Mergers, Acquisitions, Divestitures, Integration (MADI) Including M&A Due Diligence

Talent Management: Mergers, Acquisitions g g q s, Divestitures, Integration (MADI), g including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation Richard Swartzbaugh © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Executive Summary‐‐ Customer and shareholder expectations continually increase, and a vari y p y iety of forces continuously shape industry competition.1 Despite these realities, y p y p p many organizations do not have alignment of: (a) talent management practices 2 (talent strategy, talent management program) & enabling human resources core ous improvement. 3 This is especially critical when customers, shareholders, competencies, (b) organizational culture, (c) strategy, (d) execution, (e) continuo business leaders, and our workforce are focused on value creation, measurable r results, regulatory compliance, and doing the right thing the right way. A variety of proven techniques exist to achieve alignment, and ensure th hat innovation and people remain the source for competitive advantage. Key components include: components include: (a) A Talent Strategy focusing on recruiting, engaging, and retainin ng our workforce that continuously adjusts and improves based on measurable results, industry best‐practices, innovation, economic factors, sh hareholder, customer, management, and employee needs, organizational culture, and the countries and regions that it does business, (b) ATalent Management Program focused on human capital plann ning, talent acquisition, talent engagement, talent development, talent deployment, leading talent, talent retention, evaluating human capital, and continuous improvement, p y , g , , g p , p , (c) Enabling Human Resources Core Competencies, including Staff fing, Compensation & Benefits, Employee Relations, Performance Management, Training, Organizational Development, Payroll, HRIS, and implementation of policies, procedures, and practices across the business, and (d) Alignment of Organizational Culture, Strategy, Execution & Co ontinuous Improvement through: Organizational Mission, Vision, and Values, including M&A i integration, Those responsible for strategic planning, Those performing the activities required to execute strategy, Those implementing enabling human capital, process, and tec chnology solutions, Best‐in‐Class practices across the organization, Employer‐of‐Choice initiatives, and Continuous improvement. Success with mergers, acquisitions, divestitures, integration (MADI), inc cluding M&A due diligence, requires the design and execution of a customized MADI Plan to ensure achievement of business outcomes, and optimal integratio MADI Pl t hi t fb i t d ti l i t tion and alignment of the organization’s talent and cultures. d li t f th i ti ’ t l t d lt A sample framework for M&A, and M&A integration (including talent, process, technology, and execution tools) is presented and discussed herein. ed on business needs, industry practices, geographical practices, organizational Actual approach, techniques, tools, and resources remain to be determined base preferences, etc. 1 Michael E. Porter, On Competition (Harvard Business School Press, 1998). 2 Companies with mature talent management capabilities see eighteen‐percen nt higher earnings, and other benefits. The Hackett Group, December 17, 2009. 3 Robert S. Kaplan, David P. Norton, “The Office of Strategy Management” (H Harvard Business Review, October, 2003). 2 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Table of C Contents ‐‐ Topics Slide(s) Executive Summary 2 M&A Fundamentals 4 – 16 The Value Chain: Creating Value for Shareholders, , Customers, Employees 4 Definitions 5 Understanding the Type of Merger & Acquisition t to Occur 6 Questions to Consider to Obtain a Significant Busin ness & Talent Advantage During M&A 7 Mergers & Acquisition Models, The Deal Flow Mo Mergers & Acquisition Models The Deal Flow Model 8 Selecting an Acquisition Integration Framework 9 Chose a Model, Process, and Structure That Ensure es that “Doing the Deal” and “Making the Deal Work” are Both Well Don ne 10 Understanding Four Areas of Critical Business Valuue for M&A 11 Understanding Eight Areas of Critical HR Value fo Understanding Eight Areas of Critical HR Value fo M&A or M&A or 12 Establishing a Communication Strategy 13 M&A Project Plan 14 ‐ 15 M&A Scorecard 16 M&A Dashboard See Appendices Attributes of Ineffective M&A, and M&A Integration 17– 19 ution Tools (many tools are softcopy) Attributes of Effective M&A, M&A Integration, and Execu 20– 56 3 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ Putting the Product/Service – Value Chain to Work The Service/Product Value Chain creates a sustainable competitive advantage through the alignment of relationships between / p g g g p high‐quality products, support services and business practices, thus ena abling employees to deliver products & services to customers, thus ensuring employee engagement, customer satisfaction, and shareholder satisfaction. The links in the chain – which should be regarded as propositions – are as follows: 1) Employee engagement results primarily from high‐quality support t services and products, policies and practices that enable employees to deliver service & products to customers; enable employees to deliver service & products to customers; 2) Value is created by satisfied, loyal, and productive employees, and innovative products; 3) Customer satisfaction is largely influenced by the value of services and products provided to customers by employees; 4) Customer loyalty is a direct result of customer satisfaction; and 5) Shareholder value (e.g., profitability) and growth are stimulated primarily by customer loyalty. Illustration: Illustration: Employee Internal Shareholder Continuous Employee Retention External Service Customer C Satisfaction Improvement Service Customer Quality, Engagement E atisfaction Sa Value Loyalty Products Employee Revenue Productivity Growth, NOI • Innovative products Innovative products •Retention Retention for customers •Referrals For a detailed article •Our talent strategy is focused on recruiting, engaging, developing, retaining, and sustaining • Service results •Pr roducts and regarding the service‐profit your workforce in support of customer and for customers serv vices designed chain, see: J. L. Heskett, T. shareholder value creation: and d delivered to O. Jones, G. W. Loveman, 1) 10‐step talent management program, W. E. Sasser, Jr., and L. A. 2) Enabling Human Resources core Enabling Human Resources core meet targeted g competencies, and stomer needs cus Schlesinger. “Putting the 3) Alignment of organizational culture, strategy, Service Profit Chain to execution, and continuous improvement Work.” (Harvard Business 4 Review, July‐August, © 2010 Richard d Swartzbaugh 2008.)

