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Mergers and Acquisitions Toolkit - Framework, Best Practices and Templates

The document outlines a comprehensive mergers and acquisitions (M&A) toolkit designed to enhance the success rate of M&A transactions. It details a six-phase approach that includes defining the M&A strategy, identifying target companies, conducting due diligence, executing transactions, and managing post-merger integrations. The toolkit aims to remediate the high failure rate of M&A deals through structured frameworks, templates, and industry best practices.

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1 Best Practices Frameworks Templates II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy Mergers and Acquisitions Toolkit Overview and Approach
There are 3 main corporate growth strategies 2 Organic Growth Strategy Mergers and acquisitions Strategy Strategic Alliances Strategy 1 2 3
Organic Growth Strategy Organic Growth Strategy Description Advantages Disadvantages Often perceived as the default growth option for companies, an organic growth strategy relies on developing a company’s internal resources and capabilities • Provides deeper first-hand knowledge that is likely to be internalized in the company • Helps spread investment over time and reduce upfront commitment • There are no availability constraints, that is to say that the company is not dependent on the availability of suitable acquisition targets or potential alliance partners • Strategic independence • Creation of new activities within the existing culture environment • Can be slow, expensive, and risky • Difficult to use existing capabilities as the platform for major leaps in terms of innovation, diversification, or internationalization 3
Mergers and acquisitions Strategy Merger and acquisition Strategy Description Advantages Disadvantages Mergers and acquisitions (M&A) bring together companies through complete changes in ownership. It has been used by companies for centuries and remains a major way for companies to expand rapidly • Business extension: M&A can be used to extend the reach of a firm in terms of geography, products, or markets • Building capabilities: M&A may increase a company’s capabilities • Increase market power by reducing competition and increasing bargaining power with suppliers • Increase efficiency: by sharing resources and capabilities • Speed: M&A allows acquirers to act fast • Financial efficiency: by combining the 2 balance sheets • Tax efficiency • Important investment upfront • Potential culture clash between the 2 companies • High failure rate • Sometimes excessive initial valuations, exaggerated expectations of strategic fit, and underestimated problems of organizational fit 4
Strategic Alliances Strategy Strategic Alliances Strategy Description Advantages Disadvantages Two companies share resources and activities to pursue a common strategy. In terms of ownership, there are two main kinds of strategic alliance: equity and nonequity alliances. Equity alliances involve the creation of a new entity that is owned separately by the partners involved (e.g. Joint Venture). Nonequity alliances do not involve the commitment implied by ownership and are often based on contracts (Franchising, Licensing) • Require less commitment than other forms of expansion • Scale Alliances can provide economies of scale • Access alliances involve a company allying in order to access the capabilities of another company that are required to produce or sell its own products and services • Complementary alliances involve companies combining their complementary capabilities • High failure rate (~50%) • Sometimes suffer from miscalculations in terms of strategic and organizational fit, • The lack of control on either side can lead to particular issues of trust and coevolution 5
This Toolkit will focus on Mergers and acquisitions 6 Organic Growth Strategy Mergers and acquisitions Strategy Strategic Alliances Strategy 1 2 3
Main problem of the M&A Strategy More than half of Mergers & Acquisitions fail to reach their value creation objectives. 7 55% 45% Mergers & Acquisitions’ ability to reach value creation objectives* Failure rate Success rate *Consolidation of multiple surveys from New York Times, Harvard Business Review and Australia Financial Review
Our solution To increase your M&A success rate, our ex-Deloitte & McKinsey Management Consultants and JP Morgan Investment Bankers created a Mergers & Acquisitions Toolkit including 7 components. 8 Tools Templates Step-by-step tutorials Real-life examples Best practices Support from tier-1 management consultants Frameworks Toolkit
Objectives The Mergers & Acquisitions Toolkit includes frameworks, tools, templates, tutorials, real-life examples and best practices to help you: 9 • Increase your Mergers and Acquisitions success rate with our 6-phase M&A Approach: (I) Define your M&A Strategy, (II) Identify Target Companies, (III) Build a Business Case and Financial Modeling, (IV) Conduct a Due Diligence, (V) Execute Transaction, (VI) Conduct the Post Merger Integration • Define your M&A Strategy: (1) Company mission, vision and values, (2) M&A strategic objectives and key performance indicators, (3) M&A team, (4) M&A guiding principles, (5) Target screening criteria • Identify Target Companies: (1) Potential target companies and data collection, (2) High-level assessment of potential target companies, (3) Shortlisted potential targets, (4) Financial statements analysis, (5) Business valuation, (6) Targets approved for the business case phase • Build a Business Case and Financial Modeling: (1) Strategic benefit, (2) Feasibility, (3) Financial benefit, (4) Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return, (5) Letter on intent or term sheet • Conduct a Due Diligence (CDD) to identify the likely future performance of a company: (1) Work plan including key business case hypotheses & assumptions, (2) Due diligence to validate key hypotheses and assumptions, (3) Updated business valuation, (4) Recommendation to make (or not) a formal offer to acquire the target company • Execute Transaction: (1) Deal structure, (2) M&A negotiations, (3) Signing and closing the M&A deal • Conduct a successful Post Merger Integration to ensure the company reach its cost and revenue synergy targets : (1) Post merger integration strategy & high-level plan, (2) Post merger integration detailed plans, (3) Implementation and monitoring
Approach The Mergers & Acquisitions Toolkit includes a 6-Phase Approach that we built and refined over the past 20 years, by constant trial and error. The good news is that you don’t have to waste your time, energy and money going through that lengthy trial-and-error process. You can simply leverage our work and customize it based on the specificities of your organization. 10 Pre - Announcement Post - Announcement Announcement II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy
Approach The Mergers & Acquisitions Toolkit includes a 6-Phase Approach that we built and refined over the past 20 years, by constant trial and error. The good news is that you don’t have to waste your time, energy and money going through that lengthy trial-and-error process. You can simply leverage our work and customize it based on the specificities of your organization. 11 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
In the next slides, you’ll see a small preview of the Phase I of our M&A Approach 12 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
We identified 5 [insert your own number] M&A guiding principles 13 1 Insert a quick description of your guiding principle (e.g. Ensure that decision-making and approval procedures are simple, robust and transparent) 2 Insert a quick description of your guiding principle (e.g. Ensure strategic alignment between the company vision and mission and the M&A strategic objectives) 3 Insert a quick description of your guiding principle (e.g. Establish joint ownership of a shared vision, strategy and journey between our company and the acquired company) 4 Insert a quick description of your guiding principle (e.g. Pay attention to retaining key talents) 5 Insert a quick description of your guiding principle (e.g. Focus on transactions with an internal rate of return (IRR) that delivers an acceptable margin above cost of capital) Insert title of your guiding principle (e.g. Simple decision-making process Insert title of your guiding principle (e.g. Strategic alignment) Insert title of your guiding principle (e.g. Shared vision) Insert title of your guiding principle (e.g. Key talent) Insert title of your guiding principle (e.g. Internal rate of return)
