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איתן

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איתן

  1. 1. ‫ה‬ ‫ורכישות‬ ‫מיזוגים‬ ‫כנס‬-8 M&A Best Practices
  2. 2. Turnarounds Change Management processes M&A’s Life cycle Growth Management M&A Strategy Scanning Targeting Initial Assessment 360 Due Diligence Negotiation Agreement formation P.M.I. Approach P.M.I. Planning P.M.I. Execution S.G.SustainableGrowth
  3. 3. • We are an international partnership of consultancies specialising in Post-Merger Integration advisory services • We advise our clients on the integration / separation of domestic or cross-border acquisitions / divestitures • We work alongside our international clients in lean, highly experienced executive teams, focusing on transferring the benefits of our skills and experiences over to the internal staff. • We can support you with everything from training course and integration capability enhancements through to setting up and managing your global integration programme • We are the only global consulting network dedicated to merger and acquisition programmes • With top firm consultancy and industry backgrounds, our team brings a richness of knowledge, skills and experiences • We have a global network of experienced M&A consultants with functional expertise • We are 10 member firms, in 8 countries and over 20 consultants GlobalP.M.I.Partners Our partners has in average: 27 years of professional experience 14 years in consulting, 11 years working with PMI Delivered 23 PMI projects
  4. 4. 4
  5. 5. 5 Hundreds of clients’ interviews 70+ S.G. Projects Numerous Templates, project summaries, etc. Corporates, M&A teams, advisors from acquiring and acquired companies Over 25 Benchmark meetings Teva, Cisco, Amdocs, Broadcom, Marvel, etc. Ness, Netafim, Bagir, Perion, AVT, Flash Networks, etc. The information is validated by crossing multiple sources
  6. 6. Checking & Formulating the Acquisition Concept Decision Contract Signing Closing Acquisition Realization Stage Integration Stage Closing Preparations Pre Deal: - M&A Strategy - Scanning - Targeting - Approaching Deal: - Due Diligence - Valuation - Deal management Post Deal: - PMI (post merger integration) Planning - PMI Implementation / change Program Strategy Formulation Deal Execution Integration Pre deal: where the magic starts…
  7. 7. BEST PRACTICE # 1: Why are you acquiring? Be very very clear about the goal you’re trying to achieve. What is the real goal ? Is it achievable? Even in opportunistic situations, you should have a clear, realistic definition of what you want to achieve Growth above all Breakthrough Global expansion New products New technology Eliminate competition
  8. 8. BEST PRACTICE # 2: Your strategy should influence how you search for targets, negotiate the deal and plan the PMI phase • Redefine the competitive landscape • Growth • Expand to adjacent market • -Leverage sales force - scope • Extend playground • Deal with Market break-Up point - threats • Vertical integration • Extend value chain • Secure supply chain • Distribution network • Secure technology • Reduce cross depandancies • Horizontal / cost competitiveness • Critical mass • Eliminate redundancies (cost efficiencies) • Reduce inharent development costs • Gradual Expansions • Competative technology • Complementary capabilities • Financial markets and taxes • Leverage valuations arbitrage • Leverage balance sheet and share price to create share holder value • Diversification • Other • Brand • Talent • Patent portfollio - to settle IPR issues, growth • Block Competition
  9. 9. BEST PRACTICE # 3: Research and experience show that in most types of M&A deals, an earnout model will create the best results for the middle and long term Cash Share Combined
  10. 10. Making Your Drinks Come True BEST PRACTICE #4: (start) buying Small, especially if you have limited M&A experience. Small deals are much more successful
  11. 11. BEST PRACTICE #5: Synergies are overestimated. Try not to fall in love with the deal and not be overly optimistic. Remind your self that in 12 months you will have to explain to the board why the synergies you promised were not achieved.
  12. 12. Frequent Mistakes 66% Overestimated synergies 50% Failed to discover target had been dressed for sale 50% Failed to highlight critical Issues 45% Failed to recognize there was insufficient strategic fit
  13. 13. Best Practice #6: Always have a top person in the company who is not involved with the deal and can play “devil’s advocate” Remember the Statistics on M&A: 50-80% Failure
  14. 14. BEST PRACTICE #7: Build a pipeline of potential deals. Most opportunities you will analyze – will not materialize. If you want to close a deal you should always look in parallel at additional opportunities. 1-3 will be acquired (0.25%-0.75%) 10-12 may reach DD 50-60 are relevant 400 opportun ities