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Definitions Acquisition: Acquiring control of a corporation called a target by stock, purchase, or e exchange of other exchange of value, either hostile or friendly. Business Process Outsourcing (BPO): The contracting out of a particular business funnction to an outside company in order to reduce costs, or to gain some other competitive advantage as the particular business function may not be a “core” business function, and may b be performed better by an outside entity that specializes in this function. Example: Payroll and ADP or Ceridian. Corporate Culture: Corporate culture is that set of practices, artifacts, beliefs, values a and norms that defines and significantly influences how the organization operates. It develops slowly over time and once developed, and is resistant to rapid change. The processes that take p place and continuously reinforce culture take place are in key areas including: (1) policies, procedures, practices; (2) governance framework; (3) goals & measures; (4) rewards & recogniti ion; (5) training & development; (6) ceremonies & events; (7) leadership behavior; (8) communications; (9) the physical environment; (10) organizational structure; (11) “totems and t taboos.” Divestiture: Disposition or sale of an asset by a Company. A Company will often dive a a e i es i u e i po i io o a e o a a e y a o pa y A o pa y i o e ivest an asset which is not performing well, which is not vital to the companyʹs core business, or i i o pe o i g e , i i o i a o e o pa y o e u i e , o which is worth more to a potential buyer as a separate entity than as part of a combined set of e entities. Due Diligence: The process of evaluating a prospective business decision by getting in nformation about the financial, legal, and other material (important) state of the other party. Due diligence is used most often when buying a business, as the buyer spends time going throu ugh the financial situation of the business, legal obligations, customer records, and other documents. The prospective buyer wants to validate his/her opinion of the business to see if it i is truly a good decision, and glean as much as possible with the goal of understanding “what’s what,” and bringing assets to the forefront, and maximizing their value. Merger: A merger in which one of the merging companies continues to exist as a legal l entity, rather than being replaced by the new entity, OR they both join to create a new entity. Mergers & Acquisitions (M&A) ʺIntegration”: M&A integration is the full process off preparing for, and actually blending an acquired business into another business. Integration is NOT a discrete phase of a deal, and does NOT begin when the documents are signed. Rather r it is a process that begins with due diligence and runs through the ongoing management of the new enterprise. Typically, there are three types of integration:  Full Integration – All areas and processes companywide (or function‐wide) are to be merged and consolidated. All management decisions for the acquired business (or function) will be integrated into the parent company’s processes, with appropriate e “best practices” knowledge.  Moderate Integration – Certain key functions or processes (eg., Sales & Marketing g, Manufacturing) will be merged and consolidated. Strategic planning and monitoring of the function will be centralized as an element of the parent‐company’s processes, but day‐to‐day operations will remain autonomous. Recommend RACI process, and signature authorities be established for organizational and operational clarity.  Minimal Integration – Selected corporate and staff functions will be merged and c Minimal Integration Selected corporate and staff functions will be merged and consolidated primarily to achieve staffing synergies and cost‐efficiencies All strategic and consolidated, primarily to achieve staffing synergies and cost‐efficiencies. All strategic and c day‐to‐day operating decisions will remain autonomous and decentralized, with a agreed‐upon requirements for reporting to the parent company. Recommend RACI process, and signature authorities be established for organizational and operational clarity y. 5 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Understanding the Type of Merger & Acquisition That is to Occur g yp g q r Horizontal  A horizontal merger or acquisition typically occurs when the firms involved p produce one ore more of the same or closely related products or services in geographically proximate areas. This type of M&A has been common in bank king, the automotive industry, and waste management industry. Vertical  A vertical merger or acquisition typically occurs between to companies that h had an actual or potential buyer‐seller relationship prior to the combination. This approach tends to be popular in industries with a high promise of growth. In n order to reduce the uncertainty in its environment and exert more control over it’s operations, an organization may chose to acquire a supplier (backwards integgration) or a firm that could distribute its products (forward integration). This approach may also be defensive in nature. approach may also be defensive in nature. Product Extension  A merger or acquisition is considered to be a product extension when the acq quiring companies or merger partners are functionally related in production or distribution but sell products that do not compete directly with one another. An example was Chrysler’s acquisition of AMC from Renault. FedEx/Kinko’s was a hybrid of vertical & product extension. Market Extension  A merger or acquisition is considered to be a market extension when the acqu uiring and acquired companies manufacture the same products but sell them in geographically different markets. geographically different markets Unrelated  Unrelated acquisitions involve the combination of two essentially unconnecte ed companies (typically by a “conglomerate” parent entity that owns and manages a p portfolio of unrelated businesses.) An example was Illinois Tools Works (ITW) q ) p ( W) acquisition of SpaceBags. p g 6 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Questions to Consider to Gain a Significant Business & Talent A Advantage During M&A Source: Towers Perrin 7 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Mergers & Acquisition Models, Deal Flow Models g q Personal experience, Deloitte, and Mercer In the collaboration model both parties strive to employ diplomacy, goodwill, and negotiating finesse in striking a deal that represents a fair exchange, mutual respect, and a strong interest in ongoing business relations for mutual benefit. J&J is an excellent industry business relations for mutual benefit J&J is an excellent industry example of successful use of the collaboration model. The incline of resistance demonstrates (1) the intensity of oppositions to the other party’s merger objectives, and (2) the amount of resources (time, energy, money) expended on integration. amount of resources (time energy money) expended on integration Source: UCLA, Anderson School of Business The risk curve is lower for collaboration. 8 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Selecting an Acquisition Integration Framework (balancing strateg g q g g egic interdependence & organizational autonomy) p g y (1) The need for strategic interdependence (2) The need for organizational autonomy Strategic Interdependence – There are four types of value creation that are both th he goal and central task in any acquisition that is enabled when the two organizations are combined: (1) Resource sharing (value is created by combining the companies at the ope erating level) (2) Functional skills transfer (value is created by moving people or sharing in nformation, knowledge, and know how) (3) General management skill transfer (value is created through improved in nsight, coordination, or control) (4) Combination benefits (value is created by leveraging cash resources, borr rowing capacity, added purchasing power, or greater market power) Organizational Autonomy – Managers must not lose sight of the fact that the stra ategic task of M&A is to create value (outlined above) and must not grant autonomy too quickly while treating people with fairness and dignity. Th t t i kl hil t ti l ith f i d di it Th he need for autonomy can be answered by these three questions: h df t b d b th th ti (1) Is autonomy essential to preserve the strategic capability that was bought t? (2) If so, how much autonomy should be allowed? (3) In which areas, specifically, is autonomy important? The Preferred M&A Model ‐ Depending upon the score of the need for strategic in nterdependence & the need for organizational autonomy, the preferred acquisition integration approaches are: acquisition integration approaches are: (1) Absorption – management needs courage to ensure that its vision for the acquisition is carried out (2) Preservation – management focus is to keep the source of the acquired be enefits intact (e.g., “nurturing”) (3) Symbiosis – management must ensure simultaneous boundary preservati ion and boundary spanning (a gradual process) (4) Holding – non intention of integrating and value is created only by financcial transfers, risk‐sharing, or general management capability. Acquisition Integra Acquisition Integra ation Approach ation Approach Need for r Strategic Interdependence Low High Need for High Preservation Symbiosis © 2010 Richard Swartzbaugh O ga i a io a Organizational Autonomy Low Holdi ing Absorption 9 See Haspeslagh, Philippe , David Jemison, Managing Acquisitions: Creating Val lue Through Corporate Renewal (1991, Free Press/McMillan). © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Chose a Model, Process, and Structure That Ensures that “Doing Th D l W k” “D i The Deal Work” “Doing the Deal” and “Making the Deal Work” are Both Well Don ne “Making The Deal Work” Deal Team • ʺDoing The Dealʺ And Integration Team ʺMaking The Deal Workʺ are Resour rce two distinct goals which Commitm ment support the primary objective of improving the financial of improving the financial prospects of XYZ. Waiting  The focus of ʺDoing The Period Transition Dealʺ is up front. It has an ʺidealʺ resource On-Site Normal Origination Signing Closing commitment curve that Due Diligence Operations wanes as the deal wanes as the deal approaches closing.  