1、March 2002Merger IntegrationIntellectual Capital CollectionGeneric ProposalA.T.Kearney 4/1375C/Merger Integration108319_Macros2Table of contentsnExecutive SummarynOur Understanding of Your SituationnA.T.Kearneys Perspective on Merger IntegrationnProposed Overall ApproachnRealizing Integration Synerg
2、iesnIntegration ManagementnA.T.Kearney QualificationsA.T.Kearney 4/1375C/Merger Integration108319_Macros3Executive SummaryThis section is tailored to the client situation and summarizes the approach proposed in the documentA.T.Kearney 4/1375C/Merger Integration108319_Macros4Our Understanding your Si
3、tuationThis section is tailored to the client situation and summarizes the key drivers of the merger.It should highlight relevant quantitative and qualitative analysis that demonstrate our insight into the clients particular challenges and drivers of success for the integrationA.T.Kearney 4/1375C/Me
4、rger Integration108319_Macros5A.T.Kearneys Perspective on Merger IntegrationA.T.Kearney 4/1375C/Merger Integration108319_Macros6The best value-builders combine organic growth with mergers and acquisitionsSource:A.T.Kearney Monograph on Value-Building Growth 2001RevenueGrowthValue GrowthUnder perform
5、ersProfit SeekersSimple GrowersValue GrowersGrowth Matrix(CAGR 1988-2000)13.8%-2.7%RevenueValue18.0%21.5%RevenueValue3.6%-3.6%RevenueValue4.1%12.8%RevenueValueValue Growers Follow Conscious,Constant Process To Growth A.T.Kearney 4/1375C/Merger Integration108319_Macros7Mergers and acquisitions are ke
6、y growth driversWhat really matters in“acquisition for growth”strategies is executionSource:A.T.Kearney Monograph on Value-Building Growth 200140%100%60%ExternalInternalTotal GrowthSources of Growth40%of Growth Is From Acquisitions Value Growers Manage Both WellA.T.Kearney 4/1375C/Merger Integration
7、108319_Macros8Few mergers actually create shareholder valueSource:A.T.Kearney Analysis 2001,SDC database,Global WorldscopeAcquirers Value Growth Following a MergerTop performing mergers create significant shareholder valueValue growth3%8%12%27%21%16%3%Underperformance compared to industry averageOve
8、rperformance compared to industry average-100%-60%-30%30%60%150%-15%15%0%Average:2.8%49.5%50.5%Top-PerformingMergers10%A.T.Kearney 4/1375C/Merger Integration108319_Macros9Business Integration issues require“usual”management decisions while four main factors add another level of considerable complexi
9、ty Scope High number of decisions to be made in all operational and functional areas Dozens of projects/initiatives and risks to be managedTime pressure All stakeholders expect rapid execution(shareholders,employees,management,regulation committees,government,)Decisions need to be made without delay
10、Simultaneity Co-existence of strategic,tactic and operational decisions Strong inter-dependence of the decisions Short term and strategic decisions may seem incompatibleHuman component High number of people potentially involved(operational,functional and executive people)Risk of cultural mismatch Sc
11、arce resources to bridge between merged companiesUsual Management decisionsStrategy&IPODefine the scope of combined entity Confirm each countrys scope of activity for mobilesDesign strategy leveraging on broader global presence Define financial and operational targets as well as timing of expected b
12、enefitsPrepare the IPOOrganisationChoose the best organisational model at the European management levelIdentify the central/local functions evolution schedule Define organisational charts and management nomination Define key decision processes(committees,procedures,)InfrastructureReduce total cost o
13、f external purchases through best price evaluation volume concentration,competitive bidding Share best practices Support functions Rationalise shared supports(Align and select Information Systems for the integrationAlign processes and share best practicesCommunicationDefine external communication st
14、rategy Define internal communication strategy Select communication rules and procedures Choose media(intranet,documents,speeches)Integration mgnt Integrate overall planning and milestonesDetail planning by topic and countryManage transition phase Track and execute financial synergiesManage risks A.T
15、.Kearney 4/1375C/Merger Integration108319_Macros10 explaining why only few mergers and acquisitions succeed fully Note:(1)Shareholder returns from buyer divided by shareholder returns(industry average)after the mergerSources:A.T.Kearney analysis,Global PMI Survey,1998;Datastream29%14%57%HigherNochan
16、geLower100%=230 companiesOnly 29%of Companies Realize an Increase in Aggregate ProfitabilityPerformance relative to industry average10%11%21%18%17%23%-15%-25%+15%+25%Top PerformingMergersUnder performance Outperformance Number of companiesIndustry averageOnly 42%of Companies Outperform Their Peers i
17、n Shareholder Value(1)42%58%A.T.Kearney 4/1375C/Merger Integration108319_Macros11Top performers across most industries can create significant shareholder valueCreation ofShareholderReturnsErosion ofShareholderReturnsNote:(1)Total shareholder returns percentage over/under performance relative to indu
