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1、March 2002Merger IntegrationIntellectual Capital CollectionGeneric ProposalTable of contentsExecutive SummaryOur Understanding of Your SituationA.T. Kearneys Perspective on Merger IntegrationProposed Overall ApproachRealizing Integration SynergiesIntegration ManagementA.T. Kearney QualificationsExec

2、utive SummaryThis section is tailored to the client situation and summarizes the approach proposed in the documentOur Understanding your SituationThis section is tailored to the client situation and summarizes the key drivers of the merger. It should highlight relevant quantitative and qualitative a

3、nalysis that demonstrate our insight into the clients particular challenges and drivers of success for the integrationA.T. Kearneys Perspective on Merger IntegrationThe best value-builders combine organic growth with mergers and acquisitionsSource:A.T. Kearney Monograph on Value-Building Growth 2001

4、RevenueGrowthValue GrowthUnder performersProfit SeekersSimple GrowersValue GrowersGrowth Matrix (CAGR 1988-2000)Value Growers Follow Conscious, Constant Process To Growth Mergers and acquisitions are key growth driversWhat really matters in “acquisition for growth” strategies is executionSource:A.T.

5、 Kearney Monograph on Value-Building Growth 2001Sources of Growth40% of Growth Is From Acquisitions Value Growers Manage Both WellFew mergers actually create shareholder valueSource:A.T. Kearney Analysis 2001, SDC database, Global WorldscopeAcquirers Value Growth Following a MergerTop performing mer

6、gers create significant shareholder valueValue growth3%8%12%27%21%16%3%Underperformance compared to industry averageOverperformance compared to industry average-100%-60%-30%30%60%150%-15%15%0%Average: 2.8%49.5%50.5%Top-PerformingMergers10%Business Integration issues require “usual” management decisi

7、ons while four main factors add another level of considerable complexity ScopeHigh number of decisions to be made in all operational and functional areasDozens of projects/initiatives and risks to be managedTime pressureAll stakeholders expect rapid execution (shareholders, employees, management, re

8、gulation committees, government,)Decisions need to be made without delaySimultaneityCo-existence of strategic, tactic and operational decisionsStrong inter-dependence of the decisionsShort term and strategic decisions may seem incompatibleHuman componentHigh number of people potentially involved (op

9、erational, functional and executive people)Risk of cultural mismatchScarce resources to bridge between merged companiesUsual Management decisionsStrategy & IPODefine the scope of combined entity Confirm each countrys scope of activity for mobilesDesign strategy leveraging on broader global presence

10、Define financial and operational targets as well as timing of expected benefitsPrepare the IPOOrganisationChoose the best organisational model at the European management levelIdentify the central/local functions evolution schedule Define organisational charts and management nomination Define key dec

11、ision processes (committees, procedures, ) InfrastructureReduce total cost of external purchases through best price evaluation volume concentration, competitive bidding Share best practices Support functions Rationalise shared supports (Align and select Information Systems for the integrationAlign p

12、rocesses and share best practicesCommunicationDefine external communication strategy Define internal communication strategy Select communication rules and procedures Choose media (intranet, documents, speeches)Integration mgnt Integrate overall planning and milestonesDetail planning by topic and cou

13、ntryManage transition phase Track and execute financial synergiesManage risks explaining why only few mergers and acquisitions succeed fully Note: (1) Shareholder returns from buyer divided by shareholder returns (industry average) after the mergerSources : A.T. Kearney analysis, Global PMI Survey,

14、1998 ; DatastreamHigherNochangeLower100% = 230 companiesOnly 29% of Companies Realize an Increase in Aggregate ProfitabilityPerformance relative to industry average10%11%21%18%17%23%-15%-25%+15%+25%Top PerformingMergersUnder performance Outperformance Number of companiesIndustry averageOnly 42% of C

15、ompanies Outperform Their Peers in Shareholder Value(1)42%58%Top performers across most industries can create significant shareholder valueCreation ofShareholderReturnsErosion ofShareholderReturnsNote:(1)Total shareholder returns percentage over/under performance relative to industry index in the ti

16、meframe between 3 months before and 24 months after merger announcement; total shareholder returns defined as the tangible returns investors receive through dividends and stock price appreciationsSources:Datastream; A.T. Kearney Analysis 2001Retailers62.5%64.5%32.3%44.2%26.6%49.9%34.2%26.6%36.1%25.1