The focus of ʺMaking The Deal Work,ʺ( i.e., integration) is strongest at the back‐end. It has an ʺidealʺ resource ideal resource commitment curve that overlaps and extends past that of “Doing The Deal”. • Teams, committees, and change management structures to help ensure the structures to help ensure the success of M&A, and may include: investment bankers, financial advisors, M&A attorney(s), tax counsel, and Source: Deloitte representation from all functional areas. 10 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Understanding Four Areas of Critical Business Value for M&A g Integration Planning Target Evaluation What are our internal capabilities to manage the Are there any deal breakers or integration? red flags? Have you committed full‐time Has our company defined the resources to the “deal” and competencies required to deliver “integration” teams? on its business strategy? Are our people programs Will you have the best people competitive in today’s and talent ready and in place and talent ready and in place marketplace? In what parts of the k l I h f h when the right opportunity organization is high arrives? engagement most critical? Implementation Due Diligence Source: Towers Perrin & personal experience Are you prepared for the people  Do you have a clear and culture challenges that understanding of the transaction’s accompany an M&A? full cost — including all of the hidden costs of pension, labor‐ Have senior leaders articulated a management relations, FLSA mission and vision, and made it classification issues, health care, la ifi atio i ue health a e clear and meaningful to lea a d ea i ful to retiree programs and other employees? transaction‐related costs? Is our current training approach Do you understand enterprise delivering an adequate ROI, both risk, and have you taken proper for our employees and our steps to address same? steps to address same? organization? How is knowledge managed, and what is the state of 11 technology? © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Understanding Eight Areas of g g (1) LEADERSHIP. During pg periods of organization transition and disruption, our employees look first to leaders for guidance, p g p p y g motivation and focus. Leade ership becomes the most important driver of employee engagement as companies transform. Critical HR Value for M&A Have you created a proces ss to identify those leaders whose skills and mindset best match the organization’s current and (8) ENTERPRISE RISK MANAGEMENT. future business needs? Effective ERM assessment (across all risk categories) and effective enterprise risk minimization steps implemented, including cultural (2) CULTURE. Whether you are undertaking attributes that contribute to creating a risk management culture a merger or acquisition, it’s critical to align cultures and values, and ensure company cultures and values and ensure company (7) HR SERVICE DELIVERY. Throughout leaders share a common mission and vision. the integration process, ensuring seamless HR service delivery, with minimal Have you built and sustained a corporate disruptions, can positively impact culture that reinforces the new business workforce engagement and productivity. strategy rewards desired behaviors, developed change management and Have you defined and designed the communication strategies for the conversion future structure of HR service delivery, future structure of HR service delivery, and aligned those activities with other d li d h i ii ih h assessed, selected, and integrated HR integration work streams for a smooth technology systems to support the needs of transformation? the new organization? (6) TOTAL REWARDS. Total rewards (3) COMMUNICATION. Clear and represents an area of immediate concern to compelling communication is critical employees. Aligning employee reward during any corporate transition. programs with overall business objectives programs with overall business objectives is critical to both the short‐ and long term Have you created a communication and success of the transformation. Source: Towers Perrin & messaging framework that supports personal experience employee engagement, maintains focus on Have you designed & implemented driving business performance? Have you reward programs that will drive key prepared the right communication leadership and employee retention, strategy, materials and processes — from encourage new attitudes and behaviors, pre‐deal through integration — to address and increase productivity through and increase productivity through all organizational stakeholders? all organizational stakeholders? workforce engagement? (5) STAFFING AND SELECTION. People‐related issues are among the most often cited reasons for M&A failures. (4) WORK KFORCE DEPLOYMENT. Companies often fail to realize that growth is driven not only by the business Have you designed & deployed staffing and selection requirements for the strategy but through the ability and willingness of the workforce to execute it. new organization and recommend employee retention programs (financial and nonfinancial) to identify and retain key talent The employee selection and nonfinancial) to identify and retain “key” talent. The employee selection Have yo Have yo translated our business strategy into a detailed workforce plan that projects the number mix skills ou translated our business strategy into a detailed workforce plan that projects the number, mix, skills ou criteria are based on an assessment of the importance of skills and the ability and cost o of employees needed to meet business objectives? Have you benchmarked our current workforce against to attract and retain needed talent. normativee data to identify areas for improvement, analyzed the composition, flow and cost of the current workforcee to project future changes, and identify actions to close workforce gaps? 12 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ Establishing a Communication Strategy That Helps Ensure “Transp g gy p sparency” & Continuously Implement it! y y p Communication Mediums  Email  Focus Groups  Internet  Intranet  Investor Communications  Meetings  Newsletter  Press Releases  Progress Reports  Town Halls Communication Models – Communicate @ Espeed! 1. 1 Effective communications should be Effe ti e o u i atio hould be made a priority, and all messages should be linked to the strategic objectives of the integration 2. All communication should be proactive, and honest – “tell it like it is is” 3. All messaging should be consistent, and pervasive (through many channels) 4. Create vehicles for two‐way feedback 5. Use a new home page on the intranet; email bursts, chat rooms, video , , conferencing. 