1、March 2002Merger IntegrationIntellectual Capital CollectionGeneric ProposalA.T.Kearney 4/1375C/Merger Integration108319_Macros2Table of contents?Executive Summary?Our Understanding of Your Situation?A.T.Kearneys Perspective on Merger Integration?Proposed Overall Approach?Realizing Integration Synerg
2、ies?Integration Management?A.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 dela
10、ySimultaneity?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?
11、Scarce resources to bridge between merged companiesUsual Management decisionsStrategy&IPO?Define the scope of combined entity?Confirm each countrys scope of activity for mobiles?Design strategy leveraging on broader global presence?Define financial and operational targets as well as timing of expect
12、ed benefits?Prepare the IPOOrganisation?Choose the best organisational model at the European management level?Identify the central/local functions evolution schedule?Define organisational charts and management nomination?Define key decision processes(committees,procedures,)Infrastructure?Reduce tota
13、l cost of 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 integration?Align processes and share best practicesCommunication?Define external commu
14、nication strategy?Define internal communication strategy?Select communication rules and procedures?Choose media(intranet,documents,speeches)Integration mgnt?Integrate overall planning and milestones?Detail planning by topic and country?Manage transition phase?Track and execute financial synergies?Ma
15、nage risks A.T.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%5
16、7%HigherNochangeLower100%=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
17、 Their Peers in 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 re
18、lative to industry 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.
19、2%26.6%49.9%34.2%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 ProducersPaperTransportationDiv
20、ersifiedDrugs,Cosmetics&Health CareUtilitiesAutomotivePrinting and PublishingElectronicsFinancialBeveragesMetal Products ManufactureFoodTobaccoMachinery&EquipmentElectricalMiscellaneousOil,Gas,Coal&Related ServicesConstructionTextilesAerospaceIndustry Specific Ranges of Value Creation(1)A.T.Kearney
21、4/1375C/Merger 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 Exp
22、ectations Unrealistic/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.
23、Kearney 4/1375C/Merger Integration108319_Macros13A.T.Kearney 4/1375C/Merger Integration108319_Macros14Source:A.T.Kearneys global PMI survey 98Value Capture of Top Performers Over Time15%Year 1Year 2Cumulative ValueCaptureAfter Two Years85%TimeClosingthe Deal12345678910-10-8-6-4-20246ValueCapture/Los
24、s($MM)Year in Which Synergies Are RealizedTiming of Synergy Realization Is Also CriticalSource:Marl L Sirower:The Synergy Trap.Calculated based on a$10MM acquisition premium,representing 50%of market valueIn our experience,the most critical element in achieving targeted benefits is speedA.T.Kearney
25、4/1375C/Merger Integration108319_Macros15Proposed Overall ApproachA.T.Kearney 4/1375C/Merger Integration108319_Macros16A.T.Kearney has a flexible merger integration framework with a comprehensive toolkit to support planning and implementation throughout the merger process to ensure value captureA.T.
26、Kearneys Merger Integration FrameworkDevelop StrategyEstablish Structure and Plan?Merger/Acquisition options?Create/articulate/validate Markets/customers Competition Resources Sources of value?Understand type of merger?Establish the integration program?Build integration capability?Assess sources of
27、value?Develop organization strategy&design?Develop IT integration strategy?Design/harmonize HR policies?Create master plan and prioritize?Validate sources of value?Implement quick hits?Develop SOV IT enablers?Implement HR plan?Monitor progress and risk?Execute the plan?Realign the organization?Imple
28、ment IT integration planMerger Manage-mentSourcesof ValueMergerEnablersChange of ControlShareholder ApprovalMOUIntegrated Planning and Initial RolloutFull-Scale RolloutDayOnePhase 0Phase IPhase IIPhase IIIMultiple ToolsExist for All CellsA.T.Kearney 4/1375C/Merger Integration108319_Macros17This allo
29、ws merging entities to rapidly capture available sources of value by focusing on operational synergies,as well as seamlessly merging the organizationsMerge the Organizations as Seamlessly as Possible?Develop and communicate a shared strategic agenda?Define Organization structures/leadership Key busi
