Developing a Post-Acquisition Strategy - Completion And Beyond
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Developing a Post-Acquisition Strategy - Completion And Beyond

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*The crucial first three months (100 days) after the deal ...

*The crucial first three months (100 days) after the deal
* Issues on staff, compensation and benefits
*In-house systems synergy
*Retaining management and intellectual capital
*Efficient knowledge transfer

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  • 1. DEVELOPING A POST-ACQUISITION STRATEGY: COMPLETION AND BEYOND Case studies, Concepts, and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
  • 2.
    • The first 100 days
    • In-house systems synergy
    • Staff, Compensation and Benefits
    www.myCNI.com.my www.OOBEY.com
  • 3. Rewarded vs. Unrewarded M&As From: “Habits of the busiest acquirers”, Robert Palter and Dev Srinivasan, McKinsey Toronto www.myCNI.com.my www.OOBEY.com
  • 4. 1. The First 100 Days www.myCNI.com.my www.OOBEY.com
  • 5. Strategies for M&A “ Double-Digit Growth”, Michael Treacy www.myCNI.com.my www.OOBEY.com
    • Base Retention
    • Share Gain
    • Positioning
    • Adjacent Market
    • New Business
    GROWTH
  • 6. Post M&A Type 1: Buying Market Share No evidence of previous company One Kingdom Pre-integration Blueprint Slow Trigger, Fast Bullet www.myCNI.com.my www.OOBEY.com Integration Operating Model Price Premium Buying Market Share Net Cost per Customer < Direct Acquire
  • 7.
    • Make or Buy?
      • It is easier to meet the standards of competition if you buy an existing player
      • Adjacent acquisitions must remain as a SEPARATE ENTERPRISE
      • Integrate Management Control (systems, technology)
      • Inter-transfer of management talent, knowledge and capability are important
    Post M&A Type 2: Invade Adjacent Markets www.myCNI.com.my www.OOBEY.com
  • 8. Post M&A Type 3: Acquire New Business
    • No core advantage to bring in
    • Investors mind-set vs. Managers mind-set
    • Value unlocking via operational improvements
    • Invest in Management/Leadership
    • Premium = Combined value > stand alone
    www.myCNI.com.my www.OOBEY.com
  • 9. First 100 Days: Conflict Points
    • Leadership style differences
    • Who’s is charge? (Who won?)
    • Organic vs. bureaucratic cultures
    • Open vs. closed communication
    • Decision making speed & style
    • Collegial vs. competitive
    • Structures that don’t match
    • Values incongruence
    www.myCNI.com.my www.OOBEY.com
  • 10. The First 100 Days 25 50 75 100 Save Star Performers Revise Strategy/Value Maps Staffing Plans Assess HR Value Re-align Strategy Coaching/Team Dev Restructure Capabilities Audit Culture Integration www.myCNI.com.my www.OOBEY.com
  • 11. 2. In-house systems synergy www.myCNI.com.my www.OOBEY.com
  • 12. Strategy: Disciplines, Priorities, and KPIs Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
  • 13.
    • Product Leadership
    • New, state of the art products or services
    • Risk takers
    • Meet volatile customer needs
    • Fast concept-to- counter
    • Never satisfied - obsolete own and competitors' products
    • Learning organization
    Strategy: Disciplines, Priorities, and KPIs
    • Operational Excellence
    • Competitive price
    • Error free, reliable
    • Fast (on demand)
    • Simple
    • Responsive
    • Consistent information for all
    • Transactional
    • 'Once and Done'
    • Customer Intimacy
    • Management by Fact
    • Easy to do business with
    • Have it your way (customization)
    • Market segments of one
    • Proactive, flexible
    • Relationship and consultative selling
    • Cross selling
    www.myCNI.com.my www.OOBEY.com
  • 14.
    • Product Leadership
    Each Discipline Requires Different Priorities & Resources Operational Excellence Customer Intimacy Organization, jobs, skills Management systems Information and systems Culture, values, norms www.myCNI.com.my www.OOBEY.com
  • 15. Each Discipline Requires Different Priorities & Resources
    • Operational Excellence
    • Central authority, low level of empowerment
    • High skills at the core of the organization
    • Disciplined Teamwork
    • Process, product- driven
    • Conformance, 'one size fits all' mindset
    • Integrated, low cost transaction systems
    • The system is the process
    • Command and control
    • Quality management
    Organization, jobs, skills Management systems Information and systems Culture, values, norms www.myCNI.com.my www.OOBEY.com
  • 16.
    • Product Leadership
    • Ad hoc, organic and cellular
    • High skills abound in loose-knit structures
    • Concept, future-driven
    • Experimentation and 'out of the box' mindset
    • Person-to-person communications systems
    • Technologies enabling cooperation
    • Rewarding individuals' innovative capacity
    • Risk and exposure management
    • Product Life Cycle profitability
    Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms www.myCNI.com.my www.OOBEY.com
  • 17. Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms
    • Customer Intimacy
    • Empowerment close to point of customer contact
    • High skills in the field and front-line
    • Customer-driven
    • Variation and 'have it your way' mindset
    • Strong customer databases, linking internal and external information
    • Strong analytical tools
    • Customer equity measures like life time value
    • Satisfaction and share management
    • Focus on ‘Share of Wallet’