18、stry index in the timeframe between 3 months before and 24 months after merger announcement;total shareholder returns defined as the tangible returns investors receive through dividends and stock price appreciationsSources:Datastream;A.T.Kearney Analysis 2001Retailers62.5%64.5%32.3%44.2%26.6%49.9%34
19、.2%26.6%36.1%25.1%16.0%43.3%26.0%27.5%17.2%17.4%31.9%22.4%18.0%40.4%17.4%14.8%4.0%-6.5%-31.5%-38.9%-10.8%-25.9%-11.0%-35.0%-20.6%-17.6%-28.8%-18.0%-9.7%-39.6%-22.7%-24.9%-17.4%-20.3%-35.3%-26.7%-24.1%-46.8%-26.5%-27.2%-19.4%-24.1%RecreationChemicalsMetal ProducersPaperTransportationDiversifiedDrugs,
20、Cosmetics&Health CareUtilitiesAutomotivePrinting and PublishingElectronicsFinancialBeveragesMetal Products ManufactureFoodTobaccoMachinery&EquipmentElectricalMiscellaneousOil,Gas,Coal&Related ServicesConstructionTextilesAerospaceIndustry Specific Ranges of Value Creation(1)A.T.Kearney 4/1375C/Merger
21、 Integration108319_Macros12Once the deal is closed,the principal problems relate almost entirely to failures in merger management,rather than to the underlying strategic rationaleProblems Identified inMerger Integration21%26%26%32%37%37%47%47%58%Under-communicationFinancial/synergy Expectations Unre
22、alistic/UnclearNew Org.Structure With Too Many Compromises“Master Plan”MissingMissing MomentumMissing Top Management CommitmentUnclear Strategic ConceptMissing Pace of ProjectIT Issues Addressed Too LateSource:A.T.Kearneys Global Merger Integration Survey 1998Percent of RespondentsA.T.Kearney 4/1375
23、C/Merger Integration108319_Macros13To manage inherent risks,“critical success factors”can be distilled from successful large-scale mergers to guide value creationCritical Success Factors from Large-Scale MergersSource:A.T.Kearney Merger Integration Create a sense of urgency and reduce uncertainty th
24、rough clear event milestones,and move quickly Select top-level leadership quickly and fairly;avoid“two-in-the-box”leadership for integration planning and execution unless absolutely necessary Set out synergy goals and objectives,to prioritize activities and provide a baseline for performance trackin
25、g Manage market expectations carefully.Set conservative dollar targets with a time frame that accommodates unforeseen circumstances Keep strong,explicit focus on key customer retention and service with teeth(i.e.,measurement and tracking)Maintain open and timely communications with employees to ensu
26、re understanding and retention Conduct decentralized merger Integration guided forcibly via Clear guiding principles Overall framework and tools for integration Reporting standards Establish a strong central Integration office and decentralized Integration teams with corporate-wide perspectives on R
27、esults Project status Risk Lead role on internal/external communications Instill robust,well-defined processes to ensure objective and timely risk and interdependency trackingSense of UrgencyTop-Level Leadership Selected QuicklyClear Synergy GoalsManage Market ExpectationsExplicit Focus on Customers
28、Open,Timely and Consistent CommunicationsDecentralized Merger IntegrationStrong Central Integration OfficeWell-Defined ProcessesA.T.Kearney 4/1375C/Merger Integration108319_Macros14Source:A.T.Kearneys global PMI survey 98Value Capture of Top Performers Over Time15%Year 1Year 2Cumulative ValueCapture
29、 After Two Years85%TimeClosingthe Deal12345678910-10-8-6-4-20246ValueCapture/Loss($MM)Year in Which Synergies Are RealizedTiming of Synergy Realization Is Also CriticalSource:Marl L Sirower:The Synergy Trap.Calculated based on a$10MM acquisition premium,representing 50%of market valueIn our experien
30、ce,the most critical element in achieving targeted benefits is speedA.T.Kearney 4/1375C/Merger Integration108319_Macros15Proposed Overall ApproachA.T.Kearney 4/1375C/Merger Integration108319_Macros16A.T.Kearney has a flexible merger integration framework with a comprehensive toolkit to support plann
31、ing and implementation throughout the merger process to ensure value captureA.T.Kearneys Merger Integration FrameworkDevelop StrategyEstablish Structure and PlanMerger/Acquisition optionsCreate/articulate/validate Markets/customers Competition Resources Sources of valueUnderstand type of mergerEstab
32、lish the integration programBuild integration capabilityAssess sources of valueDevelop organization strategy&designDevelop IT integration strategyDesign/harmonize HR policiesCreate master plan and prioritizeValidate sources of valueImplement quick hitsDevelop SOV IT enablersImplement HR planMonitor
33、progress and riskExecute the planRealign the organizationImplement IT integration planMerger Manage-mentSourcesof ValueMergerEnablersChange of ControlShareholder ApprovalMOUIntegrated Planning and Initial RolloutFull-Scale RolloutDayOnePhase 0Phase IPhase IIPhase IIIMultiple ToolsExist for All Cells
