• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Watkins Meegan Lunch & Learn Series:
 

Watkins Meegan Lunch & Learn Series:

on

  • 696 views

On Thursday, December 2nd, Mr. Alan Stewart presented at Watkins Meegan's Monthly Lunch & Learn Series that takes place at the Tower Club in Tyson's Corner, VA. Mr. Stewart spoke about "CFO M&A ...

On Thursday, December 2nd, Mr. Alan Stewart presented at Watkins Meegan's Monthly Lunch & Learn Series that takes place at the Tower Club in Tyson's Corner, VA. Mr. Stewart spoke about "CFO M&A Strategies & Experiences" to a packed room. As the former CFO of ICF, Mr. Stewart helped grow the company's annual revenue six-fold and completed 10 acquisitions successfully. To attend a Watkins Meegan Lunch & Learn email Andrea Contres at Andrea.Contres@WatkinsMeegan.com.

Statistics

Views

Total Views
696
Views on SlideShare
696
Embed Views
0

Actions

Likes
0
Downloads
2
Comments
0

0 Embeds 0

No embeds

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
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Perception of IT within organizations:Separate control environmentOwnership of IT controls is unclearComplexCreates additional risks Specialized skills
  • Global economies are more interdependent than ever and geopolitical risks impact everyone. Electronic infrastructure and commerce are integrated in business processes around the globe. Hence the need of stronger IT controls and reliance on the same.Give examples about recent events:1998 AT&T switch failure led to communications network failing which prohibited credit card transactions to be processed for over 24 hours2003 Major power failure in Northeast and Canada was partially due to failure in IT general controls and application controls processing data that led to overload
  • IT General Controls are at the infrastructure level, Network, OS, DB
  • The following slides are a subset of the materials in the Acquisition Integration (AI) Handbook and provide an introduction to the AI process and concepts.The handbook guides the potential M&M integration and more importantly helps build a capability for acquiring and integrating additional companies in the future. The handbook and tools provided are the starting point – these materials will be iterated and improved throughout the process of using them.Definition of acquisition integration: The process of combining two or more companies once they have come under common ownership.

Watkins Meegan Lunch & Learn Series: Watkins Meegan Lunch & Learn Series: Presentation Transcript