30、ness processes Technology platform/architecture Change integration requirements?Drive top line growth New value propositions/products Cross selling/sales pull through Ensure customer focus/retention?Integrate day-to-day operations?Ensure sustainable change?Position for growth?Achieve$XX million(annu
31、al 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 risk?Drive the short-term value?Exceed the markets expectationsMI Sources of ValueAchieve Growth Syne
32、rgy 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 OfficeOthersSteering CommitteeBusiness Develop-ment TeamCorporate CenterTe
33、amGlobal 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 capture across the businessesMarket Facing TeamsValue Capture
34、TeamsEnabler Teams?Set overall direction?Make critical decisions?Develop guiding principles?Provide integration management leadership and supportA.T.Kearney 4/1375C/Merger Integration108319_Macros19ImplementationFull-Scale RolloutIntegrated Planning and Initial RolloutEstablish Structure and PlanBy
35、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 valueIntegration ManagementIT Requirements/AlignmentHigh-Level OrganizationDataRepositoryComm.PlanningOver
36、sight/Visibility RmAnalysisOpportunitiesInitial PrioritizationInitial SequencingData Collection/AnalysesOperations/Asset ConsolidationDiagnostic Pack?PP 1?PP 2?PP 3?PP 4HMLHMLInitQ1 Q2 Q3 Q4PP1PP2PP3PP4Data Collection/AnalysesBusiness Unit(e.g.,Services)Diagnostic Pack?CS 1?CS 2?CS 3?CS 4HMLHMLInitQ
37、1 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_Macros20During the critical period prior to change of control,the engage
38、ment 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 proprietary information of both companies(protection should merger be aborte
39、d)?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 merger for ongoing risk management during implementationData Colle
40、ctionOrganization assessmentHypotheses developmentPreliminary planningCompany ACompany BOpenJoint Client Team MeetingsA.T.Kearney“Clean Team”Merger SynergyHypothesesPre-Change of Control Post-Change of ControlValidated Initiatives?Accelerate decision making by providing access to comprehensive datab
41、ases 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 and financial tracking support The up-front work efforts of the“cle
42、an 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 finalizenot identifysynergy opportunities and gain consensusResults Tra
43、cking/Risk AssessmentBegin ImplementationInitial Prioritization and SequenceMaster Plan SequencingFull Team Meetings?Disclose and Validate?Modify and Refine?Finalize Savings Opportunities and Prioritization?Identify InterdependenciesHMLHMLOverall Prioritization/Executive Committee Buy-InInitQ1 Q2 Q3
44、 Q4MD 1ST 3SC 6PP 4SC6 WorkplanST3 WorkplanMD 1 WorkplanStep 1234Investment RequirementsTiming of ResultsMaster Plan DetailDay/Week/Month 1 ExecutionPhase IIInitQ1 Q2 Q3 Q4PP1HMLHMLInitQ1 Q2 Q3 Q4PP1HMLHMLIT Requirements/EnablersMaster Plan DetailCommunicationFull-Scale RolloutIntegrated Planning an
45、d Initial RolloutEstablish 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 is supported by a clear tracking processProgram Risk ManagementTop 10 Program
46、Risks as of 06/24?Organization announcement timing still unclear?IT requirements not fully understood?No plans to address cultural misalignment?Success of communication not currently planned to be measuredIllustrativeInitiative Status ManagementSize=$Saved61218GreenYellowRedRiskTime to Complete Impl
47、ementationInitiativeCurrent QuarterCum.Qrtly.BreakdownJan.Feb.Mar.4Q971Q982Q98Cost Saves and Growth AchievementImplementationCommunicationPhase IIIFull-Scale RolloutIntegrated Planning and Initial RolloutEstablish Structure and PlanA.T.Kearney 4/1375C/Merger Integration108319_Macros23Source:A.T.Kear
48、ney Merger Integration Throughout the effort,managing risk is a formalized methodology;adherence facilitates a fair and robust decision making processProject Risk PrioritizationRisk IdentificationRisk CategorizationProject Prioritization Business Criticality And SizeBusiness Criticality how much doe
49、s it matter if the project does not meet its objective?A=Incremental benefit but current processes will suffice?B=Supports strategy but manageable impact if project fails/delayed?C=Important to the strategy with significant impact if project fails/delayed?D=Critical impact/must keep up with competit
50、ors/cannot continue businessComplexityHighLowHighDCBAABCDBusiness CriticalityProject2Project3Project6Project1Project4Project5RefPro ject AreaPre-milesto n eMile-sto n ePost milesto n e1Data con v ersio n p ro cess2Data vo lu mes/sizing3Op eratio n s ch an g es4Systems chan g es5Test plan s/test exec
