In a world of "Exponential Manufacturing" Innovation is the key driver. However large firms are not always fast enough to bring Innovations to the market and use M&A to do that. Yet M&A driven Innovation that should fuel "Exponential Manufacturing" requires a specific M&A Integration approach! Listen to this webcast to unterstand the concepts and find the necessary tools to deal with "M&A Integration at the Edge of the Company" to ensure M&A driven Innovation generates value. Exponential Manufacturing and M&A Integration discusses the concept of integration at the edge of the company. A concept that is focused on retaining the success-factors in acquisitions by only integrating what is absolutely necessary in order to preserve the value and success creating DNA of an acquisition and thus permitting exponential growth for the acquirer. This concept is geared towards ensuring that small and mid-sized companies can continue to operate successfully while limiting the degree of integration to the level that is retaining the success DNA and does not force the burden of s.th. complex processes required by larger organizations onto the acquisition targets. The concept has and will be applied successfully by Chinese outbound M&A investments to manage these acquisitions effectively. Companies that are integrated at the edge should identify all benefits they can gain from belonging to a larger group while protecting the nucleus of success and identifying the value docking points to transfer the value only at the stage it makes sense for the combined group.

1. "Exponential Manufacturing & M&A"
We will begin soon...
Presenter:
Thomas H Kessler,
Partner – Global PMI
Partners Germany
Moderator:
Ana Hasbun
Marketing Manager
Midaxo

2. Exponential Manufacturing and
Mergers and Acquisitions
September 2016
Thomas H Kessler
German Partner
+49 172 255 9788
thomas.kessler@gpmip.com

3. Why is understanding
“Exponential Manufacturing”
important for M&A Integration?

4. Why is “Exponential Manufacturing”
important for M&A Integration?
“Exponential Manufacturing”
is a concept that
demonstrates how any
industry can create value
‘exponentially’
Creating growth & value
are two fundamental
concepts of
Mergers & Acquisitions
Therefore we need to ask us the question
How will we handle exponential growth in M&A Integrations?
M&A Value creation is linked to
exponential growth
4

5. What is “Exponential” growth!

6. The development steps of each and every exponential growth trend
The 6 D’s of any Exponential Framework
6
Source: Singularity University; Peter Diamandis

7. From Deceptive to
Democratization
Deceptive and Disruptive
Growth
Dematerialization
7
Demonetization
Making it digital means that the marginal cost
of replication and distribution is almost zero
Democratizing
by following the exponential path we can
reach all over a sudden 1 bn customers
Source: Singularity University; Peter Diamandis
IoT

8. 8
Results: 65% par/cipa/on
• 18% implemented it
• 29% started it
• 53% started to explore it

9. … THAT WILL IMPACT Exponential Manufacturing
THE 8 ACCELERATING TECHNOLOGIES …
Network computing
Artificial Intelligence
Robotics (incl. Sensors)
Material science
Nanotechnology
Energy (Solar specifically)
Biotechnology
Medicine
9
Source: Singularity University; Peter Diamandis

10. Democratization multiplies the value
creation options!
10
WHERE WILL YOU DEMATERIALIZE
AND DEMONETIZE BEFORE
SOMEONE ELSE DOES IT TO YOU?

11. Case: The GE Appliance
approach to “Exponential
Manufacturing”

12. Traditional vs. exponential approach
How does GE Appliances use exponential
manufacturing to renew itself?
12
Traditional
OPTIMIZATION
Exponential
INNOVATION
Source: GE Appliances; Kevin F Nolan

