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Post Merger Integration in Emerging Market Banks

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A presentation from GBRW Consulting on the key challenges and success factors in the successful realisation of the benefits of mergers and acquisitions in emergin market banks, the implementation of …

A presentation from GBRW Consulting on the key challenges and success factors in the successful realisation of the benefits of mergers and acquisitions in emergin market banks, the implementation of change, and the realisation of benefits.

Published in Economy & Finance , Business
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  • 1. BANK MERGER INTEGRATION IN EMERGING MARKETS Combining cultures to realize the benefits of mergers & acquisitions
  • 2. WHY DOES MOST M&A ACTIVITY FAIL TO DELIVER SHAREHOLDER VALUE?  Failure to engage in disciplined strategic planning prior to transaction  Inadequate planning and preparation for post-merger integration  Underestimation of the difficulty and costs of executing a successful merger  Shortage of the necessary financial or human resources  Insufficient consideration of the “people side of change”  Obsession with cost savings at the expense of revenue growth Most mergers fail in implementation, rather than the transaction
  • 3. PLANNING FOR POST-MERGER: PRIORITISING ACTIVITIES Type of integration Merger of equals Acquirer dominant Rationaleforintegration Revenuefocus Customer: drive income growth  Integration of marketing function  Customer communication  Customer MI  Development of brand strategy Sales focus: capitalise on franchise  Mobilisation and motivation of sales force  Development of cross sales capability  Harmonisation of product development Costfocus Internal: rationalise shared functions  HR strategy and organisation structure  Operations and IT strategy  Harmonisation of risk management Cost benefits: leverage scale benefits  Network rationalisation  Supplier management  Manpower planning  Corporate finance Retention of customers and key staff is the first priority in all cases
  • 4. PRE-TRANSACTION: STRATEGY IS A CASCADE OF CHOICES What are our goals and aspirations? Where will we play? How will we win in our chosen markets? What capabilities must be in place for us to win? What does success look like?
  • 5. MANAGEMENT INFORMATION: CRUCIAL TO STRATEGY & BUSINESS EXECUTION Management Information Strategy Performance Management Business Results 1. Setting staff day- to-day business targets with measures linked directly to strategic objectives 2. Staff behaviour and activities are aligned to drive business results and support strategy 3. MI provides feedback on the relative success of strategy and the performance of staff 4. Feedback and reward to staff depending on performance against targets The virtuous triangle hangs on relevance, depth, quality and timeliness of MI
  • 6. WHY DO PEOPLE MAKE THINGS SO DIFFICULT?  Why are my staff so resistant to change?  How can we make our customers loyal to the company rather than individuals?  How can we motivate our top sales staff and retain key staff?  How can we incentivise staff to work towards shared strategic goals?  Why won’t different departments work together better?  Why won’t my staff make decisions and are always delegating upwards? Effective communication is key to answering these questions
  • 7. RESISTANCE TO CHANGE: THE ‘GOOD NEWS’ CURVE Uninformed certainty (confidence) Resistance/inertia Change Programme Implementation (Time) Covert checking out Overt checking out Informed doubt (pessimism) Realistic concern (hope) Informed certainty (confidence AND satisfaction) Neutral Mild resistance Active resistance Mild support Active support Highest value destruction risk:  Loss of key people  Staff demotivated  Customer attrition
  • 8. COMMUNICATION IS THE KEY TOOL IN OVERCOMING RESISTANCE TO CHANGE Change Resistance  Why are my staff so resistant to change?  How can we make our customers loyal to the company rather than individuals?  How can we motivate our top sales staff and retain key staff?  How can we incentivise staff to work towards shared strategic goals?  Why won’t different departments work together better?  Why won’t my staff make decisions and are always delegating upwards? Communicate to overcome  Help staff to feel ownership of the change process by communicating with and involving early as possible.  Craft a credible and inspiring corporate story (relevant to all stakeholders) to propel the communications effort  Shape a strong performance culture and select the new ‘top teams’ fast  Implement a strategy implementation methodology linked to performance management  Defensiveness can only be overcome through active change management and communication  Communicating effectively is critical to ensuring staff take ownership of change and ultimately drive it
  • 9. BUILDING A CHANGE CULTURE CHANGE CULTURE Strong Leaders Shared Vision of the Future Comms Strategy Realise the Benefits Buy-in of Staff Effective Stake- holder Mgmt Change management is about generating commitment to change
  • 10. A SHORT CHECKLIST TO APPLY AGAINST YOUR NEXT TRANSACTION • Have we made realistic estimates of the timescales and cost of integration? • Do we have a dedicated change management function and methodology? • Have we made a detailed, prioritised plan against which to track the realisation of the merger benefits (cost and income)? • Are we actually improving the merged company or are we just spending money harmonising procedures between different banks? • If I’m thinking of a transaction, am I already thinking of my communication plan? • Will I have the necessary Management Information to know if change is successful or not? The biggest risk factor in merger failure is organisational inexperience
  • 11. HOW DOES GBRW CONSULTING ASSIST THE M&A PROCESS?  GBRW Consulting has 15 years experience in bank restructuring and implementing large-scale change  We provide advisory services to other banks on strategy and change management throughout Eastern Europe, Africa, the Middle East, and Asia  We can work closely with financial advisors to provide a seamless service GBRW Consulting can add value to both ends of the M&A process M&A Strategy Transaction Execution Post-Merger Integration GBRW GBRW
  • 12. CONTACT DETAILS AND FURTHER INFORMATION Mike Coates, Director  You can find out more about GBRW Consulting by visiting our website on http://www.gbrw.com  Visit my LinkedIn profile at http://uk.linkedin.com/in/mikecoates73 and feel free to connect  Email us at mail@gbrw.com