Successful Post merger integration

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  • 1. +Post Merger IntegrationWinning Strategy for:Post Merger IntegrationGnostam Consulting

2. +Its Like this.. Acquirers destroy value of acquired company in 60% ofacquisitions undertaken, [Academic data, Wharton School]; BUT: Winning acquirers put right M&A strategy in place,especially in cross border acquisitions. 3. +Help! 4. +Best Practices Move Quickly: Change is expected! Establish Strategic Framework for Decision Making: Articulate what is NON NEGOTIABLE RESOURCES: Ensure budget exists for Integration CULTURE: Identify resistance in organization COMMUNICATE: Formalize communication through steering committee, communication plan ACTION: Formulate a 100 and 360 day Integration, with detailed time line MEASURE: Performance Versus Benchmarks PRIORITIZE: Make recommendations to Steering Committee for any changes of priority FOCUS: On high NPV with high probability of success, [Decision Trees] 5. +Basics 6. +ARTICULATE INDUSTRIAL LOGIC 7. + EXAMPLE OR TIME LINE USED IN PEPSICO 8. +DO NOT SILO!!! 9. +Do it Right, in Right LanguageSteering CommitteeSales,CrossFunctionsProductDevelopmentFinance Operations QualityIT, BackofficeIntegration 10. + RESOURCESAcquiree Acquiror Co.Overlap area:This group has highestCapabilities;Empowered for change;Drive Accountabilitythrough steering committee;Supported by externalAdvisers.TaxExternalAdvisorsThese groups focused on dayto day jobsLegalHR, Other, benefits IT integration 11. +Cultural Considerations Cultural considerations are 80%of reason integration fails. Mustcommit to cultural integration athighest level of organization; Cultural integration involves allareas: it is not a one time. It iscomplex because building trustin organizations that areundergoing change is very timeconsuming and complex; Can only be done in teamsincluding both managements; 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 resolution8. Emphasis on communication9. Improve physical environment10. Reorganize continuously. 12. +COMMUNICATION BREAKDOWN Avoid it! It is very expensive. Shareholders pay for it! FOCUS ON TELLING A STORY. Be accountable. Target personnel may have been highly disappointed in past,career progression blocked. Introduce broad strategic goals, then focus on implications forfunctional areas; Impact of integration is often burn-out of most talented staff! 13. +EXECUTIONAlso dependsCritically on type ofAcquisitionRaid more risky, thanCo-operative situation:see Acq Posture below. Acquisition PosturesRescue CollaborationContestedSituationRaidCooperative Adversarial 14. + LEGAL Earn-out formulas, clawbacks. The hard stuff.. Revenues, gross margins, not EBITDA. Time frame, months not years Post closing tax effects. Incentivize decoupling from bridge systems; Penalties for delays. Sign by close of deal; Incentives, stock options, bonuses, relocations, rolechange, departures from company.DefinitiveAgreementTransitionServicesEmploymentAgreements 15. + Bio & Contact Philip has 30+ years of consultingM&A experience with PWC, IBM,various investment banks, and with hisown firm Gnostam since 2004; 30 + years of global cross border duediligence merger integration; Cultural integrations and fluency in 5languages; Industries, Finance, Insurance,healthcare, Maritime, Energy, IT andData Mining. Tel +1 206 384 0069Education: BSc Economics University ofBristolMBA London Business SchoolDecision Sciences StanfordMarine Captain, 1600 TonsOceans