13. Innovation at the edge of the company
13
Source: GE Appliances; Kevin F Nolan

14. Learnings from making a Pizza Oven
Innovation at the edge of the company
14
How is it made?
o Traditionally a USD 10 - 15 mn investment
¨ The tools (FLEXIBLE TOOLING) spent for this pizza oven have
been USD 150
o The first one sold is generating returns, this is all about LOW
VOLUME, VALIDATION, LEAN and PULL
¨ No product is made until there is a purpose or an order
o Even the WORKFORCE it is PULL
¨ ’1B-fistbuild’ is 80% student run
o Fabrication is all programmable and flexible
¨ 1B has capital invested in a maker space; but it is not
dedicated; its all about flexible machines
o Implementing 6 sigma 1B went back to the very basic
concepts
¨ It is about speed, flexibility and low cost
o Validation thru sales: Create the idea, Launch a competitive
web based design challenge, Sell via Indiegogo
Lessons learned
Source: GE Appliances; Kevin F Nolan
Results:
T2M extremely short, platform approach transforms an
engineered product into a scalable (democratized)
end product

15. Learnings from
“Exponential Manufacturing”
for M&A Integration

16. What can we learn from ‘Exponential Manufacturing’ and GEA
How to bring “Exponential” to M&A
Integration
If we can innovate at the edge of the company …, like GEA to
exponentially accelerate new product introduction while
reducing the cost of innovation dramatically, …
… then we need to think about M&A integration at the edge of
the company to accelerate value creation exponentially
Therefore we need to ask us
the question, …
Why, When and How can we create exponential value in M&A Integration?
16

17. This framework can be used across several industries
How to bring “Exponential” to M&A
Integration
Questions to answer:
Why integration at the edge is important!
When to integrate at the edge?
How to integrate at the edge?
What are the ‘must do’s’ for integration at the edge?
17

18. 18
Results: 70% par/cipa/on
• 16% organic
• 37% acquisi/on + standard
• 47% acquisi/on + tailored

19. Why integrating at the edge is important
19
Operational
Excellence
Product
Leadership
Customer
Intimacy
Major value can be destroyed when the target operating model is implemented
without taking note of the acquisitions existing value generation capability
Successful firms differentiate themselves
by focusing relentlessly on a single
value discipline, while achieving at
least industry average in the other two
– never seek the ‘mediocre middle’
Achieved by offering
of the best products
to the market by
focusing on product
or service innovation.
Achieved by a deep
and detailed under-
standing of customer
drivers and values the
cultivation of lasting
relationships with
customers, and
striving to satisfy their
unique needs
Achieved by product and
service provisions at the
lowest cost and with the least
inconvenience by focusing
on cost management and
operational effectiveness

20. Why integrating at the edge is important
20
Needfororganizationalautonomy
Depth of integration
ImportantUnimportant
Unimportant Important
Retention
• Strategic capabilities linked
to specific organizational
units
• Development of capabilities
requires a stable
environment
• How can sufficient value be
generated to justify the
purchase price of the
acquisition?
Merger
• Complete consolidation of
operations/organization/
culture
• Key is complete removal of
boundaries
• What time is best for
complete integration?
Partial integration
• Initial coexistence, then
increasing interdependence
• Balance between transfer
and interdependence
• Define ideal time horizon &
path to mutual
dependence?
• Brand management
• Sales channels
• R&D
• Decision making freedom
Value chain extension
• Complementary sales
channels
• Complementary
research and
development
• Special, non-transferable
competitive advantages
(e.g. modularization of
intellectual property)
Functional extension
• Research and development
• Sales channels
• Customer relationship
management
Functional consolidation
• Economies of scale
(e.g., capacity utilization)
• Procurement
• Sales channels
• Shared Service CentersQuestion the strategic
reasoning of the deal
Growthfocus
Cost / investment reduction focus
ImportantUnimportant
Unimportant Important
Major value can be destroyed when you select the wrong integration
approach, e.g. when you stifle the targets growth engine and / or its
organizational autonomy

21. Why integrating at the edge is important
21
Major value can be destroyed when the target operating model is
implemented without taking note of the acquisitions existing value streams
Value stream mapping
steps
Process steps
Information flows
Process data
Time line
Inventory optimization
Multiple suppliers and
customers

22. 22
Results: 69% par/cipa/on
• 30% M&A Strategy
• 70% M&A Strategy,
Integra/on Strategy,
and Integra/on Plan
pre-signing

