• Share
  • Email
  • Embed
  • Like
  • Private Content
International Competitiveness in M&A
 

International Competitiveness in M&A

on

  • 1,671 views

Watch full webinar here: http://fir.mx/101C1OT

Watch full webinar here: http://fir.mx/101C1OT

Statistics

Views

Total Views
1,671
Views on SlideShare
1,660
Embed Views
11

Actions

Likes
4
Downloads
32
Comments
1

1 Embed 11

http://www.firmex.com 11

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

11 of 1 previous next

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    International Competitiveness in M&A International Competitiveness in M&A Presentation Transcript

    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 1Firmex Webinar SeriesMarch 20th, 20121:00 p.m. to 2:00 p.m.Please submit all questions tomedia@firmex.comKen SmithAuthor & Associate Dean, Executive ProgramsUniversity of GuelphMacKinnon Building, Suite 800University of Guelph, Guelph, ON N1G 2W1519-824-4120 ext. 52346kensmith@uoguelph.caInternational Competitiveness in M&A@Firmex, #FirmexWebinar
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 2About FirmexFirmex is focused on providing the best virtual data roomsolution for managing corporate transactions and financialcomplianceWho uses Firmex?• Firmex community includesover 200,000 users worldwide• Conducted over 10,000 dealsin the last 18 monthsWhy offer a Webinar Series?• As part of our value-added service, we believe it is importantto offer educational resources to our expanding communityJoelLessemCEOFirmex
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 3Ken SmithKen Smith is a professor of business and a strategy consultant. He has practiced as a strategyconsultant for over 25 years, beginning with McKinsey & Company and later with SECORConsulting, Canada’s leading international strategy consultancy, where he has been a ManagingPartner and Chair of the Board. He is now Associate Dean of Executive Education at theUniversity of Guelph and continues consulting part-time.Ken’s client work and research interests are focused on business and public policy issues relatedto industry restructuring and international development. He published several articles relating tothe corporate governance and public policy issues associated with global industry restructuring,including his article “Losing (Ownership) Control” in the Harvard Business Review. Earlier, hedeveloped the first shareholder value-based metric of merger success and introduced theapplication of real options to acquisitions in restructuring industries. Much of this work is includedin his new book “The Art of M&A Strategy” with Alexandra Reed Lajoux, McGraw Hill, New York,2012.Most recently, Ken has initiated a program of research and education applying this business andpublic policy background to issues of hunger and poverty. In collaboration with major internationalNGO’s and corporate partners, this work is aimed at understanding those problems in foodindustry development in developing countries that may be resolved with new business solutions.Ken is also active in corporate governance. He is a director of ACCERTA, the Mergers &Acquisitions Leadership Council. He is also the past-Chair of the Ontario Chapter of the Institute ofCorporate Directors (ICD). Ken holds a B.Sc. in Mathematics from York University, and an M. Sc.and Ph.D. in Mathematics and an MBA from the University of Toronto. He is also an accrediteddirector with an ICD.D from the Institute of Corporate Directors.
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 4Losing (Ownership) Control
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 5Undertook research to answer four questions:1. Are Canadian & US companies competitive in M&Ainternationally?2. What is the impact of increased international M&A activity?3. Should Canada & the US be more ambitious outside ofNorth America?4. Are corporations playing on a level field?
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 6Losing Control
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 7Cross-Border TransactionsChange of Ownership Control(Top 10 Buyers and Sellers, Total Value of Deals >US$1billion, 2000-2009)NetOutbound-Inbound(USDmillions)Source: Bloomberg, SECOR analysisNotes: Pending deals are for 2009 only,INT includes deals with multipleacquirers-400,000-300,000-200,000-100,0000100,000200,000300,000400,000FRANCEINTSPAINSWITZERLANDBELGIUMGERMANYJAPANUAECHINALUXEMBOURGAUSTRIAUKRAINECZECHCHILEDENMARKTURKEYNETHERLANDSCANADABRITAINUNITEDSTATES