  15. 15. The 6 steps plan Determine Business Plan & Drivers Determine acquisition constraints Develop acquisition candidates list Build preliminary valuation models Rate / Rank acquisition candidates Review & Approve Acquisition Organizational Financing Human Capital BEST PRACTICE # 8: Define the Acquisition Process, Criteria and who should be involved in what phase. People who will be part of the PMI and Integration efforts should be part of the project as early as the DD or early assessment. Proper handover should be planned as well.
  16. 16. BEST PRACTICE # 9: Involve HR in the early assessment phases, even before the DD. Have them assess the cultural fit and the complexity of integrating cultures and management teams. Structure Culture Management As early as you can, map the shareholders and stakeholders. You must understand early on the “politics” of the deal (who wants it, who opposes, why, who can convince whom, etc.)
  17. 17. Checking & Formulating the Acquisition Concept Decision Contract Signing Closing Acquisition Realization Stage Integration Stage Closing Preparations Pre Deal: - M&A Strategy - Scanning - Targeting - Approaching Deal: - Due Diligence - Valuation - Deal management Post Deal: - PMI (post merger integration) Planning - PMI Implementation / change Program Strategy Formulation Deal Execution Integration Deal: Don’t mix business with pleasure… Be professional
  18. 18. 360 Management Team IT Systems People & Culture Operations Client Relations BEST PRACTICE # 10: Do not focus your DD process only on legal and financial issues. Conduct a full 360 degree DD. Involve experts from your company and not only external help.
  19. 19. Major Objectives: - Have a clear idea of what you’re walking into - Find the “skeletons in the closet” to lower the valuation BEST PRACTICE # 11: Conduct the DD as a synergetic team effort and not as separate parallel efforts. Use the information from one area to compliment findings in other areas and bring up new hypothesis.
  20. 20. Source : Organizational Market Human Organizational Culture Brand Leadership Governance Client intimacy Employees Agility Client loyalty Development and management Communication and teaming External networks Engagement Energy and clarity Internal networks Productivity Organizational structure Innovation BEST PRACTICE # 12: You can Lower the risk and Increase the probability of Success of every deal by focusing on the Intangible Assets
  21. 21. Checking & Formulating the Acquisition Concept Decision Contract Signing Closing Acquisition Realization Stage Integration Stage Closing Preparations Pre Deal: - M&A Strategy - Scanning - Targeting - Approaching Deal: - Due Diligence - Valuation - Deal management Post Deal: - PMI (post merger integration) Planning - PMI Implementation / change Program Strategy Formulation Deal Execution Integration Post Deal: ‫תחילה‬ ‫במחשבת‬ ‫מעשה‬ ‫…סוף‬
  22. 22. Preserving Deleting Through Existing Identities Through New Identities Confederation Assimilation Federation Metamorphosis Response to legacy identities Integration When analyzing the topic of post merger corporate identity, there are four major possibilities as shown in the model below: BEST PRACTICE # 13: Before going into a detailed PMI plan, define the PMI concept. The PMI concept should answer critical questions like: are we integrating everything or just some elements? How fast should the integration be, do we preserve the identity of the acquired company or not, etc.
  23. 23. BEST PRACTICE # 14: Most books on M&A say you must do things quickly, “finish the integration process in 100 days”. Experience shows that certain aspects need to be handled fast and others need to take more time. You need to differentiate between them. “In M&As sometimes fast is slow and slow is fast”
  24. 24. ©2008 “I’m in a very stressful period !!” BEST PRACTICE # 15: M&A times are perceived as chaotic and uncertain, good people tend to leave first. Map your key employees based on performance and potential and talk to all of them, design creative retention packages, remember it’s not only about the money.
  25. 25. “You didn’t get my email ??!!” BEST PRACTICE # 16: Create a comprehensive communication plan including Stakeholders, channels, messages and timing. Communicate and over- communicate, not only on the announcement day…
  26. 26. BEST PRACTICE # 17: Throughout M&As “Me issues” dominate both companies at all levels... Will I have a job? Will my pay and benefits change? Who will I report to? Will I have to move? What will ‘they’ be like to work for? Others... Example “Me Issues”
  27. 27. BEST PRACTICE # 18: Mange PMI as a project with Integration Governance, project management tools and follow-up mechanisms, tasks, meetings, etc. (see details in the next slides) Executive Committee Functional Teams PMI Office Horizontal Teams Functional Team Reps.
  28. 28. Quick Summary on M&A Value…. eitan@sg-ltd.com

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