Key Aspects for maximizing Synergies through effective

Post Merger Integration

GPMIP Webinar Series February 20th, 2014

Video of this webinar available on YouTube

Key Aspects for maximizing Synergies through effective

Post Merger Integration

GPMIP Webinar Series February 20th, 2014

Stefan HofmeyerModeratorPartner, GPMIPSan Francisco

About Global PMI Partners

An international services organization comprised of 10 country-based firms

We provide pre- and post-merger integration services (M&A Integration) for mid-size and large scale acquisitions

Training | Advisory | Integration Execution

GPMIP Partner Firms

Our extended network of PMI consultants

Today’s Webinar & Panel Discussion

Scott Whitaker Presenter & PanelistFounder, Whitaker & CompanyGPMIP US Partner

Scott is author of the Merger & Acquisitions Integration Handbook. Serving clients across industries, Scott has over 20 years’ experience in strategic planning and all aspects of M&A integration.

Michiel van der Heijden PanelistGlobal Finance & Operations DirectorMölnlycke Health Care

Michiel is involved heavily in M&A and integration projects and is responsible for valuations of potential M&A targets. Recently he managed an integration of a Polish manufacturer and an acquisition in Germany.

Danny DavisPanelistFounder, DD ConsultingGPMIP UK Partner

Danny is an author, a guest speaker on M&A integration at London Business School and was programme director M&A at Henley Business School. As a lead consultant, Danny has been involved in deals from £5mnto £16bn.

Christophe Van GampelaerePanelistFounder, Integrator InternationalGPMIP Belgium Partner

Christophe started Ernst & Young's transaction integration practice for the Benelux countries before founding Integrator International. He has led multibillion dollar global deals for both integrations and carve-outs.

Thomas KesslerPanelistFounder, Integration SuccessGPMIP German Partner

Thomas has delivered more than 28 integration projects across Europe, North America and Asia. He regularly trains European and South East Asian companies in M&A Integration and is a guest speaker at Zurich University of Applied Science.

Stefan HofmeyerModeratorPresident, ModalMinds Inc.GPMIP US Partner

Stefan has delivered business transformation across 31 clients with focus on extended management and process improvement. He is deeply involved with US / China cross border business development.

Post Merger IntegrationIntroduction

GPMIP Webinar Series February 20th, 2014

Scott WhitakerPresenter and PanelistPartner, GPMIPAtlanta

Integration Activities

Pre-planning• Setting the

Parameters of integration timing, addressing core business strategy issues, if necessary, and securing outside resources

Integration Due Diligence• Securing

background data on all functional business areas and business activity to inform your integration planning

Integration Office Planning• Establishing

an IMO to run your integration project

Execution• All major

integration activities, commencing from day one of your integration to end state

Wrap-up• Post

integration surveys and integration-closing activities

Integration: What Could Go Wrong?

People ExecutionPreparationPreparation

1 1 0

Integration: What Could Go Wrong?

People ExecutionPreparation

• Lack of integration pre-planning• Overpayment for acquisitions• Weak due diligence on people and operations• Overestimated synergies• Lack of shared vision/strategic direction• Low/no integration budget• No integration playbook or consistent approach

Preparation

Integration: What Could Go Wrong?

People ExecutionPreparation

• Cultural conflict• Key talent loss• Lack of attention to people issues during

implementation• Competing priorities• Lack of executive commitment

Preparation

Integration: What Could Go Wrong?

People ExecutionPreparation

• No Integration Management Office or team (or poorly resourced team)

• Ineffective technology integration• Slow pace of integration• No end-state planning• Scope creep

Preparation

PMI Best Practices: Pre-Planning“He who fails to plan is planning to fail”

Pre-Planning is where

integrations are won and

lost

Allocate a minimum 90

days of integration pre-planning prep

Manage the pre-planning

regimen like the execution phase

PMI Best Practices: Pre-Planning“He who fails to plan is planning to fail”

Mobilize your Integration

Management Office 90 days prior to Day 1

Define scope, roles &

responsibilities for IMO leads

Secure resource commitments in advance… clear

the decks!