6. Give it to them straight – the good, the bad, the ugly. 13 7. Over communicate! © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ M&A Project Plan – Due Diligence Should Move at a Measured Pace, but Spe is Essential for M&A Integration! j g peed g 14 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ Migration Project Management ‐‐ M&A Fund damentals ‐‐ 15 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ M&A Fund damentals ‐‐ M&A Scorecard – A clear and balanced set of performance measures can hi ighlight what integration teams should focus on, measure, analyze, and report to stakeholders. An effective scorecard can help define success, monitor progress, and keep the integration on track. Implementing an M&A scorecard involves four steps: • Translating the merger vision and strategic rationale into operational l goals • Identifying and agreeing on key M&A metrics • Linking the M&A metrics to performance targets for key individuals s • Monitoring integration activities and adjusting the plan and strategy g g j g p gy y y as needed The scorecard should include a balanced mix of metrics, not just financial ones s. The focus areas in the scorecard should be driven by the business strategy, merger strategy and value events, but other components to cconsider include: • Objectives and goals for the integration • Integration and/or divestiture initiatives • Key metrics (e.g., customer experience, customer retention, customerr profitability, revenue, people) • Analysis and real‐time feedback to drive continuous A l d l f db k d 16 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Ineffective M&A, and M&A Integration ‐‐ Primary Causes of Failed M&A (Domestic): y ( ) Primary Causes of Failed M&A (International): Primary Causes of Failed M&A (International): (1) No “MADI” Plan, (1) No “MADI” Plan, (2) Separate “deal” & “integration” teams, (2) Separate “deal” & “integration” teams, (3) Conflicting goals/strategies, (3) Conflicting management styles, (4) Poor communication, (4) M&A “technology solutions” may have less perceived value, (5) Conflict between management teams, ( ) (5) Communication difficulties between geographically separated g g p y p (6) Conflicting cultures, companies, (7) Improper planning, (6) Language barriers / lack of competent translators who can (8) Unrealistic project assessments, read/write/speak/comprehend the language at multiple levels (financial, (9) Improper allocation of time, legal, tax, operations) and differences between “informational (10) Poor resource utilization, translation” and a “certified translation,” (11) Miscommunication, (7) Failure to recognize procedural differences in international M&A, (12) Lack of secure business tools, L k f b i t l (8) ( ) Failure to recognize behavioral differences when a sovereign investor is l b h l d ff h (13) Limited access to quality business information, involved, (14) Inability to execute the business plan, (9) Improper planning, (15) “Quickie” due diligences. (10) Unrealistic project assessments, (16) Lack of understanding of cultural similarities and differences, (11) Improper allocation of time, (17) Failure to recognize or reconcile differences in organizational behavioral (12) Poor resource utilization, attributes, attributes (13) Miscommunication, Miscommunication (18) Lack of awareness, tolerance or understanding of social drivers of (14) Lack of secure business tools, behavior, (15) Limited access to quality business information, (19) Lack of linkage between requirement of behavioral change and business (16) Inability to execute the business plan, results, (17) “Quickie” due diligences, (20) Ineffective Risk Management (analysis, and solutions to avoid, transfer, (18) Geographical time delays, mitigate, control, share, accept, diversify). mitigate, control, share, accept, diversify). (19) Lack of understanding of cultural similarities and differences, Lack of understanding of cultural similarities and differences (20) Failure to recognize or reconcile differences in organizational behavioral attributes, (21) Lack of awareness, tolerance or understanding of social drivers of behavior, (22) Lack of linkage between requirement of behavioral change and business results,, (23) Ineffective Risk Management (analysis, and solutions to avoid, transfer, mitigate, control, share, accept, diversify). Source: A.T. Kearney and 17 personal experience © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Ineffective M&A, and M&A Integration ‐‐ Source: A.T. Kearney 18 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Ineffective M&A, and M&A Integration ‐‐ Ineffective Enterprise Risk Minimization During M&A HOW DO WE RANK OUR BUSINESS RISKS DURING M&A? ASSESSMENT RESULT  Reduced customer focus? Medium Risk High Risk  Lack of market growth? g  Brand dilution? Strategic ? Strate egic ?  “Value” proposition for M&A not High Market & Liquidity ? Markket & Liquidity ? fulfilled? Legal ? Legall ? Credit ? Credit ?  Invalid assumptions & dependencies? Compliance ? Compliance ? Comp pliance ? pliance ?  Supplier contract management? Reputational ? Repuutational ? Talent ? Talen nt ?  Lack of balance between strategic Org. Culture ? Org. Culture ? interdependence, and organizational Operational ? Operrational ? autonomy? I Risks  Retention of key management & M Strategic ? Strategic ? Strate St ate i ? egic ? e personnel, and potential loss to e o el a d ote tial lo to P Market & Liquidity ? Markket & Liquidity ? competitors, reduction of labor A Low Risk Legal ? Legall ? Medium Risk efficiency & engagement? C Credit ? Credit ? T  Organized labor problems? Compliance ? Comp pliance ? Reputational ? Repuutational ?  Mission, Vision, Values not embraced Talent ? Talent ? Talen ? Talen nt ? nt by employees or analysts? by employees or analysts? Org. Culture ? Org. Culture ?  Changes in leadership styles, Operational ? Operrational ? organizational culture, value drivers? PROBABILITY Low High 19 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Sample Mergers, Acquisitions, Divestitures, and Integration (MA p g q g ADI) Plan Depending upon the number, timing, size, geography, and complexity of M&A activity, a Mergers, Acquisitions, Divestitures, and Integration (MADI) Plan components and resources will vary, ranging fr rom small groups to larger committee structures, and cross‐functional teams. Key objectives may include: a) Achieving specific, measurable, actionable, results‐oriented, a and time‐bound (SMART) objectives (90 days, 1 year, 5 year) for the acquiring entity and the to‐be‐acquired entity based on “deal” ” goals, customer, shareholder, employee needs, and regulatory compliance, b) Developing an integration strategy, execution framework, int ternal and external communication & engagement plan, value delivery objectives and targets, and aligning the merger or acquisition with the acquiring entity’s corporate strategy & culture, c) Resolving needs for strategic interdependence and organizati Resolving needs for strategic interdependence and organizati ional autonomy, ional autonomy d) Identifying and managing the human impacts of change in or rder to deliver the business goals and strategy through a change program including: (a) change definition (the what, why, when, and ho ow), (b) change leadership style & capability of the acquiring and the “to‐ be‐acquired” company, (c) organizational culture, behaviour & climate, (d) relationship / stakeholder management, (e) organizational structures, (f) forward‐looking requirements for competencies s, skills, capabilities, bench strength, (g) total rewards, (h) terms & conditions of employment, (i) job alignment, (j) resolution of s skills/functions/personnel that are duplicative or no longer needed; e) Risk mitigation framework addressing strategic, operational, financial, customer, and human talent, f) Creating agreed‐upon metrics, milestones, project plan, and b benchmarks to measure success by both the acquiring and to‐be‐acquired entity, g) Validation of “key” assumptions, and dependencies, and h) An enterprise M&A integration structure: 1. An executive committee (to approve “go” or “no go,”) A e e ui e o i ee ( o app o e go o o go, ) 2. A steering committee (to set overall policies), 3. “Deal teams” and “integration teams” from all functional areas, and supporting processes (with input from the acquiring and to‐ be‐acquired businesses), 4. Project management function (to coordinate and oversee t transition processes and communications), 5. Teams to manage the customer experience, integrated com mmunications, culture and human capital integration, 6. Progress tracking, 6 Progress tracking 7. An integration team at the BU level, and 8. A conversion task force (to complete all data/KM/systems conversions). 20 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Primary Causes for Successful M&A (Deals & Integration) y g a) Understanding M&A Drivers: (1) need for specific assets, technology or know‐how; (2) market opportunity (high value, lower costs); (3) cost‐cutting/desire for economies of scale and scop pe; (4) enhanced shareholder value; (5) geographic expansion; (6) need to raise capital; (7) stressed/distressed asset investing; (8) cash r rich trade capitalization on undervalued businesses; (9) non‐core disposals; (10) non‐cash deals; (11) private equity buy‐and‐bu uild deals; b) ) Agreed‐Upon M&A Metrics for Success: Agreed‐Upon M&A Metrics for Success: (1) future financial performance (achievement of g p g p ( ) p ( cash flow targets, revenue targets, market share targets, cost targets, changes in share price); (2) future operational performance (quality of new products/services, expansion into new marke ets); (3) successful resolution of agreed‐upon risk issues; (4) customer retention post‐merger; (5) employee issues (retention post‐m merger of “key” talent, alignment of leadership, employee engagement ‐ Q12 & org specific engagement levels before & after M&A, alignment of organizational cultures B4 and after M&A using M/V/V/leadership attributes, increased innovation, increased d attraction of “key” talent); (6) achievement of MADI plan milestones, (7) customer satisfaction; (8) M&A integration scorecard; (9) synergy report‐card. (7) customer satisfaction; (8) M&A integration scorecard; (9) synergy report card c) Understanding