Date post: | 15-Sep-2014 |
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- ה ורכישות מיזוגים 8כנסM&A Best Practices
Turnarounds
Change Management
processes
M&A’s Life cycle
Growth Management
M&A Strategy
Scanning
Targeting
Initial Assessment
360 Due Diligence
Negotiation
Agreement formation
P.M.I. Approach
P.M.I. Planning
P.M.I. Execution
About us
S.G
. Sus
tain
able
Gro
wth
• We are an international partnership of consultancies specialising in Post-Merger Integration advisory services
• We advise our clients on the integration / separation of domestic or cross-border acquisitions / divestitures
• We work alongside our international clients in lean, highly experienced executive teams, focusing on transferring the benefits of our skills and experiences over to the internal staff.
• We can support you with everything from training course and integration capability enhancements through to setting up and managing your global integration programme
• We are the only global consulting network dedicated to merger and acquisition programmes
• With top firm consultancy and industry backgrounds, our team brings a richness of knowledge, skills and experiences
• We have a global network of experienced M&A consultants with functional expertise
• We are 10 member firms, in 8 countries and over 20 consultants
Global P.M.I. Partners
Our partners has in average:
27 years of professional experience
14 years in consulting,
11 years working with PMI
Delivered 23 PMI projects
About GPMIP
4
Selected…
5
Hundreds of clients’ interviews
70+S.G. Projects
NumerousTemplates, project
summaries, etc.
Corporates, M&A teams, advisors from acquiring and acquired companies
Over 25Benchmark meetings
Teva, Cisco, Amdocs, Broadcom, Marvel, etc.
Ness, Netafim, Bagir, Perion, AVT, Flash Networks, etc.
The information is validated by crossing multiple sources
Checking & Formulating the
Acquisition Concept
Decision Contract Signing
Closing
Acquisition Realization Stage
Integration Stage
Closing Preparations
Pre Deal:- M&A Strategy- Scanning- Targeting- Approaching
Deal:- Due Diligence- Valuation- Deal management
Post Deal:- PMI (post merger
integration) Planning- PMI Implementation /
change Program
Strategy Formulation
Deal Execution Integration
Pre deal: where the magic starts…
BEST PRACTICE # 1: Why are you acquiring? Be very very clear about the goal you’re trying to achieve. What is the real goal ? Is it achievable? Even in opportunistic situations, you should have a clear, realistic definition of what you want to achieve
Growth above all Breakthrough Global expansion
New products New technology Eliminate competition
BEST PRACTICE # 2: Your strategy should influence how you search for targets, negotiate the deal and plan the PMI phase
• Redefine the competitive landscape• Growth
• Expand to adjacent market • - Leverage sales force - scope
• Extend playground
• Deal with Market break-Up point - threats
• Vertical integration• Extend value chain • Secure supply chain• Distribution network• Secure technology• Reduce cross depandancies
• Horizontal / cost competitiveness• Critical mass • Eliminate redundancies (cost
efficiencies)• Reduce inharent development costs
• Gradual Expansions• Competative technology• Complementary
capabilities
• Financial markets and taxes• Leverage valuations
arbitrage• Leverage balance sheet
and share price to create share holder value
• Diversification
• Other• Brand• Talent• Patent portfollio - to settle
IPR issues, growth• Block Competition
BEST PRACTICE # 3: Research and experience show that in most types of M&A deals, an earnout model will create the best results for the middle and long term
Cash Share
Combined
Making Your Drinks Come True
BEST PRACTICE #4: (start) buying Small, especially if you have limited M&A experience. Small deals are much more successful
BEST PRACTICE #5: Synergies are overestimated. Try not to fall in love with the deal and not be overly optimistic. Remind your self that in 12 months you will have to explain to the board why the synergies you promised were not achieved.
Frequent Mistakes
66% Overestimated synergies
50% Failed to discover target had been dressed for sale
50% Failed to highlight critical Issues
45% Failed to recognize there was insufficient strategic fit
Best Practice #6: Always have a top person in the company who is not
involved with the deal and can play “devil’s advocate”
Remember the Statistics on M&A: 50-80% Failure
BEST PRACTICE #7: Build a pipeline of potential deals. Most opportunities you
will analyze – will not materialize. If you want to close a deal you should always
look in parallel at additional opportunities.
