Merger Integration

Report Horiz TemplateA.T. Kearney’s Perspective on Merger Integration
Proposed Overall Approach
Realizing Integration Synergies
Executive Summary
This section is tailored to the client situation and summarizes the approach proposed in the document
A.T. Kearney 4/1375C/Merger Integration
Our Understanding your Situation
This section is tailored to the client situation and summarizes the key drivers of the merger. It should highlight relevant quantitative and qualitative analysis that demonstrate our insight into the client’s particular challenges and drivers of success for the integration
The best value-builders combine organic growth with mergers and acquisitions
Source: A.T. Kearney Monograph on Value-Building Growth 2001
Revenue
Growth
Value Growers Follow Conscious, Constant Process To Growth
Notes: (1) Based on global sample of 1,100 companies studied from database of more than 20,000 companies
What really matters in “acquisition for growth” strategies is execution
Source: A.T. Kearney Monograph on Value-Building Growth 2001
Sources of Growth
Value Growers
Manage Both
Well
Notes: (1) Based on global sample of 1,100 companies studied from database of more than 20,000 companies
Source: A.T. Kearney Analysis 2001, SDC database, Global Worldscope
Acquirer's Value Growth Following a Merger
Top performing mergers create significant shareholder value
Value growth
Business Integration issues require “usual” management decisions while four main factors add another level of considerable complexity…
Scope
High number of decisions to be made in all operational and functional areas
Dozens of projects/initiatives and risks to be managed
Time pressure
Decisions need to be made without delay
Simultaneity
Strong inter-dependence of the decisions
Short term and strategic decisions may seem incompatible
Human component
Risk of cultural mismatch
"Usual" Management decisions
Confirm each country’s scope of activity for mobiles
Design strategy leveraging on broader global presence
Define financial and operational targets as well as timing of expected benefits
Prepare the IPO
Choose the best organisational model at the European management level
Identify the central/local functions evolution schedule
Define organisational charts and management nomination
Define key decision processes (committees, procedures, …)
Infrastructure
Reduce total cost of external purchases through best price evaluation volume concentration, competitive bidding
Share best practices
Align processes and share best practices
Communication
Integration mgnt
Detail planning by topic and country…
Manage transition phase
Manage risks
Note: (1) Shareholder returns from buyer divided by shareholder returns (industry average) after the merger
Sources : A.T. Kearney analysis, Global PMI Survey, 1998 ; Datastream
Higher
No
change
Lower
Only 29% of Companies Realize an Increase in Aggregate Profitability
10%
11%
21%
18%
17%
23%
-15%
-25%
+15%
+25%
Only 42% of Companies Outperform Their Peers in Shareholder Value(1)
42%
58%
Top performers across most industries can create significant shareholder value
Note: (1) Total shareholder returns percentage over/under performance relative to industry index in the timeframe between 3 months before and 24 months after merger announcement; total shareholder returns defined as the tangible returns investors receive through dividends and stock price appreciations
Sources: Datastream; A.T. Kearney Analysis 2001
Retailers
62.5%
64.5%
32.3%
44.2%
26.6%
49.9%
34.2%
26.6%
36.1%
25.1%
16.0%
43.3%
26.0%
27.5%
17.2%
17.4%
31.9%
22.4%
18.0%
40.4%
17.4%
14.8%
4.0%
-6.5%
-31.5%
-38.9%
-10.8%
-25.9%
-11.0%
-35.0%
-20.6%
-17.6%
-28.8%
-18.0%
-9.7%
-39.6%
-22.7%
-24.9%
-17.4%
-20.3%
-35.3%
-26.7%
-24.1%
-46.8%
-26.5%
-27.2%
-19.4%
-24.1%
Recreation
Chemicals
Construction
Textiles
Aerospace
Creation of
Shareholder
Returns
Note: (1) Total shareholder returns percentage over-/underperformance relative to industry index in the time frame between three months before and 24 months after merger announcement; total shareholder returns defined as the tangible returns investors receive through dividends and stock price appreciations
*
Once the deal is closed, the principal problems relate almost entirely to failures in merger management, rather than to the underlying strategic rationale
Problems Identified in
“Master Plan” Missing
Source: A.T. Kearney’s Global Merger Integration Survey 1998
Percent of Respondents
*
To manage inherent risks, “critical success factors” can be distilled from successful large-scale mergers to guide value creation
Critical Success Factors from Large-Scale Mergers
Source: A.T. Kearney Merger Integration