23. When to integrate at the edge (checklist)
q You recognize that the acquisition will fill a very important gap in your strategy
q You buy the business especially for its IP and talent
q The acquisitions organizational and management structure varies significantly
from yours
q The acquisitions business processes contrast yours
q The acquisitions talent resource capacity is not sufficient for a large scale
integration
q You understand that the acquisitions cultural environment is very different from
yours
q You observed that the communication within the acquisition and between the
acquisition and its stakeholders is very different from yours
23

24. How to integrate at the edge (ToDo’s vs. Don’t do’s)
Keep the target’s operating
model running!
q Keep the nimble structures and
existing business processes alive
q Keep autonomy, responsibilities,
span of control, decision making
freedom
Leverage IP and talent
q Adopt the spirit
q Become part of the team in a non
controlling, learning way
q Leverage knowhow / approach
into acquiring organization through
beachheads
Foster success culture
q Identify and continue to foster the
culture that lead to success prior to
the acquisition
Continue communication style
q Retain internal communication style
to support the success culture
q Connect with customers and suppliers
using the established communication
style
Define value streams and docking
points for value exchange
q Identify the best approach to channel
the value created within the acquired
company to the operating units of
the acquirer
q Take extra care to define the exact
point in time
Lean, pull and leverage
q Leverage the success through
additional investments that enable
the value generation to scale while
protecting the nucleus, eg. the
business approach
q Ensure full responsibility is clearly
delegated to the leadership team of
the acquired company
24

25. What are the ‘must do’s’ for integration
at the edge?
At the time of acquisition ENSURE:
o Financial integration (financial / tax accounting)
o IT integration (only within clearly defined parameters so that it does
not stifle growth, hinders proven business processes etc.)
o Legal integration (legal framework: tax and corporate laws, code
of conduct, confidentiality & insider rules, etc.)
o Implementation of key communication rules of acquirer with
stakeholders other than employees, customers, suppliers; e.g.
shareholders, press, government authorities
After 24 – 36 months of successful value transition:
o Test stronger operational and value stream integration to shift
overall organization towards more agile business processes
25

27. Results: 62% par/cipa/on
• 89% Yes
• 11% No

28. What our clients have said about us
“GPMIP greatly exceeded my expectations”
“You understood our culture, how we operate, how we work – you just got it”
“You weren’t just consultants, you were part of the team”
“Consulting differently is what we experienced. You are not a typical
consulting firm”
Our clients’ results are our currency, so we really care what they have
said about us:
In the next section, we show you more
specifically how GPMIP could work with
you on a European integration
programme.
28

29. Books & academic
Since 2009, GPMIP Partners have delivered knowledge through:
social networks (LinkedIn)
conferences (MergerMarket, HEC, DFCG, CSOEC, …)
university lectures (ZHAW, Pepperdine, Tilburg, TAU, Wharton, …)
dedicated corporate seminars and trainings (Ericsson, Airbus, Mölnlycke, …)
podcasts, newsletters
conferences (China Outbound M&A conference in Beijing, January 2016,
Global M&A Summit – Silicon Valley in Palo Alto, CA USA, October 26th 2016)
Next Training: M&A Integration Essentials for Executives - Stockholm
books (Wiley)
Our approach benefits from our academic and training activity.
29

30. Q&A
30

31. The Berlin Airlift is a symbol for cultural
is described by many as the birthplace of the Industrial Revolution.
The United Kingdom continues to build on its long history as a global leader
in engineering, R&D and innovation of all kinds, be it technology, life sciences, media,
financial services, consulting or law.
The Berlin Airlift integrated two seemingly separate parts
of Germany. It build the cornerstone for the reunification
of East and West Germany and thus created significant
cultural and financial development.
A global consultancy specialized
in pre and post merger
integration separation and
transformation
Thomas Kessler
Partner GPMIP
Germany
+49 172 255 9788
thomas.kessler@gpmip.com
Thank you for
your attention!

32. Contact us:
team@midaxo.com
Thomas H Kessler
thomas.kessler@gpmip.com
If we didn’t answer your
question, we’ll reply by
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