We identified 5 [insert your own number] screening criteria to help us select the right companies to potentially acquire 14 Strategic alignment Revenue Market Positioning Risk The acquisition of the target company needs to help us reach at least one of our M&A strategic objectives The target company needs to sell its products mainly in the Asian market Acceptable impact on the Group’s financial and non-financial risk profile The target company needs to have a revenue above $10M The target company needs to have a premium positioning and good reputation This is an example. Replace this text using your own criteria.
In the next slides, you’ll see a small preview of the Phase II of our M&A Approach 15 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
Based on our M&A strategy, we identified 20 [insert your own number] potential target companies, including the 10 listed below 16 CEO Main activity Revenue Profit Market share Number of employees Strategic rationale Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text To access the most comprehensive list of our potential target companies, open the Excel sheet “Target companies” You can replace the column header based on what information you want to emphasize. Select the top companies you want to emphasize. If someone wants to see the most comprehensive list, open the Excel sheet “Target companies”
Summary of our financial statement analysis Profitability ratios 17 Return on Capital Employed (%) Return on net assets (%) Return On Funds Employed (%) Return on equity (%) Return on sales (%) Worst peer Best peer 5% 8% 9% 2% 4% 8% X% X% X% X% X% X% X% X% X% Company X Company Y Company Z For more details on how to conduct a financial statement analysis, open the folder “financial statement analysis”
In the next slides, you’ll see a small preview of the Phase III of our M&A Approach 18 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
Document Purpose 19 The purpose of this document is to provide enough information to answer the question “should we acquire the company [insert company name]”. To answer this question, we will use an M&A framework that includes 3 components: Financial Benefit Strategic Benefit Feasibility There are many M&A frameworks that you could use. Based on our experience, this one if the most practical one.
Each component has an underlying question that we will have to answer to identify if it is a good strategic initiative to acquire company Y What would be the financial benefit of the deal? What would be the feasibility of the deal? What would be the strategic benefit of the deal? Financial Benefit Strategic Benefit Feasibility 20
If the answer is “high” or “very high” to the 3 questions, then it means that acquiring company Y is a good strategic initiative Sweet spot Financial Benefit Strategic Benefit Feasibility What would be the financial benefit of the deal? What would be the feasibility of the deal? What would be the strategic benefit of the deal? 21
Let’s start by assessing the strategic benefit of the deal What would be the financial benefit of the deal? What would be the feasibility of the deal? What would be the strategic benefit of the deal? 22 Financial Benefit Strategic Benefit Feasibility
Strategic Benefit What would be the strategic benefit of the deal? Vision & Strategic objectives M&A Strategy versus organic growth strategy M&A Strategy versus strategic alliance Insert in this box in which way this deal will help us deliver on our long-term vision and strategic objectives Insert in this box in which way acquiring company Y is a better option than an organic growth strategy. Insert in this box in which way acquiring company Y is a better option than a strategic alliance with company Y. Very Low Low Medium High Very High Caption: Very High Replace this rating by your own rating based on the sections below
See below a screenshot of our financial model. 24
In the next slides, you’ll see a small preview of the Phase IV of our M&A Approach 25 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
Example of hypothesis 26 The Target Company profit forecasts provided by the Board are reasonable
Example of assumptions that must be true to validate our hypothesis 27 The Target Company profit forecast provided by the Board is reasonable The projected Revenue is reasonable The projected COGS is reasonable The projected Operating Cost is reasonable
Example of sub-assumptions that must be true to validate our assumptions 28 The Target Company profit forecast provided by the Board is reasonable The projected Revenue is reasonable The projected COGS is reasonable The projected Operating Cost is reasonable There is no illogical trend between historic revenues and projected revenues The company core capabilities will support the future revenue growth The revenue drivers have been identified correctly and projected in a reasonable way
Once you’ve got your “Hypothesis tree” with your Hypothesis, Assumptions, Sub-Assumptions,…it is time to create your work plan 29 Work Plan to validate or invalidate your first hypothesis For more details, open the Excel sheet “Work Plan” Hypothesis #1: The Target Company profit forecast provided by the Board is reasonable Assumptions & Sub-assumptions Expected answer Actual Answer Analyses Data Sources End Product Responsibility Deadline 1. The projected Revenue is reasonable TRUE TRUE See sub-assumptions below See sub-assumptions below See sub-assumptions below Raphael October 5 1a. There is no illogical trend between historic revenues and projected revenues TRUE TRUE Compare Historic and forcasted revenue CAGR Financial Due Diligence Vertical Histogramme chart Raphael October 5 1b. The company core capabilities will support the future revenue growth TRUE TRUE Compare Historic and forcasted revenue CAGR Financial Due Diligence Vertical Histogramme chart Raphael October 5 1c. The revenue drivers have been identified correctly and projected in a reasonable way TRUE TRUE Compare Historic and forcasted revenue CAGR Financial Due Diligence Vertical Histogramme chart Raphael October 5 2. The projected COGS is reasonable TRUE FALSE Check list of key revenue drivers identified by the management Industry report Driver tree John October 10 3. The projected Operating Cost is reasonable Work Plan
In the next slides, you’ll see a small preview of the Phase V of our M&A Approach 30 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
Structuring the deal Overview* There are many ways in which a corporate merger or acquisition may be structured. The goal is not to create the most complex structure, but rather to create a structure that fairly reflects the objectives of the buyer and the seller. At the fundamental level, all structures are either mergers or acquisitions, including the purchase or consolidation of either stocks or assets. At the heart of each transaction are the following key issues that will affect the structure of the deal: • How will tangible and intangible assets be transferred from the seller to the purchaser? • At what price will they be transferred, and according to what terms? • What issues discovered during due diligence may affect the price, terms, or structure of the deal? • What liabilities will be assumed by the purchaser? • What are the tax implications for the buyer and the seller? • What role will the seller have in the management and growth of the underlying business after closing? • To what extent will third-party consents or government filings or approvals be necessary? • What arrangement will be made for the key management team of the seller, who may not necessarily be among the selling owners of the company? • Does the buyer currently have access to all of the consideration to be paid to the seller, or will some of these funds need to be raised from debt or equity markets? And at the heart of each structural alternative are the following 4 basic questions: 1. Will the buyer be acquiring the stock or the assets of the target? 2. In what form will the consideration from the buyer to the seller be made (e.g. cash, notes, securities, or some other form)? 3. Will the purchase price be fixed, contingent, or payable over time on an installment basis? 4. What are the tax consequences of the proposed structure for the acquisition? 31 * Source: Book “Mergers & Acquisitions from A to Z” by Andrew J. Sherman, which we highly recommend