1-3 will be acquired (0.25%-0.75%)
10-12 may
reach DD
50-60 are relevant
400 opportun
ities
The 6 steps plan
Determine Business Plan &
Drivers
Determine acquisition constraints
Develop acquisition
candidates list
Build preliminary
valuation models
Rate / Rank acquisition candidates
Review & Approve
Acquisition
Organizational
Financing
Human Capital
BEST PRACTICE # 8:
Define the Acquisition Process, Criteria and who should be involved in what phase.
People who will be part of the PMI and Integration efforts should be part of the project as early as the DD or early assessment.
Proper handover should be planned as well.
BEST PRACTICE # 9: Involve HR in the early assessment phases, even before the DD. Have them assess the cultural fit and the complexity of integrating cultures and management teams.
Structure Culture
Management
As early as you can, map the shareholders and stakeholders. You must understand early on the “politics” of the deal (who wants it, who opposes, why, who can convince whom, etc.)
Checking & Formulating the
Acquisition Concept
Decision Contract Signing
Closing
Acquisition Realization Stage
Integration Stage
Closing Preparations
Pre Deal:- M&A Strategy- Scanning- Targeting- Approaching
Deal:- Due Diligence- Valuation- Deal management
Post Deal:- PMI (post merger
integration) Planning- PMI Implementation /
change Program
Strategy Formulation
Deal Execution Integration
Deal: Don’t mix business with pleasure… Be professional
360 Management
Team IT Systems
People & Culture Operations
Client Relations
BEST PRACTICE # 10: Do not focus your DD process only on legal and financial issues. Conduct a full 360 degree DD.Involve experts from your company and not only external help.
Major Objectives: - Have a clear idea of what you’re walking into- Find the “skeletons in the closet” to lower the valuation
BEST PRACTICE # 11: Conduct the DD as a synergetic team effort and not as separate parallel efforts. Use the information from one area to compliment findings in other areas and bring up new hypothesis.
Source :
Organizational Market Human
Organizational Culture Brand Leadership
Governance Client intimacy Employees
Agility Client loyalty Development and management
Communication and teaming
External networks Engagement
Energy and clarity Internal networks Productivity
Organizational structure
Innovation
BEST PRACTICE # 12: You can Lower the risk and Increase the probability of Success of every deal by focusing on the Intangible Assets
Checking & Formulating the
Acquisition Concept
Decision Contract Signing
Closing
Acquisition Realization Stage
Integration Stage
Closing Preparations
Pre Deal:- M&A Strategy- Scanning- Targeting- Approaching
Deal:- Due Diligence- Valuation- Deal management
Post Deal:- PMI (post merger
integration) Planning- PMI Implementation /
change Program
Strategy Formulation Deal Execution Integration
Post Deal: סוף מעשה במחשבת תחילה…
Preserving
Deleting
Through Existing Identities
Through New Identities
Confederation
Assimilation
Federation
Metamorphosis
Response to legacy identities
Integration
When analyzing the topic of post merger corporate identity, there are four major possibilities as shown in the model below:
BEST PRACTICE # 13: Before going into a detailed PMI plan, define the PMI concept. The PMI concept should answer critical questions like: are we integrating everything or just some elements? How fast should the integration be, do we preserve the identity of the acquired company or not, etc.
BEST PRACTICE # 14: Most books on M&A say you must do things quickly, “finish the integration process in 100 days”. Experience shows that certain aspects need to be handled fast and others need to take more time. You need to differentiate between them.
“In M&As sometimes fast is slow and slow is fast”
© 2
008
“I’m in a very stressful period !!”
BEST PRACTICE # 15: M&A times are perceived as chaotic and uncertain, good people tend to leave first. Map your key employees based on performance and potential and talk to all of them, design creative retention packages, remember it’s not only about the money.
“You didn’t get my email ??!!”
BEST PRACTICE # 16: Create a comprehensive communication plan including Stakeholders, channels, messages and timing. Communicate and over-communicate, not only on the announcement day…
BEST PRACTICE # 17: Throughout M&As “Me issues” dominate both companies at all levels...
Will I have a job?Will my pay and benefits change?Who will I report to?Will I have to move?What will ‘they’ be like to work for?Others...
Example “Me Issues”
BEST PRACTICE # 18: Mange PMI as a project with Integration Governance, project management tools and follow-up mechanisms, tasks, meetings, etc. (see details in the next slides)
Executive Committee
Functional Teams
PMI Office
Horizontal Teams
Functional Team Reps.