1. a d e r s Fo r u m
Fahn Kanne
โซืืืื ืืืืืืืกโฌ Grant Thornton
M&A Le
โซืืืขืฅ ืืืืืโฌ An instinct for growth TM
M&A
Le ers o
Leaders Forum
r
2013 โซ11 ืืืคืจืืโฌ
M M&AeaLeaders um
&A L Leader r Forum
d e r s Fo F
M& A L e a d e r s Fo r u m
5. Sustainable Growth
Cross-border Integration Services
Mergers & Acquisitions
Global PMI Partners (GPMIP) is the only international network focused
exclusively on delivering post-merger integration, separation and
transformation services.
Core focus on integrations and carve outs.
Creating the alternative to the global
advisory firms.
Only working with the very best firms as
partners.
Pre-eminence through professional
community.
Differentiation through innovative use of
technology.
GPMIP has over 120 years of consulting experience,
100 years in PMI and managed over 220 PMI projects.
www.gpmip.com | www.sg-ltd.com
7. 4/11/2013
HF Indices Fixed Income
/Credit
Rates/GDP/ Budget Equities
Macro
Analysis
General Correlation
Flows
Fixed Income
/Credit
Flows Default Rates (Global, US and Europe)
Corporate Issuance
Sovereign debt/IG/HY Yields and Spreads
Total Investment Grade and Speculative
Grade Debt Maturing By Year
HF Indices Equities
Macro
Analysis
Correlation
Rates/GDP/ Budget
General
2
8. 4/11/2013
US 10 Years Govt. Bond Yield
โข 94% of US Investment Grade Bonds returns since 1990 is attributed to the decline in US treasury yields
โข 72% of US High Yield Bonds returns since 1990 is attributed to the decline in US treasury yields.
With rates now near zero, there is less income and limited room for underlying rates to rally further
US High Yield Index Par weighted Price
87%
78%
3
9. 4/11/2013
FI/Credit
HF Indices
Equities
US Equities
European Equities
EM Equities
Rates/GDP/ Budget S&P 500 P/E Ratio
Macro S&P 500 Earning Yield
Large, Mid and Small Cap
Analysis Sectors
Style
General Correlation
Flows
S&P 500 P/E Ratio
4
10. 4/11/2013
Flows FI/Credit
HF Indices Equities
Macro
Analysis
Correlation
Rates/GDP/ Budget S&P 500 Member
30 days rolling correlation
S&P 500 Member
65 days rolling correlation
General
S&P 500 Member 65d Rolling Correlation
5
11. 4/11/2013
HF Indices FI/Credit
Equities
Rates/GDP/ Budget
Macro
Analysis
General Correlation
Flows
Money Market Mutual Funds
US Equity Mutual Funds
US Bond Mutual Funds
New Cash Flow to US Equity Mutual Funds (Million USD)
6
12. 4/11/2013
New Cash Flow to Equities Long Only
New Cash Flow to US Bond Mutual Funds (Million USD)
7
16. 4/11/2013
?โซืืื ืืชืฉืืื ืืืืขื ืืืืคื ืื ืืืืืโฌ
300
250
270%
Accumulated Returns (%)
200
150
144%
100
50
0
S&P500: 25.50%
-50
-100
12/00 7/01 2/02 9/02 4/03 11/03 6/04 1/05 8/05 3/06 10/06 5/07 12/07
Fund A Fund B S&P 500 w/ dividends
?โซืืื ืืชืฉืืื ืืืืขื ืืืืคื ืื ืืืืืโฌ
300
250
270%
200
150 Fundamental Value
100
A Concentrated
L/S
144%
Trading
B
50
Oriented
0 L/S
S&P500: 25.50%
-50
-100
C
12/00 7/01 2/02 9/02 4/03 11/03 6/04 1/05 8/05 3/06 10/06 5/07 12/07
Fund A Fund B S&P 500 w/ dividends
11
17. 4/11/2013
36 Rolling Months Beta/Alpha
A
Decreasing Alpha, High Beta
Lehman Brothers collapse
A
B
C
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18. 4/11/2013
Example: W Investment Limited Fund
Track record since inception
W Investment Limited Fund VS S&P 500 W/D
Accumulated Returns (%)
W Investment S&P 500 W/ Dividends
13
20. 4/11/2013
Mergers & Acquisitions 2013
Trends & Best Practices
M&A Leaders Forum
M&A Leaders Forum
Who are we and what
will I be covering in
the next 30 min.
1
21. 4/11/2013
S.G. SustainableS.G.- Sustainable Growth
Growth
โข SG - Sustainable Growth specializes in maximizing the potential
and minimizing the risks of our clientsโ growth processes. We
achieve these results by leading strategic processes that focus on
M&A strategy, targeting, assessment before acquisitions, PMI
Planning and execution, structural realignment, turnaround
processes and more.
โข SGโs experts have vast experience working with leading
companies in Israel, USA, Latin America and Europe.
โข SG has the accumulated more experience in successful M&As
than any other Israeli consulting company.