Structuring the deal Stock versus asset purchases 32 Stock purchase advantages and disadvantages Buyer’s perspective Main Disadvantages Main Advantages • Preserves the right of the buyer to use the seller’s name, licenses, and permits. • Provides continuity of the corporate identity, contracts, and structure. • There is less flexibility to cherry-pick key assets of the seller • This structure usually does not terminate existing labor union collective bargaining agreement(s) and generally results in the continuation of employee benefits plans. • The seller is taxed only on the sales of stock. • Any gain or loss is usually capital in nature. • It does not leave the seller with the problem of disposing of assets that were not bought by the purchase. • The seller cannot pick and choose the assets to be retained. • A loss on the sale of stock may not be recognized by a corporate shareholder who included the company in its consolidated income tax return. Seller’s perspective
In the next slides, you’ll see a small preview of the Phase VI of our M&A Approach 33 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
Post Merger Integration 3-Phase Approach To help you conduct your Post Merger Integration, we created a 3-Phase Approach that we built and refined over the past 20 years, by constant trial and error. The good news is that you don’t have to waste your time, energy and money going through that lengthy trial-and-error process. You can simply leverage our work and customize it based on the specificities of your organization. 34 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
In the next slides, you’ll see a small preview of the Phase I of our Post Merger Integration Approach 35 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
Our merger strategic objectives are: 36 1 Replace this text by your own text 2 Replace this text by your own text 3 Replace this text by your own text 4 Replace this text by your own text 5 Replace this text by your own text 6 Replace this text by your own text Don’t reinvent the wheel here. Most of the strategic objectives should have already been written prior to the deal.
The most common merger strategic objectives are: 37 1 Gaining economies of scale 2 Entering a new country 3 Entering a new market 4 Increasing the company product or service portfolio 5 Increasing market share by acquiring one of your competitors (horizontal integration) 6 Becoming a key player in an industry by acquiring one of your suppliers or clients (vertical integration) Example we used during a PMI consulting project we did for a Global Fortune 1000 firm.
We decided to create an Integration Management Office that will be responsible for the success of the integration 38 The Integration Management Office will oversee the post Merger Integration and be responsible for the success of the integration. It includes 7 [replace this number by your own number] executives representing both [insert name of the acquiring company] and [insert name of the acquired company]: Integration Management Officer [Insert name] Integration and Synergy Initiatives [Insert name] Change Management [Insert name] Culture [Insert name] Risk Management [Insert name] Communication [Insert name] Training [Insert name] This is only an example. You may decide to emphasize different areas and adjust the size of the integration Management Office
We identified 8 [insert your own number] post merger integration guiding principles 39 1 Insert your own guiding principle 2 Insert your own guiding principle 3 Insert your own guiding principle 4 Insert your own guiding principle 7 Insert your own guiding principle 5 Insert your own guiding principle 8 Insert your own guiding principle 6 Insert your own guiding principle
Top 8 post merger integration guiding principles commonly used 40 1 Be clear on the strategic objectives of the deal 2 Ground the integration in the objectives of the deal 3 Be clear on your synergy baseline and synergy targets 4 Create a robust integration plan to reach the strategic objectives of the deal and the synergy targets 7 Ensure cultural fit 5 Search for synergies in every function of the newly created organization 8 Maintain business momentum 6 Communicate on a regular basis to all stakeholders Example we used during a PMI consulting project we did for a Global Fortune 1000 firm.
See below 4 screenshots from the Phase 1. 41 High-Level Plan - Phase 1 Prioritization Matrix Lean Business Case Synergy Target Breakdown
In the next slides, you’ll see a small preview of the Phase II of our Post Merger Integration Approach 42 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
Day 1 Readiness Checklist 43 Owner Due date Status -9 -8 -7 -6 -5 -4 -3 -2 -1 0 Prepare internal communications AD March 12 Done Prepare external communications Aurelien F. Jan 20 Done Define pricing policy Christian G. Feb 28 Done Integrate General ledger George P. March 31 Done Prepare welcome drink for new employees George P. March 31 On Track Adjust sales pitch Christian G. March 31 Late Align marketing messages George P. March 31 On Track Define the synergy targets George P. March 31 Late Integrate brands On Track Integrate products & services On Track Integrate reporting On Track Define employee retention strategy Late Rationalize employee compensations Late Insert name of activity Late Weeks
The Day-1 Readiness Checklist often includes many activities that will better fit in an Excel document 44 Open the Excel document “1b. Day-1 Readiness Checklist” for more details
See below 4 additional screenshots from the Phase 2. 45 Change Impact Assessment Matrix Stakeholder Analysis Matrix Communication Strategy & Plan Culture Integration Strategy
In the next slides, you’ll see a small preview of the Phase III of our Post Merger Integration Approach 46 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
To ensure a proper execution of the integration & synergy initiatives, it is very important to appoint high-caliber initiative owner or project manager 47 Project Manager Quality Cost Time Meeting the expectations Managing a budget and resource limitations Completing the project in a specific time of frame  The main challenge of the different initiative owners or project managers will be to meet the objectives while balancing the triple constraints of quality, cost and time
See below 4 additional screenshots from the Phase 3. 48 Governance Risk Management Framework Initiative Status Report Communication Plan
Structure of the Toolkit The M&A Toolkit includes 500 Powerpoint slides, 70 Excel sheets, and 7 Word pages categorized in 7 folders that you can download on your device immediately after your purchase. 49 500 editable Powerpoint slides* 70 editable Excel sheets* + *Please note that the number of Powerpoint slides and Excel sheets listed is the number of unique slides and sheets. For example, a Powerpoint slide that has been duplicated to facilitate the understanding of our clients only count for 1 Powerpoint slide. 1 0. Overview and Approach 2 I. M&A Strategy 3 II. Target companies 4 III. Business Case and Financial Model 5 IV. Due Diligence 7 VI. Post Merger Integration 6 V. Transaction Execution 7 Word pages +
Interested in more than 1 Toolkit? You can access to all our Toolkits for half the price with the Gold Business & Consulting Package www.slidebooks.com Gold Business & Consulting Package Learn More 50
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In this document
Powered by AI

