Date post: | 25-Jul-2015 |
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Business |
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Source: 2
Samenwerkingen en fusies in zorg zijn een hot topic
Internet
In 25 jaar zijn er 86 ziekenhuisfusies geweest
Source: 4
Acquisitions are aimed at creating extra value though post-acquisition synergy
Company A
Company B
Company A
synergy
Cost based synergies
New total cost are reduced by realising economies of scale and reduction of duplicate activities
Example: - Spreading fixed cost like R&D and promotion over more customers - Reducing administration, ICT etc
Benefit based synergies
The combination shares competences which facilitates extra revenue or access to new segments
Example: - Access to new geographical segment - Access to distribution channels - buying new eCommerce capabilities (Achmea)
Main reason
Source: Capron
Source: 5
A corporation can diversify either vertically or horizontally
Current business
Buyer business
Supplier business
Competitor Related business
Unrelated business
Forward vertical integration
Backward vertical integration
Horizontal expansion
Related diversification
Unrelated diversification
Source: De Wit & Meyer
Source: 6
Today we focus on formal forms of cooperation
Venture Form Model
1:1 Agreement
Network
Contract
Joint Venture
Merger
Acquisition
Direction
Intended synergie
Cost
Benefit
The initiative should match strategic intent with form, direction and synergy
Source: 7
Research consistently shows that results don’t meet management’s expectations
Sources: Capron, Douma, Porter
Improvement of joint results
Source: 9
The selection of the right candidate, but especially the failure to integrate are the reasons for not succeeding
Reasons CEO’s state for not creating (or even destroying) shareholder value
1. Failure to integrate the new venture into the corporation
2. Selecting the wrong candidate
3. Price for acquisition was too high
Source: BCG
Source: 11
Succesfull cooperations start with strategy, manage their formation process and manage the integration
The Essence Consulting
Succesful cooperations
Manage integration
and synergie
Start with a strategic
vision
Manage the
process
- Define the desired synergie based on your strategy - Select a partner who matches the desired synergie - Set up a sound strategy for the new venture
- Use a experienced, balanced deal team - Set up main principles quickly, but work out the details thoroughly
- Focus on the integration - Set up a post acquisition project that ensures synergies are realised
Source: 12
Start with a strategic vision to ensure that your new ventures matches your strategy
The Essence Consulting
1 2 3
Strategy
Desired synergy
Eg low cost > adv. of scale
Start by defining what the needed synergy is to realise your strategy
Desired synergy
Potential Potential
?
When selecting the partner focus on the desired synergy. Don’t fall for ‘the smoothest process’
You Partner
NewCo
Strategy
After selecting start with defining a sound strategy for the venture. Ensure that your desired synergy is the basis for the businessplan
DO: WMO kantoor
DON’T: Thuiszorg megafusie
Source: 13
Use an experienced and balanced deal team
M. Zollo, The Essence Consulting cases
Nr of acquisitions
Suc
ces
Experienced deal teams have a much higher change of success
Business expertise
Process management
skills
M&A expertise
The deal team should combine business, M&A and process skills
KZN case iTouch case
Source: 14
Set up the main principles quickly, but work out the details thoroughly
Zollo, Harding, Taulli, Essence cases
Cooperation set up process
Business plan
Share-holder agreement
No details.. “We agree on the main principles, let the experts work out the details”
Details and more details “let’s start with article 1.1.1 definitions”
Cooperation process lay the foundation for long term performance
Unsuccessful start or even broken off process
Flaws in decision structure, synergy not realised or too high priced
CASE: HbH thuiszorg joint venture
CASE: iTouch
“Set up the main principles quickly, but work out the details thoroughly “
Source: 15
Only in a limited number of cases cost advantages were actively pursuit…
% of companies who reported to have actively reduced means after acquisition
Strangely enough are cost advantages only limited pursuit
In most cases potential cost advantages must be available (fixed cost, processes etc)
Most acquiring companies are not pursuing post-acquisition cost advantages
Source: Capron
Source: 16
‘A marriage is worth more then just the wedding’ (focus on integration and realising the synergies)
Hapeslagh, Capron, M. Zollo
Cooperation set up process
Business
plan Share-
holder
agreement
Integration phase Going concern
Phase where you design the venture and possible synergies
Phase where you REALISE the intended synergies
Set up an integration project headed by a senior manager
Plan a ‘sweep project’ where you ensure that the remaining unrealised synergies are realised
CASE: Argonaut