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 8Canada Deal Flow-47,274-16,61937216,2556,438-18,170-47,056-53,860-13,9854,594-75,000-50,000-25,000025,000025,00050,00075,000100,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009Inbound OutboundCDN Cross-Border Deal Flow(Total Value of Deals >US$100million, 2000-2009)TotalValue(USDmillions)NetOutbound-Inbound(USDmillions)Source: Bloomberg, SECOR analysis
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 9US Deal Flow-162,561-4,458-15,40526,093 12,747-25,657-18,256-72,480-90,277-9,874-200,000-150,000-100,000-50,000050,000050,000100,000150,000200,000250,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009Inbound Outbound Net Deal FlowUS Cross-Border Deal Flow(Total Value of Deals >US$1billion, 2000-2009)TotalValue(USDmillions)NetOutbound-Inbound(USDmillions)Source: Bloomberg, SECOR analysis
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 10Deal Flow vs US/Euro exchange-162,561-4,458-15,40526,09312,747-25,657-18,256-72,480-90,277-9,8740.9911.0611.1060.9570.794 0.7400.8460.7540.681 0.7210.00.20.40.60.81.01.21.41.61.82.02000 2001 2002 2003 2004 2005 2006 2007 2008 2009-200,000-150,000-100,000-50,000050,000Net Deal Flow Exchange RateUS Deal Flow v. USD(Total Value of Deals >US$1billion, 2000-2009)EurotoUSDNetOutbound-Inbound(USDmillions)
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 11Price Premium vs. Acquiring Firms’Three-Year Performance*Price paid per share versus stock trading price 3 months prior to announcement.Source:Bloomberg, SDC, FP Datagroup
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 12Canada Cross-Border ActivityNetOutbound-Inbound(USDmillions)-50,000-25,000025,00050,000UNITEDSTATESFRANCE BRITAIN SWITZERLANDBRAZIL UAE CHINA NETHERLANDSAUS TRALIA INTCDN Cross Border Acquisitions by Country(Top 10 partners by cumulative value of inbound deals, Net Value of Deals >US$100million, 2000-2009)Outbound121,353.637,550.63 8,477.93 2,500.00 2,313.79 - - 405.33 17,072.85 -Inbound133,120.5754,642.51 53,127.04 21,245.27 17,617.72 12,989.17 8,167.33 6,813.29 6,451.33 6,059.51Source: Bloomberg, SECORanalysisINT includes deals with multipleacquirers
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 13US Cross-Border ActivityNetOutbound-Inbound(USDmillions)-50,000-25,000025,00050,000BRITAIN CANADA SWITZERLANDNETHERLANDSBELGIUM GER MANY FRANCE SPAIN JAPAN BERMUDAUS Cross Border Acquisitions by Country(Top 10 partners by cumulative value of inbound deals, Net Value of Deals >US$1billion, 2000-2009)Outbound156,732.49 133,120.579,512.38 39,865.38 2,618.22 59,785.51 29,457.52 5,520.19 24,490.82 -Inbound165,397.46 121,353.6395,274.48 67,486.44 67,162.09 63,991.42 59,122.65 40,020.86 38,082.96 36,880.10Source: Bloomberg, SECOR analysis
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 14Missed Opportunity or Risky Business?
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 15Deal Flow by Sector – Canada-75,000-50,000-25,000025,00050,000BasicMaterialsCommunicationsCon sumerCyclicalCon sumerNon-cyclicalDiver sified Energy Financial GovernmentIndustrial Tech nology Utilities N/ACDN Acquisitions by Industry Sector(Total Value of Deals >US$100million, 2000-2009)NetOutbound-Inbound(USDmillions)Source: Bloomberg, SECOR analysis
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 16Deal Flow by Sector – US-180,000-150,000-120,000-90,000-60,000-30,000030,00060,000Basic MaterialsComm unicationsCon sumer, CyclicalCon sumer, Non-cyclicalDivers ified Energy Financial Industrial Tech nology Utilities N/AUS Acquisitions by Industry Sector(Total Value of Deals >US$1billion, 2000-2009)NetOutbound-Inbound(USDmillions)Source: Bloomberg, SECOR analysis
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 17Economic Impact of Net Lossof ControlAt a companylevel■ Loss ofheadquarterjobs■ ProfessionalservicesAt an industrylevel■ Loss ofconsolidators■ Weakening ofindustryclustersAt a community/country level■ Loss ofcommunityleaders &donations■ Reducedattractivenessas a financialcenter123
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 18“... could have been a contender”
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 19Cross-border deal volume2000 – 2010