Overview of a Mergers and Acquisitions (M&A) Toolkit delineating steps from strategy to integration.

Introduction to corporate growth strategies: Organic Growth, Mergers & Acquisitions, and Strategic Alliances.

Overview of organic growth strategy including advantages like deeper knowledge and strategic independence but notes that it can be slow and risky.

Advantages and disadvantages of M&A strategies, emphasizing rapid expansion, increased market power, with a noted high failure rate.

Explains strategic alliances, their types, advantages of lower commitment and economies of scale, and high failure rate.

The toolkit emphasized will focus specifically on Mergers and Acquisitions strategies.

Statistics indicating that over 55% of Mergers and Acquisitions fail to achieve their value creation objectives.

Introduction to a structured M&A Toolkit with 7 components designed to improve M&A success rates.

Toolkit aims to help users through a six-phase approach, detailing the M&A strategy, identification, case building, due diligence, transaction execution, and integration.

Description of a 6-phase M&A approach refined over 20 years to streamline and enhance M&A efforts.

Introduction to Phase I of the M&A approach, covering strategy definition and high-level plans.

Introduction of guiding principles for M&A, emphasizing decision-making and strategic alignment.

Identification of screening criteria for selecting target companies, focused on strategic and market alignment.

Preview of Phase II concerning company identification in the M&A approach.

Identified 20 potential target companies with respective characteristics and strategic rationale.

Financial ratios summary comparing profitability metrics of target companies to industry peers.

Introduction to Phase III of the M&A approach focusing on business case and financial modeling.

Purpose of the M&A document to evaluate the feasibility of acquiring a specific company.

Key framework questions guiding evaluation of the acquisition's financial, feasibility, and strategic benefits.

Criteria indicating that high financial and strategic benefits imply a favorable acquisition initiative.

Focus on assessing the strategic benefit of potential acquisitions.

Exploration of how an acquisition aligns with the company’s strategic vision and long-term goals.

Showcase of a financial model used in evaluating the M&A strategy.

Introduction of Phase IV focusing on due diligence and transaction execution.

Presentation of sample hypotheses to guide due diligence in M&A.

Examples of fundamental assumptions necessary to validate M&A hypotheses.

Detailed sub-assumptions for validating financial forecasts during M&A analysis.

Outlining a structured work plan to validate or invalidate hypotheses formed during the M&A process.

Introduction to Phase V of M&A focusing on transaction execution strategies.

Overview of key issues and questions relating to structuring M&A deals.

Comparison of advantages and disadvantages of stock purchases versus asset purchases in M&A.

Introduction to Phase VI focusing on post-merger integration processes.

Detailed 3-phase approach for effective post-merger integration based on years of experience.

Overview of tasks and strategies in Phase I of post-merger integration.

Space for defining specific strategic objectives relevant to the M&A transaction.

List of common strategic objectives that often drive M&A activities.

Establishment of an Integration Management Office tasked with overseeing post-merger outcomes.

Introduction of guiding principles that inform and direct post-merger integration efforts.

List of best practices to follow for effective post-merger integration.

Visual overview from Phase I including project metrics and operational plans.

Outline of the steps to be taken in the second phase of post-merger integration.

Details for a checklist to ensure readiness for Day 1 post-merger engagement.

Prompt to follow up with a detailed checklist provided as an Excel document.

Additional visuals related to the communication and integration strategies from Phase 2.

Overview of what to expect in the third phase of the post-merger integration.

Importance of appointing skilled project managers for successful integration execution.

Visual representations from Phase 3 concerning governance and project management.

Breakdown of the M&A toolkit contents including slides and documents available.

Offer for package access to various toolkits at a discounted rate.

Highlighting key benefits of utilizing professional toolkits to enhance business operations.

Review excerpts showcasing client experiences and satisfaction regarding the toolkits.

Statistics showing the widespread adoption and satisfaction of the toolkit across global firms.