3
Selected clients
2
22. 4/11/2013
Global PMI Partners
โข International network of consultancies
โข Specialised in Pre and Post-Merger integration
advisory services
โข advice on integration or separation of cross-
border acquisitions and divestitures
โข comprised of individual local member firms
which work seamlessly together as one
organisation
โข Start to finish services, from training courses
through to setting up and handing over global
integration programmes
GPMIP Partner Firms
โข the only global consulting network dedicated to
Our extended network of PMI consultants
merger and acquisition programmes
โข top tier consultancy backgrounds and deep
industry experience UK France Israel Germany Sweden Belgium
โข we tailor our team to cover the specific needs of DD PMI Sustainable Integration
Micocon
Integrator
Consulting Factory Growth Success International
your integration
โข we work alongside our international clients and
with their advisors (legal, banks, transaction For more information please visit:
advisory teams, legacy advisors) www.gpmip.com
5
MergerID โ2012 in a glance
A secure online, user generated M&A platform matching buyers and sellers in the
middle market from around the world.
Total number of firms: 3310
Total number of live projects: 7878
Total Value of Sale Mandates: 67.4 B$
Total of: 7,878
More than 80 countries worldwide
On average more than 700 deals progress
off-line every month
6
3
23. 4/11/2013
In a nut shell
What happened in the world in the last year
The Global M&A Arena 2012-2013
The Israeli Market in a Glance
M&A Best Practices and lessons learned
7
M&A Leaders Forum
SoโฆWhat happened
in the past year?
4
24. 4/11/2013
Facebook went public. Expectations did not
meet reality.
The 2012 US presidential election turned into
the most expensive campaign in history.
5
25. 4/11/2013
And the Middle East kept erupting.
But no crisis was big enough to stop the
London Olympics...
6
29. 4/11/2013
Global M&A in 2012 was on par with 2011 (US$ 2,243bn).
19 In collaboration with:
2012: Energy, Materials (mining), Financials- leading
industries
20
10
31. 4/11/2013
2012: Global managers saidโฆ the world is on its way to
crisis
48%
(June 2012)
23
2013: Will this year be promising?
โActivity has been noticeably quieter in the new year.
In January and February, there were 1,540 deals
globally, with a value of US$293.3bn.
Compared with the first two months of 2012, this
represents a 30% and a 3% drop in volume and value,
respectively.
Despite this, there are signs of a more hospitable deal-
making climate and returning confidenceโ.
12
32. 4/11/2013
Mergers Slowed to a Snailโs Pace in the First Quarter, the
Fewest Since 2003
Near future is not clear, we hope the best is yet to come!
?
13
33. 4/11/2013
GLOBAL M&A GEOGRAPHIC BREAKDOWN YTD 2013
Most deals:
Value ($) and Volume (#) (1) North America, (2) Europe
GLOBAL M&A SECTOR BREAKDOWN YTD 2013
Value ($): Consumer, Energy mining & Utilities, Media
Volume (#): Consumer, Business Services, Industrials & Chemicals
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34. 4/11/2013
2013 outlook: Will this year be promising?
On one hand:
HIGH LEVEL OF UNCERTAINTY CONTINUES, both
political based and macro economic based.
Thereโs still low confidence in global markets
leading to LOW willingness to take risks.
On the other:
Growth indicators are high (S&P 500, consumer
confidence, etc.).
Cash is king! And thereโs money out there.
But transactions are not back yet!
M&A Leaders Forum
M&A activity in Israel
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35. 4/11/2013
M&As In Israel: Some Facts
In 2012 there were 70 M&A deals at a value of USD 6.09bn, including 25
cross-border deals worth USD 4.56bn.
Israeli M&A activity to remain stable in 2013
Foreign investorsโ interest in Israeli technology and energy companies
among multinationals remains high.
Foreign PE funds such as Blackstone and KKR could make buys in 2013.
Israel's hi-tech sector is stable and M&A is expected to grow as companies
mature and foreign companies look to open R&D centers in Israel
Mobile, Internet and semiconductor companies continue to attract
attention.
In collaboration with:
M&As In Israel: Some Facts
In the energy sector, companies in oil and gas, especially in exploration,
continue to look for money from foreign infrastructure funds and strategic
buyers.
Conglomerates and other large companies are expected to continue to sell
off assets that conflict with anti-concentration legislation and.
Although inbound M&A will continue to dominate, Israeli companies and
investors are expected to look increasingly abroad in 2013.
In collaboration with:
16
37. 4/11/2013
M&A Leaders Forum
If you happen to lead
an M&A process
KNOW thatโฆ
you donโt really need to be good
doing M&As โ you need to be GREAT
18
38. 4/11/2013
This is the generic M&A lifecycle
Due Diligence
M&A Strategy Target screening
and Projected
Development & Identification
Synergies
Integration
Negotiation Deal Close
Planning
SOMETHING CAN GO
Integration Second wave WRONG IN ANY ONE
Implementation Implementation OF THESE STEPS
Where and what can we do better?
Avoiding the usual statisticsโฆ
50%-80% of mergersโฆ FAIL
19
39. 4/11/2013
M&A Readiness
Develop your M&A strategy: this strategy derives from your corporate strategy and
should deal with questions such as what are the companyโs future growth engines, in
which areas weโd like to cooperate, which geographic areas are of interest to us, etc.
