nspd on bematech`s m&a process: a management tool proposal october, 2010
DESCRIPTION
NSPD on Bematech`s M&A process: a management tool proposal October, 2010. GA. Company snapshot. Overview. Portfolio. Market. Financials. Background. Corporate Strategy: Carry out new acquisitions on a selective basis ; - PowerPoint PPT PresentationTRANSCRIPT
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NSPD on Bematech`s M&A process: a management tool
proposal
October, 2010
GA
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Company snapshot
Name: Bematech S/AFoundation: 1989
Headquarters: Curitiba, PR, BrazilEmployees: +1,500
International subsidiaries: USA, Argentina, Germany, Taiwan and China.
Value proposition: integrated solutions (hardware, software, services and training)
focused on the small and medium retail and hospitality segment
Market share (Brazil)- 54.4% market share in fiscal printers
- 13.6% market share in retail management systems
Sales channel: +3,000 resellersPresence : more than 415,000 points-of-sale in
37 countriesMain customers:
Overview
Market Financials
Portfolio
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Background
• Corporate Strategy: Carry out new acquisitions on a selective basis;
• 80 companies analyzed and 7 acquisitions done and aggressive acquisition
guidance to investors ;
• Conflict of interest: guidance to investors + short term goals + 1 team
accountable
• 4 out 7 acquisitions destroyed value so far;
2002 2007 2009
First acquisition (Hardware company)
IPO$~80MM
allocated to new acquisitions
2009: 5 acquisitions
2006
2006: 2 acquisitions
Acquisitions timeline
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Background
Source: Accenture, 2006
Testing
Ideation
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Elimination funnel and Development Pipeline: assumptions
• Scope: Tool for internal process with high impact in the corporation (Acquisitions
Funnel);
• Product: Acquisition of assets and IT companies
• Assumptions:
• Limited companies available;
• Success of the funnel depends also from external factors: “ the sellers”;
• Guidance to investors influenciate the prioritization;
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Elimination funnel and Development Pipeline - PROPOSAL
Target mapping
Investment thesis
Due diligence
Integrationplanning
Financial valuation
Approach
Closing
NDAaklsdjskjskjskljfskljfslkfjdfjkjfdkljfdlkjgkldjglkdjglkdjglkdjgkldjgkldjglkd
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Elimination funnel and Development Pipeline: Roles and responsibilities
Phases Sub-Phases
M&A / Business Develop
ment team
Cross functional team
Executive team
Board of
Directors
Elimination Funnel
Ideation Target mapping L A I -
Surface evaluation Approach L A I -
Detailed evaluation Financial valuation L A A I
Development pipeline
Cross funct. Development Investment thesis A L A I
Testing Due dilligence A L A A
DeploymentIntegration planning A L A A
Launching/post launchingClosing L A A A
L = Phase leaderA = should approveI = shoud be informed
Marketing
HR
Finance
Operations
Legal
R&D
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Elimination funnel and Development Pipeline: Economic Sub-Thinking
Accumulated OPEX (US$ thousands)
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Elimination funnel: ideationPhase Description Screen Screen broad criteria
Ideation
Target mapping: identification of potential targets for acquisitions, based on corporate strategy and segmentation framework; Ideatio
n Screen
Does the company have: solid customer bases or established
distribution channels? Complementary business and
technology?Will this company maintain or expand Bematech market share, increase its profitability and competitive position?
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Elimination funnel: ideation
Segment priorization: retail automation penetration x market sizeCompany priorization: market share
Segmentation Framework
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Elimination funnel: expansion & surface evaluationPhase Description Screen Screen broad criteria
Surface
Evaluation/
Approach: Targets personally contacted and in case of interest from the target side;A standard RFI (request for information) report is sent to the target company for the next phase;
Surface
evaluation
NDA signature;Target accepts provide detailed information for the next phase;
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Elimination funnel: detailed evaluationPhase Description Screen Screen criteria
Detailed
evaluation
Valuation: Financial information modeling;Investment thesis draft produced; First alignment with cross functional;
Detailed
evaluation
screen
Financials present consistency and match with the company expectations?Target information confirms previous assumptions on company fit to the acquisition strategy? Acquisition model defined?
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Elimination funnel: detailed evaluation
Economy assumptions
Market assumptions
Operating assumptions
PremissasFinancial assumptions
Discounted cashflow
Taxa de DescontoWACC
Economic
Value
Fin
an
cial in
fo
The Financial Valuation
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Development pipeline: Cross functional developmentPhase Description Screen Screen criteria
Cross –
functional developme
nt
Investment thesis: Synergies tracked and assigned and draft of the integration objectives is provided; Cross-
functional
development
Gate
MoU signedExternal audit is hired to conduct the due diligence
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Development pipeline: testingPhase Description Screen Screen criteria
Testing
Due diligence: Financial information is confirmed by the audits;Liabilities tracked ;Adjustments on valuation;
Final negotiation is conductedIntegration team building
Testing Gate
Target owners agrees on final negotiation terms and audit results;Integration team assigned;
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Development pipeline: deploymentPhase Description Screen Screen criteria
Deploymen
t
Integration Planning
Deployment Gate
How do we create value?What is the integration model?How the integration will be managed?What is the HR strategy?
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How we create value?
How integrate?
How manage the integration?
What HR strategy needed?
• What should be preserved to leverage this deal (sinergies)?
• What should be redesigned, adapted and eliminated?
• What shouf be integrated immediately? What can we wait?
• Absorb, integrate, create or attach?
• Which company culture should prevail (Bematech or acquired)?
• Does this model applies to the local management?
• Who will manage the company post-acquisition?
• How do we keep the company performance while we integrate pursuiting synergies?
• How aggressive should be the integration?
• How do we create the integration team? What is their scope?
• What would be the new decision structure of the company acquired?
• What will be the cultural impact of the integration?
• How do we identify, select and retain strategic resources from the acquired company?
• How do we assure the employees motivation during the integration process?
Source: Booz Allen & Hamilton (adapted)
Development pipeline: deployment
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Development pipeline: Launch/Post launch reviewPhase Description Screen Screen criteria
Launch / Pos
launch
review
Definition on integration goals, modeling and HR strategy,
PLR Gate Integration plan approved by committee;
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Conclusions
• Methodology: can be applicable to internal NPSD as a leadership and
management function
• Elimination funnel
• “Doing more with less”: increase accuracy and speed through a better
screening criteria
• A more dynamic elimination process also gives condition to accelerate
opportunistic acquisitions ;
• Improve criteria on detailed evaluation: finance valuation is the critical point
• Development pipeline
• Mitigate risks of bad acquisitions: improve approval process (gate keepers)
reducing conflict of interest
• Ensure commitment and accountability of the teams, specially at the Testing
phase (due diligence)