Final notes encouraging engagement with the M&A toolkit for practical business applications.

Mergers and Acquisitions Toolkit - Framework, Best Practices and Templates

  • 1.
    1 Best Practices Frameworks Templates II.Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy Mergers and Acquisitions Toolkit Overview and Approach
  • 2.
    There are 3main corporate growth strategies 2 Organic Growth Strategy Mergers and acquisitions Strategy Strategic Alliances Strategy 1 2 3
  • 3.
    Organic Growth Strategy OrganicGrowth Strategy Description Advantages Disadvantages Often perceived as the default growth option for companies, an organic growth strategy relies on developing a company’s internal resources and capabilities • Provides deeper first-hand knowledge that is likely to be internalized in the company • Helps spread investment over time and reduce upfront commitment • There are no availability constraints, that is to say that the company is not dependent on the availability of suitable acquisition targets or potential alliance partners • Strategic independence • Creation of new activities within the existing culture environment • Can be slow, expensive, and risky • Difficult to use existing capabilities as the platform for major leaps in terms of innovation, diversification, or internationalization 3
  • 4.
    Mergers and acquisitionsStrategy Merger and acquisition Strategy Description Advantages Disadvantages Mergers and acquisitions (M&A) bring together companies through complete changes in ownership. It has been used by companies for centuries and remains a major way for companies to expand rapidly • Business extension: M&A can be used to extend the reach of a firm in terms of geography, products, or markets • Building capabilities: M&A may increase a company’s capabilities • Increase market power by reducing competition and increasing bargaining power with suppliers • Increase efficiency: by sharing resources and capabilities • Speed: M&A allows acquirers to act fast • Financial efficiency: by combining the 2 balance sheets • Tax efficiency • Important investment upfront • Potential culture clash between the 2 companies • High failure rate • Sometimes excessive initial valuations, exaggerated expectations of strategic fit, and underestimated problems of organizational fit 4
  • 5.
    Strategic Alliances Strategy Strategic Alliances Strategy DescriptionAdvantages Disadvantages Two companies share resources and activities to pursue a common strategy. In terms of ownership, there are two main kinds of strategic alliance: equity and nonequity alliances. Equity alliances involve the creation of a new entity that is owned separately by the partners involved (e.g. Joint Venture). Nonequity alliances do not involve the commitment implied by ownership and are often based on contracts (Franchising, Licensing) • Require less commitment than other forms of expansion • Scale Alliances can provide economies of scale • Access alliances involve a company allying in order to access the capabilities of another company that are required to produce or sell its own products and services • Complementary alliances involve companies combining their complementary capabilities • High failure rate (~50%) • Sometimes suffer from miscalculations in terms of strategic and organizational fit, • The lack of control on either side can lead to particular issues of trust and coevolution 5
  • 6.
    This Toolkit willfocus on Mergers and acquisitions 6 Organic Growth Strategy Mergers and acquisitions Strategy Strategic Alliances Strategy 1 2 3
  • 7.
    Main problem ofthe M&A Strategy More than half of Mergers & Acquisitions fail to reach their value creation objectives. 7 55% 45% Mergers & Acquisitions’ ability to reach value creation objectives* Failure rate Success rate *Consolidation of multiple surveys from New York Times, Harvard Business Review and Australia Financial Review
  • 8.
    Our solution To increaseyour M&A success rate, our ex-Deloitte & McKinsey Management Consultants and JP Morgan Investment Bankers created a Mergers & Acquisitions Toolkit including 7 components. 8 Tools Templates Step-by-step tutorials Real-life examples Best practices Support from tier-1 management consultants Frameworks Toolkit
  • 9.
    Objectives The Mergers &Acquisitions Toolkit includes frameworks, tools, templates, tutorials, real-life examples and best practices to help you: 9 • Increase your Mergers and Acquisitions success rate with our 6-phase M&A Approach: (I) Define your M&A Strategy, (II) Identify Target Companies, (III) Build a Business Case and Financial Modeling, (IV) Conduct a Due Diligence, (V) Execute Transaction, (VI) Conduct the Post Merger Integration • Define your M&A Strategy: (1) Company mission, vision and values, (2) M&A strategic objectives and key performance indicators, (3) M&A team, (4) M&A guiding principles, (5) Target screening criteria • Identify Target Companies: (1) Potential target companies and data collection, (2) High-level assessment of potential target companies, (3) Shortlisted potential targets, (4) Financial statements analysis, (5) Business valuation, (6) Targets approved for the business case phase • Build a Business Case and Financial Modeling: (1) Strategic benefit, (2) Feasibility, (3) Financial benefit, (4) Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return, (5) Letter on intent or term sheet • Conduct a Due Diligence (CDD) to identify the likely future performance of a company: (1) Work plan including key business case hypotheses & assumptions, (2) Due diligence to validate key hypotheses and assumptions, (3) Updated business valuation, (4) Recommendation to make (or not) a formal offer to acquire the target company • Execute Transaction: (1) Deal structure, (2) M&A negotiations, (3) Signing and closing the M&A deal • Conduct a successful Post Merger Integration to ensure the company reach its cost and revenue synergy targets : (1) Post merger integration strategy & high-level plan, (2) Post merger integration detailed plans, (3) Implementation and monitoring
  • 10.
    Approach The Mergers &Acquisitions Toolkit includes a 6-Phase Approach that we built and refined over the past 20 years, by constant trial and error. The good news is that you don’t have to waste your time, energy and money going through that lengthy trial-and-error process. You can simply leverage our work and customize it based on the specificities of your organization. 10 Pre - Announcement Post - Announcement Announcement II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy
  • 11.
    Approach The Mergers &Acquisitions Toolkit includes a 6-Phase Approach that we built and refined over the past 20 years, by constant trial and error. The good news is that you don’t have to waste your time, energy and money going through that lengthy trial-and-error process. You can simply leverage our work and customize it based on the specificities of your organization. 11 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
  • 12.