M&A Attributes Most Difficult to Predict: ( (1) future financial performance; (2) future operational performance; (3) successful resolution of agreed‐upon risk issues; (4) customer retention; (5) employee issues (retention of “key” talent, employee engagement, culture alignment, “Best of Both Worlds,” varia ations in organizational culture & leadership styles, MVV, leadership alignment; (7) invalid assumptions and dependencies; d) Understanding M&A Functional Integration Challenges (h hardest to easiest): (1) executive‐level leadership; (2) human resources; (3) sales; (4) information technology /services (IT/IS); (5) marrketing/communication; (6) accounting/finance; e) Understanding Factors That Contribute to Successful M&A A and M&A Integration: (1) know the industry and company you plan on acquiring; (2) alignment and simultaneous activity of “de eal team” and “integration team”; (3) alignment of cross‐functional metrics & incentive‐based compensation; (4) use of technolog gy (virtual data rooms, video conference calls); (5) regular & substantive communication; (6) establishing a strong management team; ; (7) retention of key customers; (8) establishing a shared purpose/vision; ( ) (9) re‐recruitment & retention of “key” employees; (10) ensur g g y p y ;( ) ring a good culture fit; (11) integrating products/services; (12) timelines ;( ) g gp / ;( ) and resource commitments that the acquiring & to‐be‐acquir red “deal teams” and “integration teams” can agree upon; (13) clear understanding of “value drivers”; (14) detailed post‐acquisit tion planning; (15) expedited decision‐making; (16) candid & regular employee communications; (17) fair employment practices; ( (18) celebrate “early wins” (the two company’s have met & get along “they’re real people”; a new name & logo is rolled out “It’s p pretty snappy”; employee benefits packages are consolidated (We’re not forgotten”; deserving candidates are promoted (“There’s roo om for winner’s here”); unpopular product or service lines are closed Sources: S ( it s about time… ; each company learns from each other; o (“it’s about time ”; each company learns from each other; onerous policies & procedures are discontinued; ); (19) move cautiously onerous policies & procedures are discontinued; ); (19) move cautiously o Merrill on reorgs; (20) reward for results; (21) “who we are is who w we were”; (22) be decisive, but be humble. Corporation f) Common Time‐frames for Measuring M&A Integration Su uccess: (1) short term operational goals (6 – 12 months); (2) long‐term & personal 21 experience strategic goals (12‐24 months), 3 year, 5 year. © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ General Guidelines for M&A Management (Parent Co) g Coaching Points for Leaders in the 1. Don’t promise that things will “remain the same.” Explain that there e will be changes, but that a Acquired Org high degree of effort will be invested to (a) consider the interests of ea ach employee, and (b) keep 1. Expect change. everyone as informed as possible of forthcoming changes. 2. Anticipate. 2. Make few promises, and be mindful that innuendo can be interpreted d as an “implied 3. Stay goal directed. commitment.” 4. Focus on what made your company great 3. 3 Keep your promises. When you go on the record, keep your word. K i Wh th d k d to begin with. t b i ith 4. Talk in specifics whenever you can. Use clear, straightforward language, avoid jargon; check for 5. Provide subordinates a generous amount of understanding before deployment. Be acutely aware of the impact of f your comments even in management direction. routine conversation. 6. Become a role model for positive attitude 5. Don’t feed the rumor mill. towards the M&A. 6. Provide more communication than usual during and after the merger/ q g f g /acquisition period. Strive p 7. y ff Put more into your communication efforts. to overcome the “information vacuum.” 8. Demonstrate maximum transparency and 7. If you don’t have the answer people are seeking, then help them find i it. Go the extra mile; be candor (with appropriate prudence). helpful. 9. Guard against extremist statements. 8. What is said, and how it is said, are equally important. 10. Make few promises, and keep the ones you 9. Be humble, and respectful. make. 10. 10 Exercise your best public relations skills. Exercise your best public relations skills 11. 11 Motivate to the hilt. Motivate to the hilt 11. Provide a clear sense of direction – RACI. Who can make which decis sions, and how? 12. Expect slower response times, and a 12. Keep people in the acquired organization focused and future‐oriented d. decrease in productivity. 13. Embrace the people and make them ours; terminate those that need to o leave (because of lack of 13. Make acquisition a two‐way street. skills, performance, culture fit, or if they won’t align with the M&A), so the healing can begin. 14. Remain a leader and a decision maker. 14. Small M&A takes just as much time & effort as large‐scale M&A. 15. Show some ownership of organizational 15. 15 Train & coach “integration management” on how everyone should ap T i & h “i t ti t” h h ld pproach the acquired h th i d problems. bl entity, based on business goals, past practices, OFI’s, etc. Engineer ouutcomes, don’t “hand them 16. Help minimize surprises. down from the acquiring entities corporate office…” Goals should be e challenging and realistic. 17. Give yourself room to make mistakes; give 16. Don’t “fight back” – expect some resistance, and hostility. Absorb it. the acquiring company room to make 17. Once the “deal is done,” then the real work begins – integration. mistakes; give your team room to make 18. Minimize interference from “corporate.” Don’t “fix it” if it ain’t brok f f p f f ken. mistakes. 19. Replace infrastructure and processes only on an “as needed” basis. 20. Realize mistakes will be made, and that you cannot keep everyone, no or keep them all “happy.” 21. There is more science in “due diligence” and more art in “integration n.” 22 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Four Areas of Critical Business Value for M&A Integration Planning I t ti Pl i Target Evaluation  We understand, have identified, and allocated full‐time internal Deal breakers and red flags are capabilities (team, and individual) understood. to manage the “deal” and “integration ” integration. Competencies required to deliver on its business strategy ? Our people programs are have been defined. competitive in today’s marketplace?. We’ve designed & deployed talent management processes to talent management processes to We have identified the parts of We have identified the parts of ensure that we have the best the organization that high people and talent ready and in engagement most critical. place when the right opportunity arrives. We’ve created our MADI Plan. Due Diligence Sources: Towers Perrin & personal experience Implementation We have a clear understanding We are prepared for the people of the transaction’s full cost — and culture challenges that including all of the hidden costs of accompany an M&A. pension, labor‐management relations, FLSA classification Our senior leaders articulated a issues, health care, retiree issues health care retiree mission and vision, and made it programs and other transaction‐ clear and meaningful to related costs. employees. Effective enterprise risk Our current training approach is assessments (analyses, and delivering an adequate ROI, both potential remedies) have been potential remedies) have been for our employees and the undertaken. organization. Enterprise technology Source: Jossey-Bass 23 assessment (knowledge management, IT, IS). © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Seven Areas of Critical HR Value for M&A (1) LEADERSHIP. During pg periods of organization transition and disruption, our employees look first to leaders for guidance, p g p p y g motivation and focus. Leade ership becomes the most important driver of employee engagement as companies transform. (8) ENTERPRISE RISK MANAGEMENT. We have created a process s to identify those leaders whose skills and mindset best match the organization’s current and We have an effective ERM process across all risk categories, future business needs. implement effective enterprise risk minimization steps, including cultural attributes that contribute to creating a risk management (2) CULTURE. Whether you are culture, and ERM is “everyone’s job.” undertaking a merger or acquisition, it’s critical to align cultures and values, and (7) HR SERVICE DELIVERY. Throughout (7) HR SERVICE DELIVERY Throughout ensure company leaders share a common the integration process, ensuring seamless mission and vision. HR service delivery, with minimal disruptions, can positively impact We have built and sustained a corporate workforce engagement and productivity. culture that reinforces the new business strategy rewards desired behaviors, We have defined and designed the future developed change management and structure of HR service delivery, assessed, communication strategies for the g selected, and integrated HR technology l t d di t t d HR