Create a sense of urgency and reduce uncertainty through clear event milestones, and move quickly
Select top-level leadership quickly and fairly; avoid “two-in-the-box” leadership for integration planning and execution unless absolutely necessary
Set out synergy goals and objectives, to prioritize activities and provide a baseline for performance tracking
Manage market expectations carefully. Set conservative dollar targets with a time frame that accommodates unforeseen circumstances
Keep strong, explicit focus on key customer retention and service with teeth (i.e., measurement and tracking)
Maintain open and timely communications with employees to ensure understanding and retention
Conduct decentralized merger Integration guided forcibly via
Clear guiding principles
Reporting standards
Results
Lead role on internal/external communications
Instill robust, well-defined processes to ensure objective and timely risk and interdependency tracking
Sense of Urgency
Decentralized Merger Integration
*
In our experience, the most critical element in achieving targeted benefits is speed
Source: A.T. Kearney's global PMI survey '98
Value Capture of Top Performers Over Time
15%
Timing of Synergy Realization Is Also Critical
Source: Marl L Sirower : The Synergy Trap. Calculated based on a $10MM acquisition premium, representing 50% of market value
*
A.T. Kearney has a flexible merger integration framework with a comprehensive toolkit to support planning and implementation throughout the merger process to ensure value capture
A.T. Kearney’s Merger Integration Framework
Develop Strategy
Validate sources of value
Full-Scale Rollout
*
This allows merging entities to rapidly capture available sources of value by focusing on operational synergies, as well as seamlessly merging the organizations
Merge the
Organizations as
Define
Ensure customer focus/retention
Integrate day-to-day operations
Ensure sustainable change
Position for growth
Achieve $ XX million (annual rate) of synergy savings within 12–18 months
Sales
Operations
Procurement
MI Sources of Value
Achieve Growth Synergy and Cost Synergy Targets as Quickly as Possible
*
The program structure supports focused value capture teams working across all SBU/Geographic teams
Illustrative
SBU C or Europe
Focused on value capture across the businesses
Market Facing Teams
Value Capture Teams
*
By launching the integration effort prior to change of control, significant progress is made in identifying sources of value, while also developing the high-level organization models to capture that value
Implementation
*
During the critical period prior to change of control, the engagement team assumes the role of a “clean team” to enable critical pre-merger integration
Role of Clean Team
Quantify savings generated from identified opportunities from teams of merged companies
Act as a third party conduit for proprietary information of both companies (protection should merger be aborted)
Validate and challenge initial assumptions of opportunities made by merging companies
Highlight best practices in existing companies and external knowledge and recommend ongoing merged operating practices
Determine risk factors in merger for ongoing risk management during implementation
Data Collection
Organization assessment
Hypotheses development
Preliminary planning
Company A
Company B
Accelerate decision making by providing access to comprehensive databases and detailed analysis
Share and validate findings with joint client teams
Finalize initiatives based on validated hypotheses
Develop implementation plans
Assist in launching initiatives and provide continued implementation, risk and financial tracking support
The up-front work efforts of the “clean team” enables accelerated launch of implementation activities and value capture
“Clean Team” Process
*
After change of control, the teams quickly finalize — not identify — synergy opportunities and gain consensus
Results Tracking/Risk Assessment
Identify Interdependencies
Overall Prioritization/
The transition to full-scale rollout and implementation of initiatives is supported by a clear tracking process
Initiative Status Management
Implementation
Communication
Organization announcement timing still unclear
IT requirements not fully understood
No plans to address cultural misalignment
Success of communication not currently planned to be measured
Illustrative
Throughout the effort, managing risk is a formalized methodology; adherence facilitates a fair and robust decision making process
Project Risk Prioritization
Project Prioritization — Business Criticality And Size
Business Criticality — how much does it matter if the project does not meet its objective?