    In the nextslides, you’ll see a small preview of the Phase I of our M&A Approach 12 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
  • 13.
    We identified 5[insert your own number] M&A guiding principles 13 1 Insert a quick description of your guiding principle (e.g. Ensure that decision-making and approval procedures are simple, robust and transparent) 2 Insert a quick description of your guiding principle (e.g. Ensure strategic alignment between the company vision and mission and the M&A strategic objectives) 3 Insert a quick description of your guiding principle (e.g. Establish joint ownership of a shared vision, strategy and journey between our company and the acquired company) 4 Insert a quick description of your guiding principle (e.g. Pay attention to retaining key talents) 5 Insert a quick description of your guiding principle (e.g. Focus on transactions with an internal rate of return (IRR) that delivers an acceptable margin above cost of capital) Insert title of your guiding principle (e.g. Simple decision-making process Insert title of your guiding principle (e.g. Strategic alignment) Insert title of your guiding principle (e.g. Shared vision) Insert title of your guiding principle (e.g. Key talent) Insert title of your guiding principle (e.g. Internal rate of return)
  • 14.
    We identified 5[insert your own number] screening criteria to help us select the right companies to potentially acquire 14 Strategic alignment Revenue Market Positioning Risk The acquisition of the target company needs to help us reach at least one of our M&A strategic objectives The target company needs to sell its products mainly in the Asian market Acceptable impact on the Group’s financial and non-financial risk profile The target company needs to have a revenue above $10M The target company needs to have a premium positioning and good reputation This is an example. Replace this text using your own criteria.
  • 15.
    In the nextslides, you’ll see a small preview of the Phase II of our M&A Approach 15 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
  • 16.
    Based on ourM&A strategy, we identified 20 [insert your own number] potential target companies, including the 10 listed below 16 CEO Main activity Revenue Profit Market share Number of employees Strategic rationale Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert company name Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text Insert your own text To access the most comprehensive list of our potential target companies, open the Excel sheet “Target companies” You can replace the column header based on what information you want to emphasize. Select the top companies you want to emphasize. If someone wants to see the most comprehensive list, open the Excel sheet “Target companies”
  • 17.
    Summary of ourfinancial statement analysis Profitability ratios 17 Return on Capital Employed (%) Return on net assets (%) Return On Funds Employed (%) Return on equity (%) Return on sales (%) Worst peer Best peer 5% 8% 9% 2% 4% 8% X% X% X% X% X% X% X% X% X% Company X Company Y Company Z For more details on how to conduct a financial statement analysis, open the folder “financial statement analysis”
  • 18.
    In the nextslides, you’ll see a small preview of the Phase III of our M&A Approach 18 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
  • 19.
    Document Purpose 19 The purposeof this document is to provide enough information to answer the question “should we acquire the company [insert company name]”. To answer this question, we will use an M&A framework that includes 3 components: Financial Benefit Strategic Benefit Feasibility There are many M&A frameworks that you could use. Based on our experience, this one if the most practical one.
  • 20.
    Each component hasan underlying question that we will have to answer to identify if it is a good strategic initiative to acquire company Y What would be the financial benefit of the deal? What would be the feasibility of the deal? What would be the strategic benefit of the deal? Financial Benefit Strategic Benefit Feasibility 20
  • 21.
    If the answeris “high” or “very high” to the 3 questions, then it means that acquiring company Y is a good strategic initiative Sweet spot Financial Benefit Strategic Benefit Feasibility What would be the financial benefit of the deal? What would be the feasibility of the deal? What would be the strategic benefit of the deal? 21
  • 22.
    Let’s start byassessing the strategic benefit of the deal What would be the financial benefit of the deal? What would be the feasibility of the deal? What would be the strategic benefit of the deal? 22 Financial Benefit Strategic Benefit Feasibility
  • 23.
    Strategic Benefit What wouldbe the strategic benefit of the deal? Vision & Strategic objectives M&A Strategy versus organic growth strategy M&A Strategy versus strategic alliance Insert in this box in which way this deal will help us deliver on our long-term vision and strategic objectives Insert in this box in which way acquiring company Y is a better option than an organic growth strategy. Insert in this box in which way acquiring company Y is a better option than a strategic alliance with company Y. Very Low Low Medium High Very High Caption: Very High Replace this rating by your own rating based on the sections below
  • 24.
    See below ascreenshot of our financial model. 24
  • 25.
    In the nextslides, you’ll see a small preview of the Phase IV of our M&A Approach 25 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
  • 26.
    Example of hypothesis 26 TheTarget Company profit forecasts provided by the Board are reasonable
  • 27.
    Example of assumptionsthat must be true to validate our hypothesis 27 The Target Company profit forecast provided by the Board is reasonable The projected Revenue is reasonable The projected COGS is reasonable The projected Operating Cost is reasonable
  • 28.
    Example of sub-assumptionsthat must be true to validate our assumptions 28 The Target Company profit forecast provided by the Board is reasonable The projected Revenue is reasonable The projected COGS is reasonable The projected Operating Cost is reasonable There is no illogical trend between historic revenues and projected revenues The company core capabilities will support the future revenue growth The revenue drivers have been identified correctly and projected in a reasonable way
  • 29.