t h l conversion and aligned those activities systems to support the needs of the new with other integration work streams for a organization. smooth transformation. (6) TOTAL REWARDS. Total rewards represents an area of immediate concern to (3) COMMUNICATION. Clear and employees. Aligning employee reward compelling communication is critical programs with overall business objectives during any corporate transition. is critical to both the short‐ and long term is critical to both the short and long term success of the transformation. We have created a communication and messaging framework that supports We have designed & implemented Sources: Towers Perrin & employee engagement, maintains focus on reward programs that will drive key personal experience driving business performance. leadership and employee retention, encourage new attitudes and behaviors, We have prepared the right and increase productivity through communication strategy, materials and workforce engagement. kf processes — from pre‐deal through processes from pre deal through integration — to address all organizational stakeholders. (5) STAFFING AND SELECTION. People‐related issues are among the most often cited reasons for M&A failures. (4) WORK KFORCE DEPLOYMENT. Companies often fail to realize that growth is driven not only by the business strategy but through the ability and willingness of the workforce to execute it. We have designed & deployed staffing and selection requirements for the new organization and recommend employee retention programs (financial We have e translated our business strategy into a detailed workforce plan that projects the number, mix, skills and and nonfinancial) to identify and retain key talent The employee selection and nonfinancial) to identify and retain “key” talent. The employee selection cost of emp y mployees needed to meet business objectives. j criteria are based on an assessment of the importance of skills and the ability to attract and retain needed talent. We have e benchmarked our current workforce against normative data to identify areas for improvement, analyzed t the composition, flow and cost of the current workforce to project future changes, and identify actions to close work kforce gaps. 24 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Map of M&A Process & Issues p Source: Jossey-Bass 25 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Map of M&A Process & Issues p Source: Jossey-Bass 26 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Process Model for Culture Due‐Diligence Analysis & Coordinating g y ng HR into the Due‐Diligence Process g Pgs. Pgs 39-41; Exhibit 2 4 2.4 Concepts for Change Management 1. Addressing me quickly 1 Addressing “me” quickly 2. Applying defined, clear leadership 3. Providing clear communication 4. Ensuring a focus on g customers, and shareholders 5. Making tough decisions 6. Creating focused initiatives 7. Managing resistance at every level Source: Jossey-Bass Pgs. 60-72 Exhibits 2.6, 2.7, 2.8 27 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Merger Integration Work‐Streams Model g g Overview of the Work‐ Streams Model 1. Executive Leadership R&R 2. Business integration 3. Communication 4. Structure & staffing 5. Re‐recruiting g 6. Cultural integration 7. Human‐capital integration 8. Measurement & Feedback 9. Integration planning & project management Pgs. 75-76; Exhibit 4.1, 4.2 Source: Jossey-Bass 28 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Merger Integration Work‐Streams Model g g Exhibit 4.4; Pgs. 85-90 Source: Jossey-Bass 29 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ M&A Integration Objectives & “Best Practices” g j Integration I t ti Steering ee i g “Go” / “No Go”  Create cross‐organizational ABC & XYZ Board of Directors hierarchy and clear lines of accountability by function “C” Suite “C” Suite designee, ABC designee ABC designee, XYZ designee XYZ Functional Functional  Enable dedicated teams of Areas, ABC Areas, XYZ Business Leaders & SMEs to “As Needed,” “As Needed,” execute critical integration ABC XYZ activities  Responsible for vision direction and Responsible for vision, direction and prioritization of all integration efforts  Ensure (a) organizational Enterprise E focus on realizing ABC/XYZ synergies , (b) create In ntegration structure that transcends Committee C ABC/XYZ deal as a platform p (a/ /k/a Merger /k/a Merger for ABC‐wide change Ste eering Cmte)  4 Steps: (Step 1) Readiness Assessment, (Step 2) Establish the Team to Develop our MADI Strategy & Integration Integration C Change Management Strategy (Step 3) Leverage People, Process, and Technology, (4) Develop MADI Plan COMMUNICATION ORG GANIZATION CULTURE & PEOPLE 30 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ M&A Integration Objectives & “Best Practices” g j Step 1 (Readiness Assessment) Step 3 (Leverage People, Process, Technology) Does the Mgmt team have M&A experience? What prep work is needed? What people, process, technology solutions ‐Dedicated “deal” and “integration” teams created (separate are we prepared to dedicate to the M&A “deal” and from daily operations OR enough horsepower from assigned “integration?” What SLA s are we prepared to commit to? integration? What SLA’s are we prepared to commit to? teams) ‐Review “key factors” for “effective” and “ineffective” M&A A readiness assessment may include: integration ‐Assessing the right time for the MADI ‐Chose technology solutions (eg VDR), and vendors ‐Preparation and validation of financial records ‐Enterprise‐wide & functional Project Plan ‐Preparation of market, product, customer analyses ‐Enterprise Risk Assessment and Risk Management solutions ‐1 3 5 year strategic plan and financial forecast 1, 3, 5 year strategic plan and financial forecast 4 Steps: (Step 1) p p ‐Agree on framework type of MADI definitions Agree on framework, type of MADI, definitions ‐Review and resolution of legal, operational, management, Readiness Ass sessment, ‐Agree on processes to be used, and ones that will not be and environmental issues (Step 2) Establlish the used ‐Development and summary of BD, Marketing, Sales plans, Team to Deve elop our ‐ Committees up and running, meeting regularly and “as including a new business pipeline MADI Strateg gy & needed” Integration Sttrategy Step 2 (Allocate the Resources & Establish the Teams to (Step 3) Leverrage People, Step 4 (Develop MADI Plan) Develop our MADI Strategy & Integration Strategy) D l MADI S &I i S ) Process, and TTechnology, (4) Develop MMADI Plan ‐MADI Plan ‐“Deal” Team ‐ Integration of “lessons learned” and “Best Practices” ‐“Integration” Team ‐Remember that MADI is about the destination & the ‐Investment Banking journey ‐Finance ‐Tax Counsel Tax Counsel ‐M&A Counsel ‐Human Capital / Culture Integration ‐Knowledge Management (IT, IS) ‐Business Operations ‐M&A Steering Committee ‐Executive Committee Executive Committee ‐Project & Process Management ‐Customer Experience 31 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Change Management Initiatives COMMUNICATION ORGAN NIZATION CULTURE & PEOPLE  Facilitate integration effectiveness  Align organiza ation to increase  Minimize integration risks due to with clear & continuous efficiencies and d realize synergies cultural differences GOAL: communication  Minimize perceived changes in Total Rewards ACTIONS: 1. Organize all stakeholders ASAP to announce details of integration 1. Maximize sta involvement akeholder buy‐in and t 1. Develop cultural transition strategy to manage and mitigate strategy & plan culture shock, create compelling 2. Set cross‐org ganizational hierarchy reasons for employees to embrace 2. Establish 2‐way feedback protocol Establish 2 way feedback protocol between ABC between ABC and XYZ divisions C and XYZ divisions C change & mechanisms 3. Identify and develop retention 2. Start XYZ and ABC team building 3. Launch communication campaign strategy for k key ABC and XYZ right away to create “one firm” to minimize misinformation and players culture misunderstanding 3. Align Total Rewards, T&C METRICS: Reports on the completion status to E Enterprise Integration Steering Committee  Track stakeholder awareness of  Monitor reten ntion rates  Deploy cultural progress surveys integration progress  Benchmark ac Benchmark ac ctual and forecasted ctual and forecasted  Revalidate survey results with y  Track and categorize employee ABC and XYZ Z organization focus group workshops & surveys complaints rationalization n (Dennison survey, functional surveys)  Track stakeholder satisfaction  Put extra emphasis on gathering informal feedback  Employee utilization of Total Rewards, “value” of T&C 32 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Establish a Communication Strategy That Helps Ensure “Transpar gy p p rency” y Four‐Phase Communication Process Communication Targets: ‐Q&A ‐What this “deal” means in English (or Spanish, French…) ‐Executives ‐Investors ‐Employees ‐Customers ‐Suppliers S li Notes: ‐Investor Relations (IR) in publicly traded companies typically owns investor companies typically “owns” investor communications; ‐Marketing in publicly