  • CFO M&A Strategies and ExperiencesDecember 2, 2010
    Proprietary and Confidential
    Alan Stewart
  • Why do acquisitions? The lay of the land.
    Proprietary and Confidential 2
    Why do acquisitions?
    How did ICF source deal opportunities?
    What type of reliance they had on internal & external experts?
    How did ICF perform due diligence?
    Negotiate to closing of the transaction
    Post closing integration
  • ICF Transaction History
    3
    June 1999 leveraged buyout with CM Equity from ICF Kaiser (a billion dollar public company heading into bankruptcy-12/99 debt to ebitda leverage at 7-1.
    April 2002 first acquisition was completed, asset purchase of two units of the Arthur D. Little consulting practice in bankruptcy auction, with equity infusion by CM Equity.
    Subsequent Transactions:
    January 2005 Synergy, Inc.
    October 2005 Caliber Associates
    January 2007 EE&A & APCG
    June 2007 Ztech
    December 2007 SH&E
    February 2008 Jones & Stokes
    March 2009 Macro International
    December 2010 Jacob & Sunstrand
  • How did ICF source deal opportunities?
    4
    As a private company before we had capacity to acquire companies:
    Hired buyside investment bankers in 2004 for a one year engagement
    Reviewed potential targets and arranged CEO meetings
    Participated in numerous auctions to understand process and players
    As we deleveraged and had capacity for acquisitions:
    Pursued and closed Synergy and Caliber acquisitions
    Hired full time M&A staff person
    Expanded contacts for CEO to pursue deals
    Expanded reach to investment banking community for deals and participate in more limited auctions
  • What type of reliance they had on internal & external experts
    5
    Necessary to have a mix of external and internal resources and used:
    External accounting firms to audit quality of earnings, backlog and rate structure as well as revenue recognition practices and tax issues.
    Outside counsel for legal corporate review and government contracts review
    We often had an independent survey of major customers completed.
    HR experts to review plans, 401k issues, conversion issues.
    Internal staff to review government contracts, backlog, pipeline and proposals, rate structure, accounting systems and processes, internal IT systems, HR benefits, facilities, etc.
  • Upon acceptance of a expression of interest (versus letter of intent), we obtained limited exclusivity with the target.
    Provided our due diligence request list and plan for due diligence.
    If sensitive of disclosure, we would send in an accounting firm to provide a business review of the target and expand work as needed.
    We would request an electronic data room where possible.
    Prepared documents which incorporated the due diligence reports from our external and internal experts, with our integration plan and financial model combining the companies. These reports were used for our Board of Directors and commercial bank approval. We used debt to acquire all but our first acquisition.
    We started the integration planning process during the due diligence process.
    How did ICF perform due diligence
    6
  • Negotiate to closing of the transaction
    Get major terms on expression of interest or letter of intent
    Obtain limited exclusivity for 30 to 60 days
    Often negotiated two step agreement (signing with conditions to close)
    Work directly through company executives and not investment bankers where possible.
    Map out benefits strategy and prepare all employee presentation
    We required a significant portion of billable employees to sign ICF standard agreements as a condition to close (intellectual property, code of ethics, nonsolicitation of clients or employees for one year after termination of employment). Also, we required all Key employees sign contracts as a condition to close.
    Ensure that the senior and next one or two levels of management are sold on the deal, understand their new reporting, and their compensation arrangements prior to closing, and preferably signing if possible.
    Work out refined financial model after signing if possible.
    Proprietary and Confidential 7
  • Post closing integration
    8
    Identify internal integration team
    Involve integration team in due diligence as early as possible
    Have weekly joint meetings on integration to identify all issues and develop plan and responsibility for actions
    Cultural implications and communications are critical
    Get into the details as quickly as possible
    Be open, honest and upfront during the integration process
    Consider retention bonuses for corporate staff, historical knowledge is important
    Evaluate corporate staff for keepers as early as possible
    Update post performance on financial, employee, customer results and review
  • Acquisition Integration Overview Presentation
    Proprietary and Confidential
  • There are Four Basic Messages for Successful Acquisition Integration
    Speed OverPerfection
    Follow the Money
    Run the CoreBusiness Aggressively
    Culture Matters
    • Start before the close of the transaction
    • Make decisions quickly
    • Make most of the decisions in the first 100 days
    • Minimize the productivity dip
    • Maximize enthusiasm by minimizing uncertainty
    • Keep it 80/20
    • Focus the work where the bulk of the shareholder value is created
    • Remember that 10 to 20 of the hundreds of possible initiatives drive the majority of the value
    • Use small teams to manage the integration
    • Preclude people running the core business from getting side tracked
    • Pay particular attention to the business systems and practices that comprise how the businesses are run
    • Decide as early as possible
    • The practices that are non-negotiable and will be imposed
    • The areas of business practice that will be the combination of best practices from both companies
    • The practices that will be needed to drive the value (in the VDA and price of the deal)
  • Value Driver Analysis Is an Iterative ProcessVDA Refines Due Diligence; Due Diligence Informs VDA
    Value Driver Analysis and Due Diligence Process Flow
    Preliminary Value Driver Assessment
    Value Driver Operating Hypothesis
    Due Diligence Requests and Prioritization
    Accept/Adjust
    Due Diligence Data Analysis
    Eliminate
  • Formulation
    of Strategic
    Objectives
    Implementation
    Evaluation
    Transaction
    Stage
    Transition
    Milestones
    Acquisition Candidate Confirmed
    LOI
    Definitive Agreement & Announcement
    Close
    Close + 100 Days
    Integration Process Incorporates Significant Integration Planning in Transition StageAlso Communication, Culture and Employee Transition Workstreams
    Acquisition Integration Process
  • Formulation
    of Strategic
    Objectives
    Implementation
    Evaluation
    Transaction
    Stage
    Transition
    Milestones
    Acquisition Candidate Confirmed
    LOI
    Definitive Agreement & Announcement
    Close
    Close + 100 Days
    Value Driver Analysis
    Due Diligence
    Transaction Workstreams
    Negotiation
    Regulatory Approval
    Culture Assessment and Integration
    Communication Plan Development and Execution
    Transition and Implementation Workstreams
    Employee Transition Planning & Implementation
    Functional Area Planning & Implementation
    Overall Acquisition Integration Project Management
    Foundational Integration Process Workstreams
    Team Formation
    Knowledge Capture & Capability Building
    Integration Process Incorporates Significant Integration Planning in Transition StageAlso Communication, Culture and Employee Transition Workstreams
    Acquisition Integration Process
  • Integration Leader to Oversee Value Creation and Continuity from VDA to ImplementationTraditional Approach Includes Only Deal Leader
    Conceptual Acquisition Integration Organizational Structure
    Traditional Acquisition Approach
    Integration (Leader)
    Steering Committee
    Deal(Leader)
    Value Driver Analysis
    Due Diligence
    (Teams)
    Transition
    (Teams)
    Implementation
    (Teams)
    Functional Area Team Continuity
  • A Balanced Scorecard Will Be Used to Monitor the Success of an IntegrationAppropriate Metrics Can Be Measured Real-Time
    Sample Metrics for an AI Balanced Scorecard
    Source: Borghese, Robert J. and Borgese, Paul F.: “M&A from Planning to Integration”, pg. 122