONE CONSIDERABLE

EXPERIENCE

NUMBER OF FEW MANY

ALTERNATIVES

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CRITERIA WEIGHT

MOSTDESIRABLE

10 7 5 3

LEASTDESIRABLE

1

Market Access Geographic CustomersSales Revenue

Capacity

Product Fit

Best-in-ClassStrategic Area

Profitability

Quality ofManagement Team

Reputation

SAMPLE INITIAL SCREENING CRITERIA

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WHAT TO DO

• Engage The Search Engine* Board Members* Business Network* Law Firm* Accounting Firm* Investment Bankers* Senior Executives* Banks* Customers & Suppliers

• Compete Initial Screens

• Anticipate New Opportunities

• Gain Consensus On Short List

• Complete Second Phase Screen

• Discuss Evaluation With Management

WHO DOES IT

Senior Managers

APET

APET

APET

APET

Senior Managers & APET

OUTPUTS

• Criteria For Ranking Alternatives

• Consensus On Top Candidates

• Advantages/disadvantages Associated With Targets

• Range Of Acquisition Costs

• Reaffirmation Of Purpose /Goals

• Commitment To Continue

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SAMPLE SECOND-PHASE SCREENING CRITERIA

CRITERIA WEIGHT

MOSTDESIRABLE

10 7 5 3

LEASTDESIRABLE

1

Size of Target

Revenue Growth

Technology Synergy

Product Synergy

Competitive Position

Market Access

Cost Position

Patents, Technology

Know-How, Expertise

Environmental Challenges

Regulatory Challenges

Financial Performance

Channel Synergy

Sales/Marketing Synergy

Supply Chain Synergy

INVESTIGATE

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WHAT TO DO

• Develop The Game Plan Identify Resources

• Make The Contact

• Complete Pre-Due Diligence Analysis

• Review With Management

• Sign A Letter Of Intent

• Complete The Due Diligence

• Complete The Negotiations

• Sign The Purchase Agreement

WHO DOES IT

APET

Senior Management

APET

Senior Management &APET

Senior Management

APET

APET

Senior Management

OUTPUT

• Purchase Agreement* Purchase Price* Terms & Conditions

• Consensus On Integration

• Check List

IMPLEMENT

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WHAT TO DO

• Develop & Execute The Business Plan* Value proposition* Goals * Budgets* Metrics/scorecard* Time-line-for implementation* Task-force responsibilities/ accountability

• Develop & Implement An Assimilation Plan * Functional Integration

• Manufacturing/production• Sales/marketing• Engineering• R&D• Purchasing

* Human Resource• Personnel policies• Salary administration

* Financial Integration: Accounting, Tax * Communication plan

• Message• Timing• Responsibilities

* Pre- and Post- Acquisition Customer/ Employee Survey * Measure Progress: The Scorecard

WHO DOES IT

APET

APET

OUTPUT

• Integrated Company * Direction * Commitment * Budgets * Key issues identified * Roles and Responsibilities for key issues

INTEGRATE

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INTEGRATION CHECK LIST

ASSETS• Plant, Property & Equipment• Inventory• Personnel• IT• Capital Structure

ACTIVITIES• Business Relationship• Production Processes• Accounting Practices• Decision Making Process• Supply Chain• Customer Service• Purchasing• HR Processes

* Pension Plans * Performance Appraisal * Labor Relations * Recruiting

• Pricing

STANDARDS• Regulatory

* Environmental* Safety* Health* Tax* Licensing

INTEGRATE