traded companies typically “owns” customer & media communications; ‐HR in publicly traded companies typically HR in publicly traded companies typically “owns” employee & dependent communications; ‐Accounting or Procurement in publicly traded companies typically “owns” supplier communications; g yp y g g, ‐Legal Counsel typically reviews all messaging, Source: Jossey-B Bass and there is a preference for a “common theme” for all communications. Exhibit 6.3 33 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Establish a Communication Strategy That Helps Ensure “Transpar gy p p rency” y 34 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Business Transformation Current Organizational Structure CEO Director Strategy gy & Planning Entity #1 Entity #2 Entity #3 Ent tity #4 CEO CEO CEO CEO Chief of Staff, HR Director HR Director HR Director HR Director H HR, PR, Legal CFO CFO CFO CFO Future Organizational Structure g CTO CTO CTO CTO CFO VP Sales & VP Sales & VP Sales & VP Sales & V Marketing Marketing Marketing Marketing M Director Sales VP VP VP VP & Marketing Purchasing Purchasing Purchasing Purchasing VP VP VP VP Manufact. Manufact. Manufact. Manufact. M COO VP Prod. VP Prod. VP Prod. VP Prod. V Develop. Develop Develop. Develop Develop. Develop Develop. Develop D 35 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Oversight Vehicles Exhibit 5.10, pg. 115 Source: Jossey-Bass Jossey Bass 36 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ The Discover, Intent, Delivery Approach to Cultural Integration y pp g 37 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Elements of a High Performing Culture g g 38 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Culture Integration & Change Management: CEO’s Need to Creat g g g te a New Vision for the Combined Company, Enable Trust, p y Teamwork, Communicate, and Create a “Best of Both World ds” Based on Common Mission‐Critical Business Drivers, Vision, Core Values, and Operating Principles! Change Management Focus Business Impacts Bus Driver Bus Driver #3 ABC XYZ #1 Bus D Driver #2 # Strategy & Business Plan Core Value Vision Bus Bus Bus #3 Driver #1 Driver #2 Driver #3 Core Vaalue #4 Technical, People Core Value Core Value Vision Process Impacts #3 #4 Impacts Operating Bus Driver Operating Principle #2 #4 Principle #1 Bus Focus on Mission‐Critical Truths! Operating Driver #4 ??? 1. Focus on mission critical aspects of culture – Principle #2 business drivers (commitments to shareholders, customers, employees) & values (integrity, innovation) Core Value 1. Be loyal to the organization, respect the culture #2 Core C Operating Core 2. Treat equilibrium like a danger zone Value #1 Principle #1 Value #2 ?? ?? 3. Help shape culture @ the local level 4. Accept personal accountability for culture change 5. Protect the organization’s operating results 6. Push for speed in the change process Core Value 7. Don’t be surprised when culture “counter attacks” 7 Do ’t be u i ed he ultu e “ ou te atta k ” #1 8. Expect the situation to get worse before it gets better. 9. Be thankful for corporate cultural diversity. 39 10. One last thought – Some things will remain the same, and some will change © 2010 Richard d Swartzbaugh Price Pritchett

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ (1) M&A Change Management Approach ‐ Measured Before & After M&A Dennison Culture Survey y Integration: I t ti Corp. “A” • Core Competency Modeling • Culture Alignment Process • Culture Cross‐Match Process • Online Employee Surveys Online Employee Surveys • Preliminary Organization Analysis • Stated Values • Organizational “Culture Map” (using Dennison, Lominger, etc.) • Employee Engagement (Gallup Q12 + custom) • “Key” Employee & Overall Headcount Index Corp. “B” • Core Competency Modeling • Culture Alignment Process Dennison Culture Survey • Culture Cross‐Match Process • Online Employee Surveys Part “A” – Measures and describes culture based on several decades of • Preliminary Organization Analysis y g y research by Dr. Daniel Denison (from the University of Michigan) measuring research by Dr. Daniel Denison (from the University of Michigan) measuring • Stated Values four traits and twelve profit driving management practices. The businesses • Organizational “Culture Map” (using Dennison, Lominger, etc.) responses will be benchmarked to explain how they are performing in a • Employee Engagement (Gallup Q12 + custom) competitive sense, and the results of the survey presented in a “circumplex” • “Key” Employee & Overall Headcount Index (sample “circumplex” above). (2) “Best of Both Worlds” Measured After M&A Integration Part “B” – The functional survey identifies Human Capital management y p g practice cornerstones, and success factors that are most critical to Merged Entity: Corp. “A” + “B” organizational, team‐based, and individual performance. • Core Competency Modeling • Culture Alignment Process • Online Employee Surveys • Preliminary Organization Analysis Additional Processes & Approaches: (a) Core Competency Modeling, (b) • Stated Value Stated Values Culture Cross‐Matching, (c) Online Employee Surveys, (d) Preliminary • Organizational “Culture Map” (using Dennison, Lominger, etc.) Organization Analysis • Employee Engagement (Gallup Q12 + custom) 40 • “Key” Employee & Overall Headcount Index (Retained) © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Establish a Communication Strategy That Helps Ensure “Transpar gy p p rency” & Continuously Implement it! y y p Days 0‐30 Days 0 ‐ 90 Within 6 Months Within 12 Months  Strategy # 1 – Conduct a  Strategy # 7 – Conduct On‐Site  Strategy # 12 – Install Video  Strategy #16 – Conduct an Vision/Strategy Meeting with all Employee Orientation Session to Bulletin Boards at Major Employee Employee Engagement Survey Members of the Sr. Mgmt Team g Enhance Mgmt Visibility, Outline g y Sites  Strategy #17 – Develop a gy p and Key Operations Personnel to Future Vision & Strategic Goals,  Strategy #13 – Host Monthly Company‐Wide Communications Outline Future Direction and Q&A Employee Luncheons, “Early Bird” Strategy & Program Strategic Goals for the New  Strategy # 8 – Establish a Systemic Breakfasts at Rotating Sites  Initiate Annual Employee Company Communication Vehicle for  Strategy #14 – Increase the Orientation Workshop  Strategy #2 – Assure that an Distribution to EE’s and Effectiveness of Total Rewards  Water down the “Annual Report” Adequate Communications Dependents Communications to an Employee version Function Exists, With Proper  Strategy # 9 – Make “Front Line  Strategy #15 – Deploy “Key”  Create Quarterly dashboard and Headcount & Budget Supervisors” the Front Line for activities to increase Employee cascading goals  Finalize and Announce the New Employee Communications Engagement (Gallup Q12, etc)  Implement “spot” bonus program Company Name to EE’s and  Strategy # 10 – Increase “Two Investors, and Work the Way” Communication Development of the New Corp Opportunities Throughout The Identity Ide tity Company Co a y  Strategy #4 – Implement some “Quick Wins” that Will Signal to Days 0 – 120 the New Company is Making  Strategy # 11 ‐ Require all Sr. Mgmt Decisions and Positive Progress & “Key” Operations EE”s Go  Strategy # 5 – Implement a Through a 360 Transitional Bonus Program to Transitional Bonus Program to  Finalize M&A scorecard Finalize M&A scorecard Increase the Urgency Related to Achievement of the Synergy Goals and to Reward & Recognize M&A Related Results  Strategy # 6 – Aggressive Review Meetings and Eliminate All Except g p Those That Are Mission Critical, Reduce Attendance for Senior Mgmt, Follow‐up on Action Items 41 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Sorting Method Used for Current and Future Cultures Example of Current and Future Culture Results: Ordered Left to Right, Top to Bottom by Average Row Placement Score Source: Towers Perrin 42 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Example of Current and Future Culture Results: l f d l l Ordered Left to Right, Top to Bottom by Average Row Placement Score Example of Results for Consensus on Future Culture C lt Source: Towers Perrin 43 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Strategic Priorities: Taxonomy of Cultures That Serve Financially Hig Strategic Priorities: Taxonomy of Cultures That Serve Financially Hig Performing Companies gh‐Performing Companies gh Source: Towers Perrin 44 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Effective Enterprise Risk Minimization During M&A D i M&A ERM Process E Risk Catego ories IAMMRTI Tools (IAMMRTI) ►Strategic ►Policies, ►Identify Procedures, ►Market & ►M k t & Practices P ti Liquidity ►Controls ►Assess ►Legal ►Governance ►Credit ►C dit ►Mitigate ►Planning ►Compliance ►Measure ►Training ►Reputational epu a io a ►Report ►Reporting ►Talent ►Test/Evaluate ►Solutions: ►Org. Culture Avoid, Transfer, Mitigate, Control, Mitigate Control ►Internal Controls Share, Accept, ►Operational Diversify COSO/Treadway Commission 45 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Cultural Attributes That Contribute to Creating a Risk Managem ment Culture: ERM is