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Page 1: Successful Post merger integration

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Post Merger IntegrationWinning Strategy for: Post Merger IntegrationGnostam Consulting

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+It’s Like this…..

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

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

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+Help!

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+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]

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+Basics

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+ARTICULATE INDUSTRIAL LOGIC

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+ EXAMPLE OR TIME LINE USED IN PEPSICO

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+DO NOT SILO!!!

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+Do it Right, in Right Language

Steering Committee

Sales,Cross

Functions

ProductDevelop

mentFinance Operations Quality IT, Back

office Integration

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+ RESOURCES

Acquiror Co.Acquiree

Overlap area:

This group has highestCapabilities;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 integrationHR, Other, benefits

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+Cultural Considerations

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

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;

Can only be done in teams including 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.

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+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 for functional areas;

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

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+EXECUTION

Rescue CollaborationContested Situation

Raid

Cooperative Adversarial

Acquisition Postures

Also depends Critically on type of Acquisition…

Raid more risky, thanCo-operative situation: see Acq Posture below.

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+LEGAL

Earn-out formula’s, 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, role change, departures from company.

Definitive Agreemen

t

TransitionServices

Employment Agreements

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+ Bio & Contact

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

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

Cultural integrations and fluency in 5 languages;

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

[email protected]

Tel +1 206 384 0069

Education: BSc Economics University of

Bristol

MBA London Business School

Decision Sciences Stanford

Marine Captain, 1600 Tons

Oceans