    www.myCNI.com.my www.OOBEY.com
  • 18. Post M&A: 4-Wheels Model Culture Business Objective M&A Strategy www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
  • 19. Post M&A : Framework
    • Joint-Boards
    • Org Structure
    • Job Design
    • C&B
    • Policies & procedures
    • Decision making
    • Transition/Integration Team
    • Revise structure to strategy
    • Process alignments
    www.myCNI.com.my www.OOBEY.com
    • Share Gain
    • Adjacent Market
    • New Business
    Structure
  • 20. Post M&A : Framework
    • Info and Comm Technology
    • Integration Cost Centers
    • Real Estate
    • Operating Assets
    • Procurement*
    • Combined Cost Savings KPI
    • Product lines
    • Geographic Parking: Services, Production
    • Customer Problems Database
    • R&D
    www.myCNI.com.my www.OOBEY.com
    • Share Gain
    • Adjacent Market
    • New Business
    Resources
  • 21. Special Note: Procurement
    • Prices and Terms of current contracts
    • Supply market dynamics
    • Tactics for Supply Purchase
    • Consolidated spending database
    • Opportunities to save money
    • Cutting T.C.O.
    • Manuals on Negotiation Strategies
    www.myCNI.com.my www.OOBEY.com
  • 22. Activity Grid to optimize resources www.myCNI.com.my www.OOBEY.com Eliminate (-) What are features/ activities/services to eliminate? Reduce (↓) What are features/ activities/services to reduce? Create (+) What are features/ activities/services to introduce? Increase ( ↑) What are features/ activities/services to increase?
  • 23. 3. Staff, Compensation and Benefits www.myCNI.com.my www.OOBEY.com
  • 24. Post M&A : Framework
    • Tone, Speed, Direction, Principles, Requirements
    • Post-M&A Roles & Responsibilities
    • Geographic role differences
    • Decision making processes
    • Employee authorities
    • Communication*
    • Culture integration sessions
    • Buy-in ‘Key Players’
    www.myCNI.com.my www.OOBEY.com
    • Share Gain
    • Adjacent Market
    • New Business
    Leadership
  • 25. Communication: Internal
    • What: Significance, Direction
    • Top Management Roadshows
    • Website
    • Web TV (Vlogs)
    • Employee Conventions, Re-Branding launch
    • Concrete, Consistent Messages
    • Generate Enthusiasm, allay Fears
    • Questions: Workforce merge or separate? Let go? Role assignments? Compensation?
    www.myCNI.com.my www.OOBEY.com
  • 26. Communication: External
    • Media Interviews
    • Media Day
    • Single Face to Market (single proposition)
    • Customer Communication Organization (Advantages of M&A)
    www.myCNI.com.my www.OOBEY.com
  • 27. Post M&A : Framework
    • Integration-era Incentives
    • HR Value: Alignment
    • HR Value: Capabilities
    • HR Value: Engagement
    • Star (‘A’) players
    • Competency mapping
    • Culture gaps
    • Employee views on new entity
    www.myCNI.com.my www.OOBEY.com
    • Share Gain
    • Adjacent Market
    • New Business
    Person
  • 28. HR: Special Considerations
    • Frontline (Sales) is key in post-M&A
    • Targets for Competitors to poach
    • Communication: Roadshows, Repetition, Emphasis
    • Integration-era Incentives:
      • Retaining key people
      • Encourage Cooperation
      • Sharing of Knowledge
      • Cross-selling
    • Temporary Management Structure:
      • During transition period
      • Cut thru Red Tape
      • On-the-spot Decisions
      • Priority Access to CEO
    www.myCNI.com.my www.OOBEY.com
  • 29. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A
  • 30. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A
  • 31. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A
  • 32. MBO Standards www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A
  • 33. What to Pay?
    • Pay for Service
    • Pay for Job
    • Pay for Performance
    • Pay for Competency
    www.myCNI.com.my www.OOBEY.com
  • 34. Performance and Incentives
    • Internal Equity
      • Internal Job Rates
      • Performance differentials
    • External Competitiveness
      • External Job Rates - Benchmarking
      • Demand & Supply
    www.myCNI.com.my www.OOBEY.com
  • 35. What’s the Difference?
    • Increment
    • Bonus
    • Promotion
    www.myCNI.com.my www.OOBEY.com
  • 36. Compa Ratio Table
    • Use this if your company:
    • Pays for Performance , and
    • Pays for Job rates
    • Def:
    • Mid-Point = Mid Point of Pay Grade
    Grade E2 Min RM2,000 MID RM2,500 Max RM3,000 www.myCNI.com.my www.OOBEY.com
  • 37. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • 38. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 5% 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • 39. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 1 2 2 3 4 5% 7 9 3 7 4 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • 40. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 0 0 2 4 1 0 1 2 4 6 2 3 4 5% 7 9 3 3 5 7 9 12 4 7 8 9 12 15 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
  • 41. Employee Distinction Group I (Talent Pool) Group II (  Potential) Group III (  Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL
    • Identify
    www.myCNI.com.my www.OOBEY.com
  • 42. Post M&A: 4-Wheels Model Culture Business Objective M&A Strategy www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
  • 43. End Note for Post-M&A
    • “ In the absence of leadership, the people will listen to whoever speaks”
    A.J., from the movie “The American President” www.myCNI.com.my www.OOBEY.com
  • 44. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com