a Organizational Competency Source: Accenture 46 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Cultural Attributes That Contribute to Creating a Risk Managem ment Culture: ERM is a Organizational Competency Source: Accenture 47 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Use of Technology – MADI Data Sites, Virtual Data Rooms (VD DR), Security Considerations 7 Factors for Selecting a MADI Datasite 1. Confidentiality ‐ Ensure an air‐tight ʺchain of custodyʺ for corporate documents 2. Hosting & Management ‐ Know who our partner is and how hosting in ntegrates with other processes 3. Service & Support ‐ A 3 S i &S t Assure the availability of resources and assistance from th il bilit f d i t start to finish 4. Transaction Speed ‐ Accelerate transaction time with faster set‐up and ggreater responsiveness 5. Deal Communication ‐ Drive more productive deal‐making with alerts and automated Q&A automated Q&A 6. Document Search ‐ Make sure it’s possible to do site‐wide searches acro oss all documents 7. Audit History ‐ Track buyer activity and gauge intent with detailed an nalysis and reporting Security Considerations (ISO Secure Site (ISO 27001)) 1. Security‐based business model 2. Multi‐layered data security 3. Seller & Buyer based security controls 4. Secure viewer and interface 5. Security verification S i ifi i 48 © 2010 Richard d Swartzbaugh Source: Merrill Corporation

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ MADI Milestones Exhibit 5.7, 5.8, pgs. 110-111 Source: Jossey-Bass Jossey Bass 49 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ 1 Year MADI Plan Existing Pre‐Work First 30 Days and ongoing …. Next 70 Days & ongoing …. Last 100 Days PR & IR Comm. Org., Structures, Market Plan 2‐Day Off‐Site Committee Integration R&R, HC, T&C “Actual v. Business Analyses, Implemented Sales: Sales Structure Practice Alignment Target Check‐ Strategy? gy Acquisition q (External & (External & Territories, Territories Up & Working U Reviews Process up up” Financing Internal) Teams, Products, Srvs, SIP Talent Strategy M&A Selection 3‐Day Off‐Site Checkpoint, Total Rewards Synergy Alignment “How’s it Going” & Talent Mgmt. Criteria ‐ (Sr. Team & BU) Strengths, Validation Retention Process Focus Groups, Practices? “Org profile” g Build Rels., Align OFI’s Workshop Process for Process for True‐upsp Culture, MVV, “key” SME’s Milestones, “Hard & Mgmt Employee Enabling HR Conf. Agrmt., & Soft” goals, Survey Process Assess Current Meetings & Survey #2, Core Comp., P, LOI, MOU, Benchmark #1, B Migration & Org Structures, Comm. ERA#3 P, P, HB? Due Diligence Document ERA#2 Integration R&R, HC, Register, g Perf. f Governance, Teams Drafted, Data Library Review Motivation, Team Technology & 2‐Day Off‐Site Organizational Final Due Action, Issues, A Building & Data Overall M&A (Review #1, Culture? Diligence, ERA#1 & Risks Recognition Migration & Integration Status, +/‐/OFI’s Register Integration Framework Tech. (VDR), “Kick Off” : Process, “Go” / “No Go” Go / No Go “Go” / “No Go” Go / No Go R&R, R&R Leadership L d hi Purchase/Sale Program, P Customer, Work Stream Execution Decision Made Decision Made Agrmt, Press & Structures, Project, Data Shareholder, S Assessments Rolling Enterprise‐Wide Framework? Comm. Docs Timelines, Migration Employee (Lominger) Review Review Teams, Needs Metrics, Formalize Budget , Chg. Customer, Review Finalize Culture Assess “Go” / “No Go” Mgmt, Total Mgmt Total New Org New Org OFI Analyses, y , Decision De i io Vendor, V d Business i & Align. & Ali Decision Made, Rewards, Structures, DMAIC, Making Supplier Operating (Dennison, Sign, Close T&C, Ops R&R, HC SWOT Framework Comm. Model Lominger) 50 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ 5‐Year MADI Plan Year 1 Y Ye Year 2 Year 3 Y Year 4 Y Year 5 Y Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2 Integration Enterprise Team ‐Create Teams & Committees ‐Monitor legal and valuation teams ‐Clearly communicate vision to key stakeholders Clearly communicate vision to key stakeholders ‐Establish new operational models & integrate ‐Monitor & improve overall integration Change Management Team ‐Establish organizational focus teams ‐Develop communication and strategy plan ‐Develop cultural transitional strategy ‐Identify cultural hazards and mitigate ‐PR / IR campaign ‐Analyze Total Rewards, T&C ‐Organizational consolidation ‐Conduct overall integration assessment Operational Synergy Team ‐Exploit Economies of Scale Exploit Economies of Scale ‐Sales Territory Consolidation ‐Supplier Integration ‐Cash management system migration ‐Adoption of XYZ/GAI best practices ‐Implementation of Lean Manufacturing ‐Total Platform Reduction ‐Technology Audit and Prioritization Technology Audit and Prioritization Market‐Based Synergy Team ‐Develop PR campaign for ABC Customers ‐Communicate customer satisfaction metrics ‐Set up reward incentive program ‐Quantify cross selling potential ‐Launch CRM and internet campaigns ‐Integrate distribution capabilities I di ib i bili i ‐Expand in new markets ‐Launch luxury program/reposition ABC Brands 51 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Re‐Recruitment Process Re‐Recruitment 1. Make the target roles & people feel special, NOT taken for granted; 2. Keep the communication lines open & active 3. Take the person into your confidence, asking for their ideas and opinions 4. Seek to give “key” people key roles, a special assignment that makes it clear that (s)he is a highly valued th t ( )h i hi hl l d individual; 5. Consider giving a rise, higher ranking title, or a retention bonus (payable @ the end of the retention period); typically a range of period); typically a range of 5%/10%/15% of base. If a LTI is in place, give some sort of additional grant for retention. Jossey-Bass, 7.3, 7.4, 7.5, 8.7 52 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Merger & Integration “Repair” ‐ “We Did Everything Right But it Still Isn’t Work king …” 53 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Merger & Integration “Repair” ‐ “We Did Everything Right But it Still Isn’t Work king …” 54 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Continuous Improvement (1) Customer Feedback (survey) (2) Results analysis, including M&A Scorecard (3) Six Sigma DMAIC (3) Six Sigma DMAIC (4) ) SWOT Strengths: S Opportunities: ‐ To be determined ‐ To be determined Weaknesses: W Threats: ‐ To be determined ‐ To be determined 55 © 2010 Richard d Swartzbaugh

‐‐ Talent Management: Mergers, Acquisitions, Divest titures, Integration (MADI), including M&A Due Diligence, in Support of Shareholder, and Customer Value Creation M&A Due Diligence in Support of Shareholder and Customer Value Creation ‐‐ ‐‐ Attributes of Effective M&A, M&A Integration, and Execution Tools ‐‐ Appendixes & Tools Appendix 1 ‐ Soft copy sample “Due Diligence Checklist” Appendix 2 ‐ Soft copy sample “Step 1 – Workforce Integration Project Plan.” Appendix 3 ‐ S ft A di 3 Soft copy sample “Step 2 – HR D Dili l “St 2 HR Due Diligence Ch kli t ( e Checklist (as part of the initial Due Diligence).” t f th i iti l D Dili )” Appendix 4 ‐ Soft copy sample “Step 3 – Compare Total Reewards, and Terms and Conditions of Employment, and Analyze Differences in Value.” Appendix 5 ‐ Soft copy sample “Step 4 – Compare Culture es using the Dennison culture survey Appendix 6 ‐ Soft copy sample “Step 5 – Develop a Total R Rewards Strategy & T&C for employment for Workforce Integration Integration” Appendix 7 ‐ Soft copy sample tools to Determine Leadersship Assignments based on Business Needs, Lominger Competencies, and relevant Education & Experience Appendix 8 ‐ Soft copy sample tools to Address Duplicativ ve Functions, and Address Organizational Structures Appendix 9 ‐ Soft copy sample tools to prepare an Employyee Communications Strategy (jointly with Marketing Communications, and Investor Relations) Communications, and Investor Relations) Appendix 10 ‐ Soft copy sample tools to Define Human Ca apital Related Transition Data Requirements Appendix 11 ‐ Soft copy sample tools to Develop an Emplooyee Retention & Engagement Strategy using the Gallup Q12, Total Rewards, T&C, and other employee engagemen nt factors and processes http://www.mergercoach.com www.accenture.com Accenture ʺCulture Value Assessment; ʺRisk Cu ulture Value Assessment www.merrillcorp.com www.merrillcorp.com/DataSite https://www.capitaliq.com/main.asp http://www.bloomberg.com http://www.thomsonone.com http://www.capitaliq.com http://www.factset.com htt // fa t et o http://www.towersperrin.com Culture Alignment Tool (CAT) http://w www.towersperrin.com/tp/getwebcachedoc?webc=USA/2009/200909/CAT‐Brochure Final.pdf The Core Competency Model, Culture Cross‐Match Tool, On nline Employee Surveys, Preliminary Organization Analysis 310‐551‐5600; 56 http://www.strategy2act.com/solutions/mergers and acquisitions exce el.htm http://www.themandajournal.com/ © 2010 Richard d Swartzbaugh

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Mergers, Acquisitions, Divestitures, Integration (MADI) Including M&A Due Diligence

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