17、%16.0%43.3%26.0%27.5%17.2%17.4%31.9%22.4%18.0%40.4%17.4%14.8%4.0%-6.5%-31.5%-38.9%-10.8%-25.9%-11.0%-35.0%-20.6%-17.6%-28.8%-18.0%-9.7%-39.6%-22.7%-24.9%-17.4%-20.3%-35.3%-26.7%-24.1%-46.8%-26.5%-27.2%-19.4%-24.1%RecreationChemicalsMetal ProducersPaperTransportationDiversifiedDrugs, Cosmetics & Heal

18、th CareUtilitiesAutomotivePrinting and PublishingElectronicsFinancialBeveragesMetal Products ManufactureFoodTobaccoMachinery & EquipmentElectricalMiscellaneousOil, Gas, Coal & Related ServicesConstructionTextilesAerospaceIndustry Specific Ranges of Value Creation(1)Once the deal is closed, the princ

19、ipal problems relate almost entirely to failures in merger management, rather than to the underlying strategic rationaleProblems Identified inMerger IntegrationUnder-communicationFinancial/synergy Expectations Unrealistic/UnclearNew Org. Structure With Too Many Compromises“Master Plan” MissingMissin

20、g MomentumMissing Top Management CommitmentUnclear Strategic ConceptMissing Pace of ProjectIT Issues Addressed Too LateSource: A.T. Kearneys Global Merger Integration Survey 1998Percent of RespondentsTo manage inherent risks, “critical success factors” can be distilled from successful large-scale me

21、rgers to guide value creationCritical Success Factors from Large-Scale MergersSource: A.T. Kearney Merger IntegrationCreate a sense of urgency and reduce uncertainty through clear event milestones, and move quicklySelect top-level leadership quickly and fairly; avoid “two-in-the-box” leadership for

22、integration planning and execution unless absolutely necessarySet out synergy goals and objectives, to prioritize activities and provide a baseline for performance trackingManage market expectations carefully. Set conservative dollar targets with a time frame that accommodates unforeseen circumstanc

23、es Keep strong, explicit focus on key customer retention and service with teeth (i.e., measurement and tracking)Maintain open and timely communications with employees to ensure understanding and retentionConduct decentralized merger Integration guided forcibly viaClear guiding principlesOverall fram

24、ework and tools for integrationReporting standardsEstablish a strong central Integration office and decentralized Integration teams with corporate-wide perspectives onResultsProject statusRiskLead role on internal/external communicationsInstill robust, well-defined processes to ensure objective and

25、timely risk and interdependency trackingSense of UrgencyTop-Level Leadership Selected QuicklyClear Synergy GoalsManage Market ExpectationsExplicit Focus on CustomersOpen, Timely and Consistent CommunicationsDecentralized Merger IntegrationStrong Central Integration OfficeWell-Defined ProcessesSource

26、: A.T. Kearneys global PMI survey 98Value Capture of Top Performers Over Time15%Year 1Year 2Cumulative ValueCapture After Two Years85%TimeClosingthe Deal12345678910-10-8-6-4-20246ValueCapture/Loss($ MM)Year in Which Synergies Are RealizedTiming of Synergy Realization Is Also CriticalSource:Marl L Si

27、rower : The Synergy Trap. Calculated based on a $10MM acquisition premium, representing 50% of market valueIn our experience, the most critical element in achieving targeted benefits is speedProposed Overall ApproachA.T. Kearney has a flexible merger integration framework with a comprehensive toolki

28、t to support planning and implementation throughout the merger process to ensure value captureA.T. Kearneys Merger Integration FrameworkDevelop StrategyEstablish Structure and PlanMerger/Acquisition optionsCreate/articulate/validateMarkets/customersCompetitionResourcesSources of valueUnderstand type

29、 of mergerEstablish the integration programBuild integration capabilityAssess sources of valueDevelop organization strategy & designDevelop IT integration strategyDesign/harmonize HR policiesCreate master plan and prioritizeValidate sources of valueImplement quick hitsDevelop SOV IT enablersImplemen

30、t HR planMonitor progress and riskExecute the planRealign the organizationImplement IT integration planMerger Manage-mentSourcesof ValueMergerEnablersChange of ControlShareholder ApprovalMOUIntegrated Planning and Initial RolloutFull-Scale RolloutDayOnePhase 0Phase IPhase IIPhase IIIMultiple ToolsEx

