+

Post Merger Integration

Winning Strategy for: Post Merger Integration Gnostam Consulting

+It’s Like this…..

n  Acquirers destroy value of acquired company in 60% of acquisitions undertaken, [Academic data, Wharton School];

n  BUT: Winning acquirers put right M&A strategy in place, especially in cross border acquisitions.

+Help!

+Best Practices

n  Move Quickly: Change is expected!

n  Establish Strategic Framework for Decision Making: Articulate what is NON NEGOTIABLE

n  � RESOURCES: Ensure budget exists for Integration

n  � CULTURE: Identify resistance in organization

n  COMMUNICATE: Formalize communication through steering committee, communication plan

n  ACTION: Formulate a 100 and 360 day Integration, with detailed time line

n  MEASURE: Performance Versus Benchmarks

n  PRIORITIZE: Make recommendations to Steering Committee for any changes of priority

n  FOCUS: On high NPV with high probability of success, [Decision Trees]

+Basics

+ARTICULATE INDUSTRIAL LOGIC

+ EXAMPLE OR TIME LINE USED IN PEPSICO

+DO NOT SILO!!!

+Do it Right, in Right Language

Steering Committee

Sales, Cross

Functions

Product Develop

ment Finance Operations Quality IT, Back

office Integration

+ RESOURCES

Acquiror Co. Acquiree

Overlap area: This group has highest Capabilities; Empowered for change; Drive Accountability through steering committee; Supported by external Advisers.

Tax

External Advisors

These groups focused on day to day jobs

Legal

IT integration HR, Other, benefits

+Cultural Considerations

n  Cultural considerations are 80% of reason integration fails. Must commit to cultural integration at highest level of organization;

n  Cultural integration involves all areas: it is not a one time. It is complex because building trust in organizations that are undergoing change is very time consuming and complex;

n  Can only be done in teams including both managements;

n  Take time to explain, communicate, train, educate, both ways! Be transparent.

Culture re-inforcers: 1.  Develop clear policies; 2.  Goals… Measure them! 3.  Recognize achievements; 4.  Invest in staff, selection of staff; 5.  Invest in training; 6.  Create dedicated events; 7.  Reward leadership, conflict

resolution 8.  Emphasis on communication 9.  Improve physical environment 10. Reorganize continuously.

+COMMUNICATION BREAKDOWN

n  Avoid it! It is very expensive. Shareholders pay for it!

n  FOCUS ON TELLING A STORY. Be accountable.

n  Target personnel may have been highly disappointed in past, career progression blocked….

n  Introduce broad strategic goals, then focus on implications for functional areas;

n  Impact of integration is often burn-out of most talented staff!

+EXECUTION

Rescue Collaboration Contested Situation

Raid

Cooperative Adversarial

§  Acquisition Postures

Also depends Critically on type of Acquisition… Raid more risky, than Co-operative situation: see Acq Posture below.

+Execution Template

Integration Measures

Operation Measures

Process & Cultural Measure

Financial Measures

Business Mgt processes redesigned and implemented?

Are we achieving deal synergies?

Are integration events supports change?

Day to day operational metrics achieved?

Benchmark against metrics and “timeline” implementation

+ LEGAL

n  Earn-out formula’s, clawbacks…. The hard stuff..

n  Revenues, gross margins, not EBITDA.

n  Time frame, months not years…

n  Post closing tax effects.

n  Incentivize decoupling from “bridge systems”;

n  Penalties for delays.

n  Sign by close of deal;

n  Incentives, stock options, bonuses, relocations, role change, departures from company.

Definitive Agreement

Transition Services

Employment Agreements

+ Bio & Contact

n  Philip has 30+ years of consulting M&A experience with PWC, IBM, various investment banks, and with his own firm Gnostam since 2004;

n  30 + years of global cross border due diligence merger integration;

n  Cultural integrations and fluency in 5 languages;

n  Industries, Finance, Insurance, healthcare, Maritime, Energy, IT and Data Mining.

n  pcorsano@gmail.com

n  Tel +1 206 384 0069

Education: BSc Economics University of Bristol

MBA London Business School

Decision Sciences Stanford

Marine Captain, 1600 Tons Oceans