34、A.T.Kearney 4/1375C/Merger Integration108319_Macros17This allows merging entities to rapidly capture available sources of value by focusing on operational synergies,as well as seamlessly merging the organizationsMerge the Organizations as Seamlessly as Possible Develop and communicate a shared strat
35、egic agenda Define Organization structures/leadership Key business processes Technology platform/architecture Change integration requirements Drive top line growth New value propositions/products Cross selling/sales pull through Ensure customer focus/retentionIntegrate day-to-day operations Ensure s
36、ustainable changePosition for growth Achieve$XX million(annual rate)of synergy savings within 1218 months Sales Operations Procurement Corporate overlap and duplication Cost of distribution Technology/R&D Others to be identified Eliminate/minimize sources of riskDrive the short-term valueExceed the
37、markets expectationsMI Sources of ValueAchieve Growth Synergy and Cost Synergy Targets as Quickly as PossibleA.T.Kearney 4/1375C/Merger Integration108319_Macros18The program structure supports focused value capture teams working across all SBU/Geographic teamsIllustrativeIntegration Office OthersSte
38、ering Committee Business Develop-ment TeamCorporate CenterTeamGlobal OperationsTeamGlobal SourcingTeam Technology/R&DTeamHuman ResourcesTeamInformation TechnologyTeamSBU A or N.AmericaSBU B or Latin AmericaSBU C or EuropeSBU D or Asia PacificBU driven integration to set prioritiesFocused on value ca
39、pture across the businessesMarket Facing TeamsValue Capture TeamsEnabler Teams Set overall direction Make critical decisions Develop guiding principles Provide integration management leadership and supportA.T.Kearney 4/1375C/Merger Integration108319_Macros19Implementation Full-Scale Rollout Integrat
40、ed Planning and Initial Rollout Establish Structure and PlanBy launching the integration effort prior to change of control,significant progress is made in identifying sources of value,while also developing the high-level organization models to capture that value Integration Management IT Requirement
41、s/Alignment High-Level OrganizationDataRepositoryComm.PlanningOversight/Visibility RmAnalysisOpportunitiesInitial PrioritizationInitial SequencingData Collection/AnalysesOperations/Asset ConsolidationDiagnostic Pack PP 1 PP 2 PP 3 PP 4HMLHMLInitQ1 Q2 Q3 Q4PP1PP2PP3PP4Data Collection/AnalysesBusiness
42、 Unit(e.g.,Services)Diagnostic Pack CS 1 CS 2 CS 3 CS 4HMLHMLInitQ1 Q2 Q3 Q4CS1CS2CS3CS4Phase I(“Clean Team”)Hypotheses 1Hypothesis N Hypotheses 1Hypothesis N Master CalendarDay/Week/Month 1 PlansSources of Value IdentificationBaseline Dev./TrackingA.T.Kearney 4/1375C/Merger Integration108319_Macros
43、20During the critical period prior to change of control,the engagement team assumes the role of a“clean team”to enable critical pre-merger integrationRole of Clean Team Quantify savings generated from identified opportunities from teams of merged companies Act as a third party conduit for proprietar
44、y information of both companies(protection should merger be aborted)Validate and challenge initial assumptions of opportunities made by merging companies Highlight best practices in existing companies and external knowledge and recommend ongoing merged operating practices Determine risk factors in m
45、erger for ongoing risk management during implementationData CollectionOrganization assessmentHypotheses developmentPreliminary planningCompany ACompany BOpenJoint Client Team MeetingsA.T.Kearney“Clean Team”Merger SynergyHypothesesPre-Change of Control Post-Change of ControlValidated Initiatives Acce
46、lerate decision making by providing access to comprehensive databases and detailed analysis Share and validate findings with joint client teams Finalize initiatives based on validated hypotheses Develop implementation plans Assist in launching initiatives and provide continued implementation,risk an
47、d financial tracking support The up-front work efforts of the“clean team”enables accelerated launch of implementation activities and value capture“Clean Team”Process LimitedJoint Client Team MeetingsA.T.Kearney 4/1375C/Merger Integration108319_Macros21After change of control,the teams quickly finali
48、ze not identify synergy opportunities and gain consensus Results Tracking/Risk Assessment Begin ImplementationInitial Prioritization and SequenceMaster Plan SequencingFull Team Meetings Disclose and Validate Modify and Refine Finalize Savings Opportunities and Prioritization Identify Interdependenci
49、esHMLHMLOverall Prioritization/Executive Committee Buy-InInitQ1 Q2 Q3 Q4MD 1ST 3SC 6PP 4SC6 WorkplanST3 WorkplanMD 1 WorkplanStep 1 2 3 4Investment RequirementsTiming of ResultsMaster Plan Detail Day/Week/Month 1 ExecutionPhase IIInitQ1 Q2 Q3 Q4PP1HMLHMLInitQ1 Q2 Q3 Q4PP1HMLHML IT Requirements/Enabl
50、ersMaster Plan Detail Communication Full-Scale Rollout Integrated Planning and Initial Rollout Establish Structure and PlanA.T.Kearney 4/1375C/Merger Integration108319_Macros22MD 1 WorkplanActivityTask 1Task 1Task 1Task 1Q1Q2Q3Q4The transition to full-scale rollout and implementation of initiatives