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 20M&A Value Creation – Canada60.0%68.0%54.5%Domestic Continental OverseasPercent Successful(Canada 3 YR Post Deal Acquisition Performance Relative toIndustry Indices 2000-2009)Source: Bloomberg, SECOR analysis
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 21U.S. Deal Performance45.3% 44.8% 44.0%Domestic Continental OverseasPercent Successful(US 3 YR Post Deal Acquisition Performance Relative to IndustryIndices 2000-2009)Source: Bloomberg, SECOR analysis
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 22Key messages
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 23Value Creation in M&A3. Manage to Completion• Accelerate transitionand act on strategicpotential1. Focus on Deal Logic• Identify path tolong-termstrategic value2. Align Organizationand Culture• Integratestructure,process, systemsand cultureCEOs: Improve Deal Performance(esp. US Companies)
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 241.4066 1.26741.1449Domestic Continental OverseasAverage Return(CDN 3 YR Relative to Industry Indices, TotalValue of Deals >US$1billion, 2000-2009)Boards: Take the Long View –Buyers are Creating Value1.16501.1998 1.3456Domestic Continental OverseasSource: Bloomberg, SECOR analysisAverage Return(EU 3 YR Relative to Industry Indices, TotalValue of Deals >US$1billion, 2000-2009)
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 25Policy Makers: Level thePlaying Field• Drive market opening, but don’t take a long lead• Ensure domestic regulation (competitionpolicy, securities law, . . .) is designed ininternational context• Support global growth
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 26For discussion:Canadian and US companies are not competitive inInternational M&A■ Why not?■ What should be done?■ What are the roles of: Business leaders Boards Regulators?
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 27Questions & Answers
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 28The Art of M&A Strategyby Kenneth Smith and Alexandra Reed LajouxRapid globalization, technological advances, and dramaticchanges in public policy have made industry restructuringthe “new normal.” In order to compete, M&A must be partof your overall business strategy.Written by practicing experts in the field of mergers,acquisitions, and divestitures, The Art of M&A series ofprofessional guides is the number-one resource foranyone seeking practical, hands-on advice for planningfor and executing successful deals.Now, The Art of M&A Strategy breaks new ground byproviding the tools and techniques to design a businessstrategy using M&A as a key element. It takes youthrough all the steps for making optimum use of M&A forcorporate success.
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 29Book Winners!• Shane Handsaeme, Athabasca Oil Sands Corp• Sebastian Storfner, Corporate Finance Partners• John Henberger, Henberger Group Inc• Jim Jeffries, M&A Leadership Council• Phillip McGoohan, Oak Hill Business PartnersCongratulations! We will be following up shortlyto get your mailing address.
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 30Thank YouOur next webinar is April 17th, 1pm EasternTrends in Technology M&Awith a review of overall Q1 ActivityFeaturing Cyrus Lam, Managing Director, KMPG New York.www.Firmex.com/company/eventsToday’s Recorded Webinar, Slides will be made available in a follow-upemail shortly.
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 31Appendix
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 320246810121416180 0.55 0.65 0.75 0.85 0.95 1.05 1.15 1.25 1.35 1.45 >1.5Three-Year Total Return Relative to Industry IndexSuccess of US Deals in the 1990sMean = 0.99 = 0.30>1 = 44.3%Source:Bloomberg, SDC, FP Datagroup
    • ©COPYRIGHT 2012. KEN SMITH. ALL RIGHTS RESERVED 33Investment banks with >5 $1 billion deals (listedalphabetically)Performance by Advisor for Major US AcquisitionsAcquirer Total Return vs. Industry (%)Bank of AmericaChase ManhattanCIBCCitiCredit SuisseDeutshe BankDonaldson Lufkin*Dresdner Kleinwort**Evercore PartnerGoldman SachsJP MorganLazardMerrill LynchMorgan StanleyThomas WeiselUBSWachovia****Acquired by Credit Suisse in 2000, but still uses the Donaldsonbrand name**Rebranded under Commerzbank in September 2009***Absorbed by Wells Fargo during recent recession16% 14% 14% 13%10%1% 1% 1%-3% -4% -5%-8%-25%-26%-35%