31、ist for All CellsThis allows merging entities to rapidly capture available sources of value by focusing on operational synergies, as well as seamlessly merging the organizationsMerge the Organizations as Seamlessly as PossibleDevelop and communicate a shared strategic agenda DefineOrganization struc

32、tures/leadershipKey business processesTechnology platform/architectureChange integration requirementsDrive top line growthNew value propositions/productsCross selling/sales pull throughEnsure customer focus/retentionIntegrate day-to-day operations Ensure sustainable changePosition for growthAchieve

33、$ XX million (annual rate) of synergy savings within 1218 monthsSalesOperationsProcurementCorporate overlap and duplicationCost of distributionTechnology/R&DOthers to be identifiedEliminate/minimize sources of riskDrive the short-term valueExceed the markets expectationsMI Sources of ValueAchieve Gr

34、owth Synergy and Cost Synergy Targets as Quickly as PossibleThe program structure supports focused value capture teams working across all SBU/Geographic teamsIllustrativeIntegration Office OthersSteering Committee Business Develop-ment TeamCorporate CenterTeamGlobal OperationsTeamGlobal SourcingTeam

35、 Technology/ R&DTeamHuman ResourcesTeamInformation TechnologyTeamSBU A or N. AmericaSBU B or Latin AmericaSBU C or EuropeSBU D or Asia PacificBU driven integration to set prioritiesFocused on value capture across the businessesMarket Facing TeamsValue Capture TeamsEnabler TeamsSet overall directionM

36、ake critical decisionsDevelop guiding principlesProvide integration management leadership and supportImplementation Full-Scale Rollout Integrated Planning and Initial Rollout Establish Structure and PlanBy launching the integration effort prior to change of control, significant progress is made in i

37、dentifying sources of value, while also developing the high-level organization models to capture that value Integration Management IT Requirements/Alignment High-Level OrganizationDataRepositoryComm. PlanningOversight/Visibility RmAnalysisOpportunitiesInitial PrioritizationInitial SequencingData Col

38、lection/AnalysesOperations/ Asset ConsolidationDiagnostic PackPP 1PP 2PP 3PP 4HMLHMLInitQ1 Q2 Q3 Q4PP1PP2PP3PP4Data Collection/AnalysesBusiness Unit(e.g., Services)Diagnostic PackCS 1CS 2CS 3CS 4HMLHMLInitQ1 Q2 Q3 Q4CS1CS2CS3CS4Phase I (“Clean Team”)Hypotheses 1Hypothesis N Hypotheses 1Hypothesis N

39、Master CalendarDay/Week/Month 1 PlansSources of Value IdentificationBaseline Dev./TrackingDuring the critical period prior to change of control, the engagement team assumes the role of a “clean team” to enable critical pre-merger integrationRole of Clean TeamQuantify savings generated from identifie

40、d opportunities from teams of merged companies Act as a third party conduit for proprietary information of both companies (protection should merger be aborted)Validate and challenge initial assumptions of opportunities made by merging companiesHighlight best practices in existing companies and exter

41、nal knowledge and recommend ongoing merged operating practicesDetermine risk factors in merger for ongoing risk management during implementationData CollectionOrganization assessmentHypotheses developmentPreliminary planningCompany ACompany BOpenJoint Client Team MeetingsA.T. Kearney“Clean Team”Merg

42、er SynergyHypothesesPre-Change of Control Post-Change of ControlValidated InitiativesAccelerate decision making by providing access to comprehensive databases and detailed analysisShare and validate findings with joint client teamsFinalize initiatives based on validated hypothesesDevelop implementat

43、ion plansAssist in launching initiatives and provide continued implementation, risk and financial tracking support The up-front work efforts of the “clean team” enables accelerated launch of implementation activities and value capture“Clean Team” Process LimitedJoint Client Team MeetingsAfter change

44、 of control, the teams quickly finalize not identify synergy opportunities and gain consensus Results Tracking/Risk Assessment Begin ImplementationInitial Prioritization and SequenceMaster Plan SequencingFull Team MeetingsDisclose and ValidateModify and RefineFinalize Savings Opportunities and Prior

45、itizationIdentify InterdependenciesHMLHMLOverall Prioritization/ Executive Committee Buy-InInitQ1 Q2 Q3 Q4MD 1ST 3SC 6PP 4SC6 WorkplanST3 WorkplanMD 1 WorkplanStep 1 2 3 4Investment RequirementsTiming of ResultsMaster Plan Detail Day/Week/Month 1 ExecutionPhase IIInitQ1 Q2 Q3 Q4PP1HMLHMLInitQ1 Q2 Q3