    Once you’ve gotyour “Hypothesis tree” with your Hypothesis, Assumptions, Sub-Assumptions,…it is time to create your work plan 29 Work Plan to validate or invalidate your first hypothesis For more details, open the Excel sheet “Work Plan” Hypothesis #1: The Target Company profit forecast provided by the Board is reasonable Assumptions & Sub-assumptions Expected answer Actual Answer Analyses Data Sources End Product Responsibility Deadline 1. The projected Revenue is reasonable TRUE TRUE See sub-assumptions below See sub-assumptions below See sub-assumptions below Raphael October 5 1a. There is no illogical trend between historic revenues and projected revenues TRUE TRUE Compare Historic and forcasted revenue CAGR Financial Due Diligence Vertical Histogramme chart Raphael October 5 1b. The company core capabilities will support the future revenue growth TRUE TRUE Compare Historic and forcasted revenue CAGR Financial Due Diligence Vertical Histogramme chart Raphael October 5 1c. The revenue drivers have been identified correctly and projected in a reasonable way TRUE TRUE Compare Historic and forcasted revenue CAGR Financial Due Diligence Vertical Histogramme chart Raphael October 5 2. The projected COGS is reasonable TRUE FALSE Check list of key revenue drivers identified by the management Industry report Driver tree John October 10 3. The projected Operating Cost is reasonable Work Plan
  • 30.
    In the nextslides, you’ll see a small preview of the Phase V of our M&A Approach 30 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
  • 31.
    Structuring the deal Overview* Thereare many ways in which a corporate merger or acquisition may be structured. The goal is not to create the most complex structure, but rather to create a structure that fairly reflects the objectives of the buyer and the seller. At the fundamental level, all structures are either mergers or acquisitions, including the purchase or consolidation of either stocks or assets. At the heart of each transaction are the following key issues that will affect the structure of the deal: • How will tangible and intangible assets be transferred from the seller to the purchaser? • At what price will they be transferred, and according to what terms? • What issues discovered during due diligence may affect the price, terms, or structure of the deal? • What liabilities will be assumed by the purchaser? • What are the tax implications for the buyer and the seller? • What role will the seller have in the management and growth of the underlying business after closing? • To what extent will third-party consents or government filings or approvals be necessary? • What arrangement will be made for the key management team of the seller, who may not necessarily be among the selling owners of the company? • Does the buyer currently have access to all of the consideration to be paid to the seller, or will some of these funds need to be raised from debt or equity markets? And at the heart of each structural alternative are the following 4 basic questions: 1. Will the buyer be acquiring the stock or the assets of the target? 2. In what form will the consideration from the buyer to the seller be made (e.g. cash, notes, securities, or some other form)? 3. Will the purchase price be fixed, contingent, or payable over time on an installment basis? 4. What are the tax consequences of the proposed structure for the acquisition? 31 * Source: Book “Mergers & Acquisitions from A to Z” by Andrew J. Sherman, which we highly recommend
  • 32.
    Structuring the deal Stockversus asset purchases 32 Stock purchase advantages and disadvantages Buyer’s perspective Main Disadvantages Main Advantages • Preserves the right of the buyer to use the seller’s name, licenses, and permits. • Provides continuity of the corporate identity, contracts, and structure. • There is less flexibility to cherry-pick key assets of the seller • This structure usually does not terminate existing labor union collective bargaining agreement(s) and generally results in the continuation of employee benefits plans. • The seller is taxed only on the sales of stock. • Any gain or loss is usually capital in nature. • It does not leave the seller with the problem of disposing of assets that were not bought by the purchase. • The seller cannot pick and choose the assets to be retained. • A loss on the sale of stock may not be recognized by a corporate shareholder who included the company in its consolidated income tax return. Seller’s perspective
  • 33.
    In the nextslides, you’ll see a small preview of the Phase VI of our M&A Approach 33 II. Identify Target Companies III. Build a Business Case and Financial Modeling IV. Conduct a Due Diligence V. Execute Transaction VI. Conduct the Post Merger Integration I. Define your M&A Strategy 1. Company mission, vision and values 2. M&A strategic objectives and key performance indicators 3. M&A team 4. M&A guiding principles 5. Target screening criteria 1. Post merger integration strategy & high-level plan 2. Post merger integration detailed plans 3. Implementation and monitoring 1. Potential target companies and data collection 2. High-level assessment of potential target companies 3. Shortlisted potential targets 4. Financial statements analysis 5. Business valuation 6. Targets approved for the business case phase 1. Work plan including key business case hypotheses & assumptions 2. Due diligence to validate key hypotheses and assumptions 3. Updated business valuation 4. Recommendation to make (or not) a formal offer to acquire the target company 1. Deal structure 2. M&A negotiations 3. Signing and closing the M&A deal 1. Strategic benefit 2. Feasibility 3. Financial benefit 4. Financial modeling to estimate transaction cost, revenue synergy, cost synergy, net present value, ROI, and internal rate of return 5. Letter on intent or term sheet
  • 34.
    Post Merger Integration3-Phase Approach To help you conduct your Post Merger Integration, we created a 3-Phase Approach that we built and refined over the past 20 years, by constant trial and error. The good news is that you don’t have to waste your time, energy and money going through that lengthy trial-and-error process. You can simply leverage our work and customize it based on the specificities of your organization. 34 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
  • 35.
    In the nextslides, you’ll see a small preview of the Phase I of our Post Merger Integration Approach 35 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
  • 36.
    Our merger strategicobjectives are: 36 1 Replace this text by your own text 2 Replace this text by your own text 3 Replace this text by your own text 4 Replace this text by your own text 5 Replace this text by your own text 6 Replace this text by your own text Don’t reinvent the wheel here. Most of the strategic objectives should have already been written prior to the deal.
  • 37.
    The most commonmerger strategic objectives are: 37 1 Gaining economies of scale 2 Entering a new country 3 Entering a new market 4 Increasing the company product or service portfolio 5 Increasing market share by acquiring one of your competitors (horizontal integration) 6 Becoming a key player in an industry by acquiring one of your suppliers or clients (vertical integration) Example we used during a PMI consulting project we did for a Global Fortune 1000 firm.
  • 38.