A = Incremental benefit but current processes will suffice
B = Supports strategy but manageable impact if project fails/delayed
C = Important to the strategy with significant impact if project fails/delayed
D = Critical impact/must keep up with competitors/cannot continue business
Complexity
High
Low
High
D
C
B
A
A
B
C
D
Risks
Assumptions
Issues
Project
Plans
Issues, Assumptions And Risks Are Inherent In The Project Plans
Risk Reduction
Cross organizational input and dedicated facilitation ensures objective input
Milestone risks associated with decision timing are derived from process-wide initiatives
Risk process highlights resource vulnerabilities. Sense of urgency associated with the process forces discussions and actions
Proactive management and facilitation objectively evaluates all communication risks. Forum offers participants a chance to agree or disagree
Concise updates focused on cross-organizational risks direct attention where it is needed
Clear assignment of risk ownership and action responsibilities eliminate confusion
Red
Amber
Green
Now
Future
Green
Amber
Red
Time
Criticality
*
To assess and achieve their synergies, all teams can leverage a number of A.T. Kearney’s proven methodologies and tools as appropriate
Streamlining the Organization
Reducing Purchased Costs
Integrate offices
Finance / Accounting
Legal / Regulatory
Explore channel leverage (i.e., Dealer /Reseller network)
Sales force effectiveness
Rationalize product offering and customer base
Evaluate and implement optimal network strategy
Product Offering
Customer requirements
Operating Networks Integration
Rapid benefit delivery is feasible through integrating the operating network
Manufacturing
Capabilities
What are the capacity constraints
Network
Configuration
Which is the most cost efficient network configuration
Are there cost synergies with other Dannon products
Manufacturing Capabilities
Network Configuration
Several Iterations
Local Market
What is the current/future competitive positioning
What distribution channels are growing fastest
Market Requirements
SKU Tree
Sample Preliminary
*
Which entity in the supply chain should develop a capability is determined by the business’ scale and strategic objectives
Strategic Alliance
Develop strong relationships with key supply chain partners that have the required capabilities
Maintain very high levels of cross-functional involvement
In-House
Outsource
Organize related activity to minimize transaction costs with outsourced provider
Rationalize
Depending on true switching costs and investment requirements either continue to develop capability in-house or outsource
High
High
Low
Low
Activity Strategic Importance
How core is the activity? How “entangled” is it with the rest of the organization?
How critical is it to maintain control and involvement in the activity?
Is the activity an area of competitive advantage today? In the future?
Potential For Internal Capability Development
In the short- to medium-term can the required capability be developed in-house to be highly efficient and effective in an activity?
*
Differences in each company have to be understood, and decisions made on both the operating model of the joint venture going forward – a formal process can help in facilitating this thinking
Identify the Operating Model and Detailed Operating Structure and Characteristics of Each Firm
Determine New Operating Model, and Appropriate Benchmarks
Make the High Level Choices As to How the Company Operates Going Forward
Step 1
Step 3
Step 2
Best practices “Corporate Center”
Strategic sourcing is a powerful methodology for leveraging the combined spending base and procurement capabilities of the merged organization
7. Continuously Benchmark and Monitor Supplier Improvement
6. Operationally Integrate Supplier(s)
Performance measurement tools
Coordinate new supply chains
Implementation templates
Select supplier development or negotiation path including use of market exchanges
Define initial negotiation strategy
Negotiation training
Prescreen list to develop short list of suppliers
Existing supplier lists available globally
Assess supply category business impacts
Confirm sourcing strategies
Detailed understanding
Proven database and management tools
Existing supply category profiles
*
Strategic Sourcing has a goal of delivering bottom line savings through core elements: strategic purchasing; demand management and change management
Change Management
Tangible
Results
Application
Methodology
Reduce costs by decreasing or eliminating the demand for goods and services
Eliminate
Demand
Reevaluate external purchases and restructure supplier relationships to get best value for the company (price, quality and service)
Strategic
Purchasing
Strategic
Sourcing
*
Strategic Sourcing is effective in integration environments since it can be started immediately, deliver major savings and contribute to building the new company
Integration-Related Strategic Sourcing
Leveraging scale Capitalize on combined buying power Use leverage to restructure supplier offerings Mitigate supply risks by managing vendor concentration Generating efficiencies Spread technology investment over increased purchasing base Evaluate/select the best existing purchasing systems for use in the new organization Rapid transfer of best practice RFI/RFP harmonization Convergence of procurement practices and guidelines
Build the New Company
Teamwork across the new enterprise: All categories All business units All geographies (domestic and/or global) Bottom-up initiative driven by the “new” team Service levels/needs Demand dynamics Organizational similarities and differences Relatively undisruptive (products and services not people) Helps new management to understand their operation in detail Opportunity to redesign processes to reflect the new organization, and embed world class procurement as a core competency in the new company
The sales productivity effort should include Customer Retention Methodology to understand the key risks for customer defection and action plans to address them
Step 1
Step 2
Defection/Loyalty Segmentation
Step 3
Retention Sales Programs
Product Management Issues
Objectives
Sales force focus Detect and react to defection behavior Incentives for retention performance Empowerment of staff- pricing, fee waivers, etc.
