The document discusses integration initiatives that often fail to deliver objectives and how to improve integration success. It introduces The Integration Executive (TIE) company that provides specialized integration management services. TIE aims to improve integration performance and deliver the expected value through an independent program focused on implementing the acquisition benefits. TIE's services include planning, governance, functional alignment, change management, and program management. Fees are based on a day rate or tied to integration results if given appropriate governance over the integration program.

1. THE INTEGRATION EXECUTIVE KEEPING THE OBJECTIVE CLEAR The Integration Executive is a limited liability company registered in England and Wales. The contents of this presentation represent Intellectual Property of The Integration Executive. No reproduction is authorised without express permission of the company. ©2008

2. WHY DO M&A AND INTEGRATION INITIATIVES SO OFTEN FAIL TO DELIVER ON THE OBJECTIVES? It’s a sad fact of business life but the majority of acquisitions, mergers or business division integrations continue to fail to deliver on their objectives. In "The art of M&A Integration" by Lajoux, 1998 of all the 7000 M&A's between 1965 and 1997 covered, the bottom-line is that between 55 and 77% of all mergers fail to deliver on the financial promise announced when the merger was initiated. M&A's fail for many different reasons. "Cultural Issues" is often cited but is one of many and rarely the real one. M&A's fail because of inadequate strategy development, poor due diligence, lack of appreciation of integration, unexpected market events, poor pricing, lack of incentives amongst newly cashed out acquired employees, amongst other things. These also apply largely to corporate re-arrangements of structure too. Too many company execs just pay lip service to the "soft issues". They say all the right things but when it comes to action, everything goes out the window. They either think it's a waste of time, don't care, don't want to spend the money, or most probably it's a mixture of all of these. Separate extracts from iloblog, Nov07 and contributed to by dealmakers, executives and ‘victims’

3. COMPLEXITY MAY BE A FEATURE OF SCALE – BUT NOT A STRONG FEATURE IN THE OUTCOME Common pre-conceptions are that the larger the programme of integration, the more multinational and the more cross functional it is then the more likely it will be to not deliver all the benefits sought. Not true! Generally the larger the programme the more focus is applied to the plan and resources ‘found’ to deliver. Smaller integration deals also suffer from the span of control that executives have to manage. With more time and attention required on multiple aspects of business operations the action timing and effectiveness involved in successfully integrating structures often takes a back seat. Typically an organisation that does not have the resources for a specialist team or has not integrated business before can miss the warning signs – often with catastrophic effects on the business objectives. Whether small, mid size or large, single company/country or multiple activities, a merger of equals or the addition of a small specialist competency there is a consistent list of risks and ‘gotyas’ that will undermine and cause the programme to under perform. Even if you can tick all the boxes on the following chart within your plan (and even more impressively can tick them as achieved for your previous integration venture) keeping them all balanced and in focus for the duration is very unusual.

4. INTERNAL (NON MARKET DRIVEN) IMPLEMENTATION IMPACT AREAS OVER TIME  Leadership changes  Change programme poorly defined  New Business Campaigns  Order of alignment programmes not thought through or ‘held’  Cultural biases and clashes  Governance of plan not balanced across stakeholders  Key Skill losses  Integration ‘added to day to day jobs with overstretch on BAU delivery  Poor Communication (121 and corporate)  Training and process standardisation based on ‘strongest will’ rather than ‘best practise’  Subjugation of priority attention post acquisition by Board / Mgt.  Earn-out conflicts / biases to integration, Management, Reporting and Business Development  functional plan milestones slip out of alignment  Lack of Specialist Integration Mgt with requisite soft skills to deliver ‘value’ from the joined IP and assets  Subsidiary unit input not validated or clear  Lack of Specialist Integration Mgt with requisite hard skills to deliver functional/process value and financial targets

5. SUPPORTING THE VALUE OF INTEGRATION PROGRAMMES The Integration Executive (TIE) was formed specifically to improve the performance of integration programmes within businesses and to deliver the value sought. TIE provide a range of operationally experienced and specialised skills vested in an independent advocate to the board – focused on and committed to delivering the benefits of the acquisition or integration of business areas. All TIE executives have led integration programmes (successful and unsuccessful) at corporate or functional level over many years. TIE services focus on ‘post due diligence’ assessments and support final ‘deal construct’ items through to implementation signoff. Each programme is individually proposed and managed using components of good practice gained through practical application. Services can be provided on a ‘pick and mix’ basis according to the organisation and integration programme needs and from consultative ‘background advice’ to programme ownership. Commercially TIE will tie fees to results given an appropriate Governance position, or provide services on a consulting rate basis providing organisations affordable delivery.

6. SERVICE CATALOGUE Facilitator of plan design to Boards (Acquirer/Acquired) Overall Objectives Timescales (“The project”) Functional design and imperatives Process design and imperatives Key activities/Key Risks analysis Skills alignment/Critical resource plan (by period) development Incentive/Loyalty alignment Process evaluation Ombudsman role Cost/Benefit management (mapping to business case and trade off recommendations) Advocate/defender of the business through all changes – independent of mgt structures (pre/during/post integration) biases and changes. Facilitator to functional teams/HR to plan Portfolio presentation (Client facing) and restructuring efforts (internal facing). Provision of Programme Office administration and reporting communications.

7. EXAMPLE SERVICE STRUCTURE Consultancy prior to “Deal Signature” advising on: Governance structure for integration plan. Validation of assumed benefits. Due diligence on customer/pipeline and business value. Validation of alignment (Systems, Infrastructure, Management) complexity. Assessment of integration plan, likely costs and assumed benefits.

8. Delivery: Take plan, set up functional and process teams. Integrate and align plans into overall programme. Be ‘focal’ point for Q&A forums (physical/soft) supporting HR, PR, Functional Heads & Board. Advise board on process improvement recommendations and decisions. Support HR on Management selection/alignment to other imperatives (i.e. key skills by function, process, clients etc). Develop Cost/Benefit models by function/process stream to validate and provide exception/risk reporting to Board on acquisition/integration business case impacts. Monitor key projects for timeliness, competency, opportunities. Provide direction to “Change team” leaders. Provision of Specialist resources to support the plan where key skills do not exist or are high risk exposures. Organise programme office administration tasks. EXAMPLE SERVICE STRUCTURE

9. COMMERCIALS AND UNDERTAKINGS Day rate charging structure from £1750 to £1250 for leadership through to administration resource provision when required. % of plan ROI where complete service engaged and governance agreed. Delivery of plan to within +/- 5% of targets (if engaged pre-deal) or +/- 10% of targets (after deal completion) subject to Governance model and Integration P&L responsibility being assigned to TIE.