Develop a strategy & process for

getting information

PMI Best Practices: Pre-Planning“He who fails to plan is planning to fail”

Don’t Minimize Culture and

Change Management Challenges

Confirm cultural differences as

part of operational due-

diligence

Plan communications

for all stakeholders to

Day 1 +90

Make communications everyone’s responsibility

Integrate with the End in Mind

What is the desired experience for acquired employees on Day 1?

- Branding, email addresses, business cards, intranet, etc.

What is the desired End State for customers?

- Customer service, invoices, packaging, etc.

What is the desired End State for other external stakeholders?

- E.g. local communities and charities

- Suppliers, vendors, contractors

Embrace transformation opportunities

- People, process, system upgrades

- Future proofing

Get ahead of critical planning assumptions and desired “end state” for all critical areas of the business

For Integration Success…Focus Here

Integration Success

Integration Support

Resource Augmentation

Systems Integration

Communications

Leverage the Positives

Institutionalize the Approach

Integration Strategy

C-Level Oversight

Resource IMO and critical Functions Properly

Don’t underestimate IT workstream challenges and

timing

Make communication planning a top priority

Clarify Strategy & Business Goals

Create a Playbook

Reward Success

PANEL DISCUSSION

GPMIP Webinar Series February 20th, 2014

Scott Whitaker Founder, Whitaker & Company

GPMIP US Partner

Michiel van der Heijden Global Finance &

Operations DirectorMölnlycke Health Care

Danny DavisFounder, DD Consulting

GPMIP UK Partner

Christophe Van Gampelaere

Founder, Integrator International

GPMIP Belgium Partner

.

Thomas KesslerFounder, Integration Success

GPMIP German Partner

Stefan HofmeyerModerator

President, ModalMinds Inc.GPMIP US Partner

Integration Activities

Pre-planning• Setting

the Parameters of integration timing, addressing core business strategy issues, if necessary, and securing outside resources

Integration Due Diligence• Securing

background data on all functional business areas and business activity to inform your integration planning

Integration Office Planning• Establishin

g an IMO to run your integration project

Execution• All major

integration activities, commencing from day one of your integration to end state

Wrap-up• Post

integration surveys and integration-closing activities

Pre-Planning

• Can you detail how synergies are incorporated in the valuation model?

Pre-Planning

• How are synergy targets derived?

Pre-Planning

• Are there any synergy quick wins that you can find on any integration?

Pre-Planning

• I understand what cost synergies are, but what are growth synergies?

Pre-Planning

• Is there a normal % of cost savings achievable?

Pre-Planning

• What training concepts can be incorporated to make your M&A team more efficient?

Pre-Planning

• At what point is planning started? Who typically takes the first responsibility to act?

Pre-Planning

• What do you consider the top 3 priorities for pre-planning and when should they be completed relative to Day 1?

Integration Due Diligence

• What do I do if we don’t have the resources to deal with a detailed synergy analysis?

Integration Due Diligence

• Are cost and growth synergies both essential to any deal?

Integration Due Diligence

• Who within the business owns the realisation of synergies?

Integration Due Diligence

• How do you handle situations where executive decisions are stalled but needed for planning?

Integration Office Planning

• Communication plans get a lot of attention, but even so what are some of the common mistakes companies make during planning?

Integration Office Planning

• What should be considered when developing a robust framework and methodology?

Integration Office Planning

• What is the optimal reporting structure for an IMO?

Integration Office Planning

• Are dedicated IMO resources typically established or are activities delegated to operational personnel?

Integration Office Planning

• What factors should be considered for cross border transactions?

Integration Office Planning

• What is the typical oversight / reporting frequency to the IMO

Integration Office Planning

• What are some standard best practices for ensuring an issue free Day 1?

Execution

• What can we do if we see that we're failing to realise planned synergies?

Execution

• What is the scope of a synergy template?

Execution

• What sense of urgency should be placed on synergies

Execution

• What are top execution related best practices?

Execution

• How do you balance moving quickly and taking time to ensure the integration is done right? What are related best practices?

Execution

• What audits are performed during M&A integration activities?

Execution

• What are some best practices for integration metrics?

Wrap-up

• At what point should an integration be complete and turned over to operations and general project work?

Wrap-up

• What are some things to watch out for in knowledge transfer?

Thank You!

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