Analyze customer satisfaction level by product Quantify retention performance and value contribution of key technology segments Understand customer defection Pursue additional research on high value segments
Initiate early communications Build account plans Build triggered and tactical response capability Build defection models
Develop metrics to measure customer retention Overall company Specific product branding Ensure customers are positively impacted by changes in the company
*
Our approach to sales productivity includes benchmarks, analysis of overlap and identification of near term growth opportunities
Illustrative
Efficiency
Total Sales Managed by Sales Rep
Sales Dollar Per Sales Rep
Effectiveness
Overlap
A
B
A
B
A
B
A
B
Marketing
Strategically Manage Relation-ships
Minor
Minor
Major
Major
*
Information Technology should be viewed as an enabling mechanism for achieving merger goals
Technology Focus in a Merger Product/Market Focus Context
Source: A.T. Kearney Merger Integration
Complementary or New
Product Focus
Market Focus
Cost Reduction
Cost/Revenue blend
Revenue Enhancement
Anticipated Benefits
Market Overlap
In high-overlap mergers, the emphasis is on cost reduction. Market analysts expect to see tangible actions being taken early in the merger program
For synergistic mergers, timescales to achieve benefits may be longer, and I.T. integration can operate within a longer planning horizon to support revenue enhancement
The common factor with all of these merger forms is the need for a smooth integration process that eliminates the risk of customer or employee defection
Product
Lines
Major systems revisions to support cross-selling and geographic/channel expansion
Review of global data centers and core systems
Eliminating duplication between systems
*
IT must quickly deliver tangible business driven results in a timely fashion and not necessarily the “best” possible solution to achieve value creation commitment
Cost imperatives
Rapid integration to capture synergies as committed to the street
Product rationalization
Cross selling
Act on future acquisition opportunities
Business continuity
Percent of Initiatives Defined Over Time
IT’s challenge is to stay in tune with business initiatives to understand the scope of effort, develop the IT response, and to integrate with the corporate IT direction
Representative IT Support Requirements
10%
*
The Steering Committee and Integration Office manage the overall program and coordinate decentralized project teams through the Integration Office
Integration Office
Implement merger planning, integration and reporting — create and manage the “master plan”
Conduct frequent work task reviews with teams
Facilitate overall change management
Prioritize enterprisewide issues and make recommendations
Manage communications
Steering Committee
Implement top-down communication
Each component of the project had specific roles and responsibilities
Steering Committee
Sign-off on major issues/decisions
Focus on continuity of growth, customers’ issues
Integration Office
Monitors implementation of organizational models
Prioritize issues / initiatives
Prepare the transition work plan
Detailed organizational assessment
Implementation of transition plans
Guiding principles
Master project plan and risk assessment
Transition reporting including benefits tracking and risk management
Communication implementation
Transition plans
Risk assessment
*
Each of these three teams have clearly defined roles and responsibilities
Key Pre-Merger Integration Set-up Responsibilities
Steering Committee
Establish and communicate the “Merger Guiding Principles”
Identify and appoint Integration Leader
Identify and appoint team leaders
Communicate formation of Integration Office and Value Capture Teams
Communicate executive commitment to the integration program
Communicate team leader and team member commitment
Ensure regular and consistent top-down communication across all regions and groups
Integration Office
Identify team members
Establish cost savings & revenue synergies targets as a precursor to the “Merger Integration Scorecard”
Initiate the appropriate MIS/IT infrastructure
Support development of high-level business line/functional plans
Identify, at a high level, major risk areas
Co-ordinate the senior management review cycle of these plans
Assemble the first “Master Plan”
Develop tracking baseline
Establish risk management process
Value Capture Teams
Identify team members
Create team charters
Prepare for Kickoff Meetings to introduce team members and provide initial orientation
Agree on optimal processes to coordinate each team
Begin data collection and hypothesis testing
Develop Day 1 Plans
Develop organizational, customer and/or cost profiles falling within team scope
Conduct interviews to gather additional qualitative insight regarding operating processes and styles
