MarketEntryandTargetSelection市场进入及目标选择

ChristopherHumphryMarketEntryStrategy&TargetSearch&SelectionM&AMasterClass

19th&20thMarch2001ContentsIntroductionandbackgroundMarketentrystrategyTopRoseCaseStudyTargetsearchandselectionMerrillLynchCasestudyIntroduction&BackgroundMarketentrystrategyandtargetsearchandselectionareconcernedwithstrategicquestionsonhowtoeffectivelygroworreorganisethebusinessWhereshouldweinvest?Whatscaleshouldweconsiderandwhen?Howcanwedivest?MarketEntryStrategyTargetSearch&SelectionCommercialDueDiligenceStrategicValuationSecuringtheDealIntegrationorMergerWhomshouldwebuy?Howgoodafitwilltheybe?Whoelsemightbeinterested?CGE&Yslegacyorganisationsbring15yearsexperienceinpre-dealM&AservicestothetableMarketEntryStrategyTargetSearch&SelectionCommercialDueDiligenceStrategicValuationSecuringtheDealIntegrationorMergerPre-DealDeal&PostDealGeminiSchroedersMerrillLynchRandstadtABNAmroUnitedBiscuitsErnst&YoungRhone-PoulencLloyds—AbbeyLifeEKONobelxxxxxxConsequently,inbuildingournewM&Aserviceofferingwehavebuiltastrongpre-dealfocusCriteriadevelopmentPre-screening&pre-selectionProfilingofcandidatesChoice/PreferenceFirstContactsTarget

Search&SelectionCommercialDueDiligenceMarket

entrystrategyStrategicValuationPostMergerIntegrationDe-MergerandSeparationUnderpinnedbyeffectiveChangeandProgrammeManagementStrategyreviewMakevs..buyBusinesscasedevelopmentOptionanalysisTargetanalysisMarketdynamicsTargetpositionandtrendsProcessreviewFitanalysesSynergyquantificationBusinessevaluationIntegrationrequirementsNPV,EVA,CFROIetc.IntegrationblueprintingExecutivealignment&selectionOrganisationdesignTransitionplanningProgrammedesignandset-upRiskmanagementOrganisationmobilisationDe-mergerblueprintingExecutivealignment&selectionOrganisationdesignTransitionplanningProgrammedesignandset-upRiskmanagementOrganisationmobilisationFocusofthispresentationTopRoseProjectMarketEntryStrategyRandstadt,aleadingtemporaryservicesfirm,hiredCGE&Ytoinvestigategrowthopportunitiesinthehigh-endsegmentofthemarketTeam’sObjectives:Examinethefeasibilityofahigh-endprofessionalservicesbusinessArticulatethevisionforthebusinessIdentifycriticalsuccessfactorsforbuildingthebusinessOutlinestrategicoptionsandorganisingconceptDevelopfinancialscenariosOutlineahigh-levelimplementationplanOurapproachleveragedexternalandinternalanalysestoidentifytheoptimalopportunitiesfortheclientCapabilitiesCasestudiesEntryStrategiesMarketsProductsSegmentsMarketsizeandgrowthCustomerpreferencesGapsBenefitsCaseCompetitionAlliances/acquisitionscandidatesEntrystrategy“Whichmarkets......withwhatoffers......enteredhow......atwhatcostQuickWinsRequired:SystemsOrganisationMeasuresProcessesSelectMarketsSeriesofoptionsAchievingcompetitiveadvantageOfferdevelopmentandsizingAlignVisionShort-listopportunitiesAgreedentrystrategiesImplementationplanningOpportunityidentificationDetailedin-marketresearchAugust-SeptemberSeptember-NovemberNov-DecInternalFocus:MarketFocus:Focusandlevelofdetail:MacroMicroEachphaseproducedanalysesthatenabledtheclienttomakedecisionstomoveforwardExecutivealignmentre:expansionstrategy,e.g.:ScopeandtimingOffensivevs.defensiveAgreedcountryscreeningcriteriaSetofprioritisedhypotheses:ProductsServicesDistributionUnderstanding/synthesisof:Lessonslearnedtodatein-countryPreviousresearchListofexportablecorecompetenciesandgaps:Corporate-levelAcquisitionsIn-countryShort-listofprioritisedcountries:PhasingcalendarNovember—DecemberSeptember—NovemberAugust—SeptemberAgreeBusinessGoals/Capabilities/OpportunitiesIdentifyOffersandMarketEntryStrategiesAgreeEntryStrategiesandBuildImplementationPlansCasestudies:NewmarketentrantsalternatestrategiesBycountry:Competitivescan“Whitespaces”Options:products,servicesRequiredcapabilitiesandgapsPotentialentryoptions:AcquisitionsOrganicbuildalliancesPreliminarymarket-entrypartnercandidates.Cross-marketopportunities:CentralutilitiesTop-levelbenefitscaseAgreement:markets,offers,entrystrategiesDetailedbusinesscasebycountryAgreescreeningcriteria:AcquisitioncandidatesPotentialpartnersShort-list(cut1)acquisition/partnercandidatesValuepropositions/countryImplementationplans:InfrastructureOrganisationMarketingNegotiationsOutput:OurapproachinvolveddevelopingcriteriaforevaluatingthemarketopportunityofTopRoseineachofthefivelargesttemporaryservicesmarketsMarketsizeGrowthprospectsCompetitiveintensityCulturalfactorsEaseofentryAmbitionSizeGrowthrateCriticalmassCostsandrisksTestAcquireGrowITTechnicalFinancial&AccountingGeneralManagementFrance