    We decided tocreate an Integration Management Office that will be responsible for the success of the integration 38 The Integration Management Office will oversee the post Merger Integration and be responsible for the success of the integration. It includes 7 [replace this number by your own number] executives representing both [insert name of the acquiring company] and [insert name of the acquired company]: Integration Management Officer [Insert name] Integration and Synergy Initiatives [Insert name] Change Management [Insert name] Culture [Insert name] Risk Management [Insert name] Communication [Insert name] Training [Insert name] This is only an example. You may decide to emphasize different areas and adjust the size of the integration Management Office
  • 39.
    We identified 8[insert your own number] post merger integration guiding principles 39 1 Insert your own guiding principle 2 Insert your own guiding principle 3 Insert your own guiding principle 4 Insert your own guiding principle 7 Insert your own guiding principle 5 Insert your own guiding principle 8 Insert your own guiding principle 6 Insert your own guiding principle
  • 40.
    Top 8 postmerger integration guiding principles commonly used 40 1 Be clear on the strategic objectives of the deal 2 Ground the integration in the objectives of the deal 3 Be clear on your synergy baseline and synergy targets 4 Create a robust integration plan to reach the strategic objectives of the deal and the synergy targets 7 Ensure cultural fit 5 Search for synergies in every function of the newly created organization 8 Maintain business momentum 6 Communicate on a regular basis to all stakeholders Example we used during a PMI consulting project we did for a Global Fortune 1000 firm.
  • 41.
    See below 4screenshots from the Phase 1. 41 High-Level Plan - Phase 1 Prioritization Matrix Lean Business Case Synergy Target Breakdown
  • 42.
    In the nextslides, you’ll see a small preview of the Phase II of our Post Merger Integration Approach 42 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
  • 43.
    Day 1 ReadinessChecklist 43 Owner Due date Status -9 -8 -7 -6 -5 -4 -3 -2 -1 0 Prepare internal communications AD March 12 Done Prepare external communications Aurelien F. Jan 20 Done Define pricing policy Christian G. Feb 28 Done Integrate General ledger George P. March 31 Done Prepare welcome drink for new employees George P. March 31 On Track Adjust sales pitch Christian G. March 31 Late Align marketing messages George P. March 31 On Track Define the synergy targets George P. March 31 Late Integrate brands On Track Integrate products & services On Track Integrate reporting On Track Define employee retention strategy Late Rationalize employee compensations Late Insert name of activity Late Weeks
  • 44.
    The Day-1 ReadinessChecklist often includes many activities that will better fit in an Excel document 44 Open the Excel document “1b. Day-1 Readiness Checklist” for more details
  • 45.
    See below 4additional screenshots from the Phase 2. 45 Change Impact Assessment Matrix Stakeholder Analysis Matrix Communication Strategy & Plan Culture Integration Strategy
  • 46.
    In the nextslides, you’ll see a small preview of the Phase III of our Post Merger Integration Approach 46 Phase I: Define & Communicate the Strategy & High-Level Plan Phase II: Develop & Communicate the Detailed Plans Phase III: Implement & Monitor 1. Merger strategic objectives 2. Integration management office 3. Guiding principles 4. Post merger integration high-level plan 5. Organizational structure (Top layers) 6. Top management appointment 7. Training to help managers set up their team 8. Integrated synergy baseline 9. Synergy targets 10.Potential integration & synergy initiatives 11.Business cases and financial models 12.Integration & synergy initiatives prioritization 1. Post merger integration high-level plan status 2. Day 1 readiness checklist status 3. Integration & synergy initiatives plan status 4. Change management strategy and plan status 5. Communication strategy and plan status 6. Culture integration strategy and plan status 7. Risk management strategy and plan status 8. Staffing & retention plan status 9. Integration lessons learned 10.Institutionalization of the updated PMI Toolkit 1. Day 1 readiness checklist 2. Integration & synergy initiatives plan 3. Change management strategy and plan 4. Communication strategy and plan 5. Culture integration strategy and plan 6. Risk management strategy and plan 7. Staffing & retention plan
  • 47.
    To ensure aproper execution of the integration & synergy initiatives, it is very important to appoint high-caliber initiative owner or project manager 47 Project Manager Quality Cost Time Meeting the expectations Managing a budget and resource limitations Completing the project in a specific time of frame  The main challenge of the different initiative owners or project managers will be to meet the objectives while balancing the triple constraints of quality, cost and time
  • 48.
    See below 4additional screenshots from the Phase 3. 48 Governance Risk Management Framework Initiative Status Report Communication Plan
  • 49.
    Structure of theToolkit The M&A Toolkit includes 500 Powerpoint slides, 70 Excel sheets, and 7 Word pages categorized in 7 folders that you can download on your device immediately after your purchase. 49 500 editable Powerpoint slides* 70 editable Excel sheets* + *Please note that the number of Powerpoint slides and Excel sheets listed is the number of unique slides and sheets. For example, a Powerpoint slide that has been duplicated to facilitate the understanding of our clients only count for 1 Powerpoint slide. 1 0. Overview and Approach 2 I. M&A Strategy 3 II. Target companies 4 III. Business Case and Financial Model 5 IV. Due Diligence 7 VI. Post Merger Integration 6 V. Transaction Execution 7 Word pages +
  • 50.
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  • 51.
    Key Benefits ofour Business & Consulting Toolkits 51 Improve the growth & efficiency of your organization by leveraging Business & Consulting Toolkits created by ex-McKinsey, Deloitte & BCG Consultants. It cost us $1.7M to create all our Business & Consulting Toolkits. Get them for a fraction of this cost. It’s like hiring Management Consultants to create all the practical Frameworks, Tools & Templates required to get a competitive advantage. Get the job done quicker and never start from scratch again with our ready-made & fully editable Frameworks, Tools & Templates in Powerpoint & Excel. We have worked 20,000+ hours over the past 5 years to create the world’s best Business & Consulting Toolkits. Don’t reinvent the wheel. Download now. Improve your skills & capabilities and meet your professional goals by learning how the Fortune 100 and Global Consulting Firms do it. Get free support and advice from our ex-McKinsey, Deloitte & BCG Management Consultants. Hiring top-tier Consultants for a management consulting project would cost you $300k+. A lot more expensive than purchasing our Toolkits. Impress your stakeholders and become your organization’s subject matter expert with world-class approaches to resolve common business problems.
  • 52.
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  • 54.
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