Develop joint vision for combined organization
*
The Steering Committee must apply significant early effort to communicate the new company’s strategy, operating philosophy and governance
Issues to Address
Market environment Likely environment Other competitive developments Ensuring 1 + 1 = 3 Realistic capacity for development Areas for investment/growth Strategic initiatives to freeze, continue or accelerate Key third party relationship issues New opportunities arising Linkage to performance targets Growth Cost reduction Capital efficiency
Core management style Holding company “Strategic architect” Business controller Operator Alignment to core style Leadership alignment Line responsibilities Corporate responsibilities Support functions Performance management Expectations setting Role of the “plan”/“budget” Performance reporting and management Management reward systems
Organization structure Reporting relationships Inside DWNA versus in parent Decision making/maps Key accountabilities Key corporate policies Relationship structure Conflict resolution mechanisms Change management
*
In addition, the Steering Committee should establish a clear set of guiding principles
Merger Guiding Principles
1. “This is not the customer’s merger” — Major focus on avoiding customer inconvenience and loss of customers. “Customer service can only change for the better.” Cost savings are important, but second to customer focus
2. Focus analyst expectations on the longer term — Savings goals defined as $1 billion expense “run rate” reduction by end of three years, eliminating short-term, quarter-by-quarter focus
3. Appearance of tight control through Command Center — Command Center used as a single point of contact for all external communications. External presentations conducted in “war room” to exhibit corporate controls in place
4. Relentless tracking of risk and interdependencies — All merger projects required to use risk and interdependency tracking approach. These were integrated by the Command Center to provide corporate perspective on risk. Focus of internal meetings on risks and customer issues, not on successes
5. Systems focus on smooth Integration — “Suites” of systems should be selected rather than pursuit of optimal elements from each organization. Extensive use of “bridges and workarounds” to maintain critical controls while expediting the process
6. End-to-end systems and process testing — No system or process should be considered ready for processing until it has been tested in a “dress rehearsal” mode (usually two dress rehearsals)
7. “1 + 1 = 3” volumes — Strong encouragement of business units to focus on post merger business volumes
Case Examples
1. Fast and fair — accept that we will make mistakes, but give us credit for being smart enough to be able to recognize them, and not so proud that we can not change
2. Leadership must be evident/inspiring — not holed up in the corner offices/board rooms, but out in evidence with key customers and our employees
3. Harmonization — this has to be a key goal with respect to strategy, key policies, business processes, etc.
4. Minimize ambiguity — be clear in plans, timing, decisions(don’t fuzzify - “don’t know” is ok
5. Short term bias towards the customer — don’t lose sight of the business whatever we do
6. Overcommunicate — you can never do enough here
7. Integration study team should be advisory and separate from management — let management decide and let advisors advise, don’t mix too closely
8. Seek acquaintanceship-building opportunities — informal, formal
9. Emphasis on flexibility/change/fluidity — accept change as a way of life, strategic agility is key, it is management’s first responsibility to take risk (change, growth, wealth creation can only happen by taking risk)
*
The role of the Integration Office evolves over the course of the integration
Creation of Integration Office with leadership assigned
Define roles of members
Establish and communicate the “Merger Guiding Principles”
Establish cost savings targets as a precursor to the “Merger Integration Scorecard”
Initiate the appropriate MIS/IT infrastructure
Support development of high-level business line/functional plans
Identify, at a high level, major risk areas
Co-ordinate the senior management review cycle of these plans
Assemble the first “Master Plan”
Update Merger Steering Committee
Establish risk management process
Develop further project infrastructure
Finalize key objectives, and establish the “Merger Integration Scorecard”
Work with line management to finalize detailed Integration Teams required and their scope, objectives and timelines
Focus on ensuring detailed, comprehensive project management
Establish initial prioritization framework
Update Integration Steering Committee on plans
Manage stakeholder communications