Dealโs milestones: Define clear milestones and go/ donโt go decision points. Consider
aspects such as deal profitability, complexity of the deal, integration approach, KPIโs and
measurements, etc.
Management agreement and BOD approval: itโs essential to get aligned and agree upon
the M&A strategy, milestones and indicators, otherwise it can become a chaos.
M&A Methodology and process: Create your companyโs M&A Booklet, define
governance, project management capabilities, Roles & Responsibilities, etc.
Plan!
While planning donโt forget to pay extra attention to the following aspects:
Clients: provide them constant updates, create a clear client
retention plan, check clientsโ satisfaction (from service, time to
respond, etc.)
Communication: Provide a clear picture to employees, partners,
stakeholders. Deal with employees morale issues and fears. Deal
with organizational culture and changes to be made due to the
merger.
Workers: assessment and selection of most suitable employees in
both companies, retention of key employees and managers,
handling payroll issues, Org chart, new management team, new
aligned compensation systems, layoffs, etc.
20
40. 4/11/2013
Plan!
While planning donโt forget to pay extra attention to the following aspects:
Sales: conduct thorough evaluation of sales team, sales streams,
products, etc. Evaluate cross sales, up-sales, synergies, etc.
Definition of Business and Operational targets: management of
business objectives alongside with operational and organizational
aspects to reach defined synergy.
Planning and management of the integration process: project
management skills and governance, drill down and cover all
details.
Timing is an issue!
Some activities should be executed at once, some could be delayed: Invoices,
paychecks, financial and HR aspects should be taken care of immediately.
Thereโs no Absolute pace: The organizationโs ability to absorb changes from one
company to the other. Sometimes, some activities should be postponed.
Creating value to shareholders: measuring value is crucial, determining time to
reach value is crucial as well. The main question is how time and planning
influence value creation for the shareholders.
21
41. 4/11/2013
Plain DD is not enough, 360 degrees DD
Legal and Financial DD are important but not enough! PMI aspects are more
likely to focus on non Legal and Financial areas.
360 DD = synergetic DD, get down to the bottom of things and how they
influence other areas.
Manage your DD properly, manage it as a project.
Use data room or any other tools that help your organization being organized,
methodical and consistent.
Organization Health Indicators
Check these indicators in both companies
22
42. 4/11/2013
Sometimes you need to run as fast
as you canโฆ Abandon this merger!
Business and Organizational Culture: when you canโt Bridge fundamental gaps in this
areaโฆ Run away!
Companyโs orientation: when one company is product oriented and the other is project
oriented and you donโt speak each otherโs language and cross sales is more than just a
challengeโฆ Run Away!
What are we really buying (or alternatively who is really buying us)? Sometimes the
motivations for M&A are different to what is presented to the other side. If thatโs the case
the gap can not be closedโฆ Run away.
Falling in love with the deal: when you fell in love- donโt run away! Stop, think, think
again, consult, decide.
Turnaround deal: when you need to turnaround the business you bought and you donโt
have the capabilities, think twice! If you understand that you canโt deliverโฆRun away.
Doing it RIGHT will lead to success
23
56. โซ โ ืกืงืืจื ืืืืืืืชโฌPrivate Equity
53% of deals $120 bn of deals
greater than less than
$1bn deal size $1bn
Mega buy-outs
coming back
?
โซ โ ืกืงืืจื ืืืืืืืชโฌPrivate Equity
โซืืืื ืืชืืฆืืโฌ
US PE 13.7% IRR (10 years to 30 September 2012)
S&P 500 8.0% IRR (10 years to 30 September 2012)
Grant Thornton International :โซ*ืืงืืจโฌ
12
57. โซ ืืืจื"ืโฌPrivate Equity โซืืืฆื ืฉืโฌ
โซืืืฉืจืืโฌ
Private Equity
2012 Private Equity Report
โข Latest global study conducted during 2012,
published in beginning of 2013.
โข Recent survey undertaken by Grant Thornton LLP
and PitchBook Data, Inc.
โข Explores private equity exit activity and trends
in 2012.
โข Grant Thornton LLP is located in the USA and is
one of the main branches of Grant Thornton
International
13
73. MergerID
Sustainable Growth
Mergers & Acquisitions
MergerID is a powerful and innovative deal sourcing tool
that was designed to fulfill the middle marketโs needs
Online M&A platform that brings together qualified M&A
professionals from around the world with matching deal criteria
Using its intelligent matching algorithm, MergerID identifies middle
market buyers and sellers with corresponding M&A requirements
MergerID effectively shrinks the distance and removes the
barriers that inhibit traditional deal sourcing and due diligence
MergerID professionals vet every member, therefore can
guarantee each seller and buyer on their platform is genuine
Sell Side: identify interested corporate buyers and
private equity professionals from around the
world, ensuring youโve explored every possible
opportunity
Buy Side: discover new sell-side mandates
you wouldnโt otherwise have known about and be
100% sure that every relevant
advisory ๏ฌrm knows of your interest
www.mergerid.com
www.sg-ltd.com