1. Risk Management Through The M&A Process 7/10/2013 1

2. Agenda Introduction The M&A process Target Identification and Evaluation DD & Negotiation Post Integration The Risk Managers role 7/10/2013 2

3. Introduction Identification of major risks, red flags and examples of how they can be addressed in due time and what can happen if not managed 7/10/2013 3

4. Introduction A workshop around Dos and Donts and red flags for efficient risk management during the mergers, acquisitions and joint ventures process 7/10/2013 4

5. Introduction How can the risk manager support the business and its objective during the mergers, acquisitions and joint venture process as in the post integration process 7/10/2013 5

6. The M&A Process Target Identification and Evaluation Due Diligence and Negotiation Post Closing Integration - Screening of candidates - Pre-closing-integration-plan - Organizational/legal integration - Leadership structure - Rough evaluation PREPATORY Involves corporate strategic objectives Combine analytical abilities Internal coordination Short communication channels Top management decisions 7/10/2013 - Detailed evaluation - Internal decision TRANSACTION High coordination requirements (int./ext.). Flexibility High volume of communication Combination of professional know how Interface to target company - Human Resources integration - Cultural change INTEGRATION Integration of units/people from target company Knowledge management Efficiency, time frame Handling over to new entity management team Controlling of activities 6

7. Target Identification and Evaluation DD and Negotiation Post Integration Strategic fit Culture crash Market risk analysis culture, history, HR, Country blue print Are there environmental risks hidden in the selected target? Corruption 7/10/2013 7

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9. Corruption issues 7/10/2013 9

10. Corruption issues 7/10/2013 10

11. Target Identification and Evaluation DD and Negotiation Post Integration Do the negotiators understand the benchmarks and company risk appetite? Are the deal-makers more concerned with closing the deal than whether the target is a good fit with acceptable risk? 7/10/2013 11

12. Target Identification and Evaluation DD and Negotiation Post Integration DD and Negotiation Phase Operational risks Property Process risks Contracts Pension liabilities Employee matters Supply chain risks IP rights trust transfer Within existing country check cost/implication of alignment Use insurance as tool 7/10/2013 12

13. Insurance Insure risk you do not want to take Traditional P&C Property Product Liability Public Liability Make sure your insurance policies are prepared for aquisition growth Employers Liability Motor Financial Lines Directors and Officers Liability Employment Practices Liability Pension Trustee Liability Commercial Crime Red flag do you know understand the exposure and do the targets team? 7/10/2013 Professional Indemnity / Errors & Omission Transactional Lines Warranty and Indemnity Tax Liability 13

14. Target Identification and Evaluation DD and Negotiation Alignment of expectations Post Integration Setup integration workstreams Operational Finance Insurance IT HR Procurement 100 days review and follow-up 7/10/2013 14

15. Target Identification and Evaluation DD and Negotiation Post Integration Dont let the DD teams go and let others manage the integration without supervision. Difficuelt to manage the integration through a phone Dont let HR and culture wait until second wave integration after first integration wave (100 days) 7/10/2013 15

16. 100 Day Review Dos On track and if not Root cause analysis Gap closing plan Update risk assessment per integration work stream Learning's into M&A polices and manual Learning's to be used in second wave integration process Dont Pretend it didn't happen and let the acquired entity alone Forget to have lessons learned to support continues improvement Forget second wave integration 7/10/2013 16

17. Risk Managers Role Insurance only? Enterprise approach to M&A Help other stakeholders to build the M&A process make sure that risk is in focus where relevant 7/10/2013 17

18. Questions 7/10/2013 18