Update Integration Steering Committee on plans and progress toward targets
Maintain the “Merger Integration Scorecard”
Support development and execution of detailed implementation plans by decentralized Integration Teams
Ensure consistency of execution
Champion “quick win” projects to reinforce confidence of key stakeholders
Ensure that key milestones are met, proposing resource reallocations as necessary
Manage stakeholder communications
Establish
Day
One
Full-Scale
*
A Command Center to monitor and control the process of the merger can be established
Functional Areas
System
A
System
B
System
E
*
The Command Center monitors and tracks critical information from each area of the integration and provides an overall view of progress to ensure success
Key Performance Indicators
Shareholder Value Created
Example
*
There are five main advantages of implementing the Benefits Tracking and Reporting (BTR) system
BTR Implementation
Facilitates the identification and realization of cost synergies and related costs, whether they be in a merger environment, a restructuring program, a strategic sourcing program or any general cost reduction program
Provides key constituents with access to periodic, data-driven status of program initiatives
Creates a forward-looking risk and milestone tracking system to alert key stakeholders about potential synergy shortfalls or issues
Provides evidence that cost synergies have been achieved
Provides information for a common program communication vehicle for executive management
*
The BTR is a web-enabled system that allows users to input and update key project data easily, quickly and frequently. The output of the system is used to create consolidated project and program-level reports
Benefits Achievement, Progress against Plan & Revised Forecasts
Management Reports
BTR
Database
(Via a Terminal Server Application)
The BTR front-end and back-end are completely customizable and scaleable to meet the needs of any engagement size and scope
Summary of Manpower Reductions & Savings
Project Risk Assessment
*
The eight components of the BTR consist of one-time and ongoing regular update reporting requirements
1) Project Profile
3) Project Interdependencies
Describes interdependencies with other teams, actions required and impact if actions are not taken
4) Headcount Reductions Template
Tracks headcount-related savings and costs
5) Non-Headcount Savings and Cost Template
Tracks non-headcount savings and associated implementation costs
6) Capital Expenditures Template
7) Asset Sales Template
Tracks related asset write-downs
Tracks progress against key milestones
Highlights areas of potential risk
Identifies actions required to resolve issues and remove barriers
One-time
Reporting
*
Updates to the system are used to track progress against targets. The system can track multiple parameters, including - savings, costs, headcount and project status
Management Reports
Web-enabled User Interface
Summaries by Project Team
Project Risk Assessment
Other Restructuring Charges (i.e. Asset Sales & Write-Offs)
Risk and Key Milestone Tracker
Chart4
Jan
Jan
Jan
Feb
Feb
Feb
Mar
Mar
Mar
Apr
Apr
Apr
May
May
May
Jun
Jun
Jun
Jul
Jul
Jul
Aug
Aug
Aug
Sep
Sep
Sep
Oct
Oct
Oct
Nov
Nov
Nov
Dec
Dec
Dec
Total
Total
Total
169
Total
Achieved
Remaining
0
0
3.8088026
3.8088026
3.8088026
4.498944626
8.307747226
6.647465204
14.95521243
7.535479982
22.490692412
8.023222382
30.513914794
14.1369280487
44.6508428427
20.5978603353
65.248703178
20.999884903
86.248588081
26.049524027
112.298112108
28.141334467
140.439446575
28.087084467
0
30.513914794
138.012616248
RRManRed
CS
0
30
40
53
57
58
58
59
61
65
65
65
65
65
FI
FIN
0
6
3
8
10
14
17
16
13
17
18
17
17
17
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Beyond
Steering
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
Steering
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
CS
APS
APS2
0
0
1
1
2
2
2
2
2
3
3
3
3
3
CS
0
30
40
53
57
58
58
59
61
65
65
65
65
65
FI
FIN
0
6
3
8
10
14
17
16
13
17
18
17
17
17
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Beyond
Steering
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
Steering
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
CS
APS
APS2
0
0
1
1
2
2
2
2
2
3
3
3
3
3
*
The Steering Committee and client team leaders are provided with summaries of progress against plan on a regular basis
Illustrative
(US$ MM)
Run Rate Saves — Supply Chain Integration Team
Financial Reports
*
A risk-tracking system is implemented to track initiative progress and to help anticipate delays, identify barriers to success and highlight areas of concern to leadership
<$1MM
*
In risk management, objective criteria need to be developed to decide which
initiatives are inherently more risky than others
Initiative Prioritization — Business Criticality and Size
Business Complexity — how many areas of the business will be involved in the project?