46、 Q4PP1HMLHML IT Requirements/EnablersMaster Plan Detail Communication Full-Scale Rollout Integrated Planning and Initial Rollout Establish Structure and PlanMD 1 WorkplanActivityTask 1Task 1Task 1Task 1Q1Q2Q3Q4The transition to full-scale rollout and implementation of initiatives is supported by a c

47、lear tracking process Program Risk ManagementTop 10 Program Risks as of 06/24Organization announcement timing still unclearIT requirements not fully understoodNo plans to address cultural misalignmentSuccess of communication not currently planned to be measuredIllustrativeInitiative Status Managemen

48、tSize = $ Saved61218GreenYellowRedRiskTime to Complete ImplementationInitiativeCurrent QuarterCum. Qrtly. BreakdownJan.Feb.Mar.4Q971Q982Q98Cost Saves and Growth AchievementImplementation CommunicationPhase III Full-Scale Rollout Integrated Planning and Initial Rollout Establish Structure and PlanSou

49、rce: A.T. Kearney Merger Integration Throughout the effort, managing risk is a formalized methodology; adherence facilitates a fair and robust decision making processProject Risk PrioritizationRisk IdentificationRisk CategorizationProject Prioritization Business Criticality And SizeBusiness Critical

50、ity how much does it matter if the project does not meet its objective?A = Incremental benefit but current processes will sufficeB = Supports strategy but manageable impact if project fails/delayedC = Important to the strategy with significant impact if project fails/delayedD = Critical impact/must

51、keep up with competitors/cannot continue businessComplexityHighLowHighDCBAABCDBusiness CriticalityProject2Project3Project6Project1Project4Project5Many issues are closed by making assumptionsRisksAssumptionsIssuesProjectPlansRisk PlansIssues are open questionsUnstable/sensitive assumptions create ris

52、ksSignificant risks need to be managedIssues, Assumptions And Risks Are Inherent In The Project PlansRisk ReductionRedAmberGreenMerger Risk ProfileNowFutureGreenAmberRedTimeCriticalityIllustrativeChallengesDecision MakingPlanning/ExecutionReportingBenefits of Proactive Risk ManagementCross organizat

53、ional input and dedicated facilitation ensures objective inputMilestone risks associated with decision timing are derived from process-wide initiativesRisk process highlights resource vulnerabilities. Sense of urgency associated with the process forces discussions and actionsProactive management and

54、 facilitation objectively evaluates all communication risks. Forum offers participants a chance to agree or disagreeConcise updates focused on cross-organizational risks direct attention where it is neededClear assignment of risk ownership and action responsibilities eliminate confusionRealizing Int

55、egration SynergiesTo assess and achieve their synergies, all teams can leverage a number of A.T. Kearneys proven methodologies and tools as appropriateStreamlining the OrganizationReducing Purchased CostsObjectives:Focus Areas:Methodology and ToolsDetermine management and governance structureIntegra

56、te officesAlign HR policies and proceduresFinance / AccountingLegal / RegulatoryITHRCorporate Center RationalizationLeverage corporate spendLeverage purchasing volumesDirect materialsPurchased servicesIndirect materialsCapital expendituresStrategic SourcingE-Sourcing (eBreviate)Market exchange strat

57、egy (LSN)Supporting Methodologies and ToolsIncreasing Sales Force EffectivenessIncrease revenue productivity of sales forceIncrease knowledge and value-added selling capabilitiesExplore channel leverage (i.e., Dealer /Reseller network)Sales force effectivenessCross-sellingSales Force Effectiveness M

58、ethodologyCustomer Retention MethodologyIllustrativeLeveraging AssetsMaximize asset utilizationBottling plant consolidationWarehouse consolidationRealize network synergiesFixed assetsCapital expendituresInventoryProcurementSupply Chain TransformationOperating Asset EffectivenessStreamlining Product

59、Portfolios and NetworksRationalize product offering and customer baseEvaluate and implement optimal network strategyProduct OfferingCustomer requirementsNetwork cost and capacityProduct Portfolio and Network Rationalization MethodologyOperating Networks IntegrationRapid benefit delivery is feasible

60、through integrating the operating networkManufacturingCapabilitiesWhat can be produced Where How does throughput vary by location and plant capability What are the capacity constraintsNetworkConfigurationWhich are the costs of transportation, handling and inventoryWhich is the most cost efficient ne