Technical Complexity — how technically difficult is the project?
Project Size — how many dedicated FTEs will be working on the project?
Business Criticality — how much does it matter if the project does not meet its objective?
A = Incremental benefit but current
processes will suffice
B = Supports strategy but manageable impact if project fails/delayed
C = Important to the strategy with significant impact if project fails/delayed
D = Critical impact/must keep up with competitors/cannot continue business
Complexity
High
Low
High
D
C
B
A
A
B
C
D
Illustrative
Project
2
Project
3
Project
6
Project
1
Project
4
Project
5
In This Example, Project 5 and Project 1 Are Both Critical and Complex, Requiring a Formal Project Risk Management Approach
*
Once risks have been identified, they are then prioritized as “Red”, “Amber” or “Green” (RAG) to reflect their potential impact
Risk Categorization
Red = Showstopper
Unable to provide one Funds Transfer System
Lose a major customer
Customer irritation or embarrassment
Localized impact
*
A.T. Kearney is a global management consulting firm with 5,000 employees worldwide
Successful Track Record
Mostly Fortune 500 clientele
Senior, experienced staff
Berlin
Tokyo
*
A.T. Kearney is best known for delivering outstanding tangible results quickly
Representative Annual
Results Achieved
Federal Express
>$500 Million
Kellogg
Metro
Monoprix
Nabisco
Nomura
PepsiCo
Promedes
Prudential
Quelle
Sears
Shell
Sprint
Unilever
"A.T. Kearney has helped enormously to address our key issues… We have planned and implemented cost reduction Programmes that will return over half a billion dollars"
Fred Smith, CEO, Federal Express
"…in sharpest contrast… A.T. Kearney consultants helped engineer one of the most stunning corporate turnarounds in recent memory"
Arthur Martinez, CEO, Sears (excerpt, review of Dangerous Company in Fortune, August 18, 1997)
"The Kearney work has made us radically re-think our approach to the business. We wouldn't have done that otherwise"
M&S Supplier
"A.T. Kearney is really the father of our global purchasing system." "They are our achievement consultants"
Jack Smith, CEO, GM
"We wanted consultants who wouldn't just give us advice and walk away"
John Rose, CEO, Rolls-Royce
*
Our commitment to our clients is guided by three key principles
Relationship Based Accounts
Senior-level relationships and
85% of work exceeds expectations
The only program of its kind to our knowledge
90% of revenues from repeat clients
15 current clients with 10 plus years
Most relationships extend internationally through our one-firm policy
Engagement Quality Review
These principles ensure that A.T. Kearney consistently provides not only
high-value insights but also practical, tangible results for our clients
71%
74%
75%
77%
79%
79%
80%
82%
94%
Client Satisfaction
Our organization of global service and industry practices supports effective building and dissemination of specific know-how
Industry Practices
*
We have used our specific capabilities and know-how to build a wide range of global merger integration experience with more than 250 assignments
Aluminium Comp. of America
ABN AMRO N.V.
Pacific Corp.
Advanced Medical, Inc./IVAC Systems, Inc.
Agr Evo
Air Liquide/BOC
Rohm & Haas
*
Our merger integration competency is brought to life through a style suitable for merger integration activity—swiftness and analytical rigor matched with sensitivity and buy-in
A.T. Kearney Merger Integration Practice Competencies
Merger Engagements
MI Approach
An independent strategic view
Advisory role in many of the major mergers in the past decade
Merger integration experience across industries and geographies
Formalized feedback processes within the firm to capture and advance post merger integration best practices
Highly developed project/risk management skills
Proven ability to expedite change in large organizations
Seasoned
Expertise
Knowledge
Early and recurrent management buy-in opportunities
Culturally versed and flexible
Local resources/global support
29%
14%
57%
21%
26%
26%
32%
37%
37%
47%
47%
58%
0
2
5
5
0
7
5
1
0
0
1
2
5
your people during the assignment?
Did we interact and work with your people effectively?
To what extent were expectations clearly set at the
beginning of the assignment?
Do you believe the identified results or benefits can be
achieved?
Poor
Excellent
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2
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5

Merger Integration

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Transcript of Merger Integration