xGermanyUK

NetherlandsUSSelectionofhighestopportunitycountriesandLOBsMarketentryscreeningcriteriaScoring,prioritisationandtrade-offsPreferredmarketentrystrategyThemarketentrystrategydecisionisafunctionofseveralkeyfactorsAmbition/sizeHowbigyouwanttobeinwhattimescaledescribesthegrowthrequiredtosucceedIfthisgrowthfarexceedsthemarketgrowth,thenyouareprobablymorelikelytosucceedifyoucanbuysomemarketshareup-front.MarketsizeandgrowthHowlargeisthemarket?Howfastisthemarketgrowing?Aslowgrowingormaturemarketmakesbuildingupapresencemoredifficult,andthusindicatesacquisitionasthepreferredroute.EaseofentryHowcompetitiveistheexistingmarket?NumberandconcentrationofplayersWhatarethe‘hard’entrybarriers(capital)?Whatarethe‘soft’entrybarriers(eg.existingdemandsidecustomerstiedintocompetitors)AretherestrongregulatorybarriersTest,makeorbuy?TheseconditionsvarybyLOBandbycountry,anddifferentstrategiesmaybeappropriateatdifferenttimesCultureHowusedarelocalfirmstoaflexibleemploymentcultureHowimportantare‘local’culturalfactorssuchaslanguage,people,companycontacts/networks,educationtobuildingupabusiness?Ifveryimportant,thenacquiringalocalcompanymaybeamoresuccessfulwaytoenterthemarket.Acquisitionscoresasthepreferredentrystrategyin

mostcasesCountryLineofBusinessMarketSizeGrowthCurrentCapabilitiesCompetitiveIntensityCultureGermanyFranceNLUKPreferredMarketEntryActionITLargeHighLowHighLocalTechLargeHighLowMediumLocalF&ASmallLowLowMediumLocalGMSmallLowLowMediumLocalITLargeHighLowHighLocalTechMediumHighLowMed-HighLocalF&ASmallLowLowMediumLocalGMn/an/an/an/an/aITMediumMediumMed-HighMed-HighInternationalTechMediumMediumMed-HighMed-HighInternationalF&ASmallLowMed-HighMed-HighInternationalGMSmallLowMed-HighMed-HighInternationalITLargeHighLowHighInternationalTechLargeHighLowHighInternationalF&AMediumMediumLowHighInternationalGMMediumMediumLowHighInternationalAcquireAcquireAcquireTest/AcquireAcquireAcquireTest/Acquire-Growautonomously

GrowautonomouslyAcquireAcquireAcquireAcquireAcquireAcquirePriorityPriorityPriorityPriorityPriorityPriorityPriorityTargetSearch&SelectionStrategicRationaleSeekingdramaticgrowthoverseas,MerrillLynchtaskedCGE&YwithaframeworkforidentifyingaUKacquisitiontargetFacinganincreasinglydomesticUSmarket,thebankwasseekingdramaticgrowththroughoverseasexpansionGrowththroughacquisitionstostaveanytakeoverthreatswasakeyelementoftheclient’sstrategy,howeverfavourablemarketconditionshaddrivenupstockpricesandhencemarketcapMerrillLynchandCGE&YhadagreedthattheUKheldsufficientopportunityformarketgrowththroughacquisitionCGE&YEngagementCGE&Ydevelopedanobjectivescreeningprocessthatallowedtheteamtonarrowdowna“longlist”ofcandidatesquicklyandrecommendtargetsCGE&YreviewedtheavailablecompaniesinthemostprofitableareasofthevaluechainanddevelopedacriteriaandapproachforscreeningCGE&Ydeliverablewasprovidetheclientwithashort-listofcompaniestotargetTargetsearchandselectionwasthepivotalstagepostintheprojectroadmap1.ConductAnalysis2.RecommendMarketEntryStrategy3.Screen AcquisitionCandidates4.BuildEconomicModel5.PlanImplementationa. MarketSizeand Growthb. Competitionc. Distribution Channelsd. LegalandRegulatorye. CustomerFeedbackf. ComparingUSandUKMarketsg. Segmentationa. Buildvs.Buyvs.Allyoptionsb. FinancialImpacta. FundManagementb. Distributionc. Administrationa. Assumptionsanddriversa. ImplementationChallengesb. ValuepropositionsProjectRoadmapWeuseda4screenprocessforidentifyingacoresetofacquisitioncandidatesinthefundmanagementsegmentofoursearch&selectionScreen1Screen2Screen3Screen4Top25AssetManagersandTop25LifeAssuresRelevantAUM>£1bnRatioRelevantAUM/TotalAUM>40%EaseofAcquisitionlevel1Pensionsfocus:ProductmixAdmin.capabilitiesTargetmarketDistributionFundmanagerperformanceTransportability:LocalfundcapabilityPhysicaldistributionLegislativeknowledgeCulturalfitPotentialpurchasepriceDuediligence:FinancialanalysisAdmin

systemsEaseofacquisitionlevel2AcquisitionCandidates18CandidatesTheimperativeistoeliminateasmanycandidatesinscreen1aspossibleKey:WhyrejectedRejects(34)1a) Relevantassets £1bn<1b) “40%rule”1c) AcquisitioneasecPDFMbBarclayscHermesbMGAMcLazardbGoldmanSachscBaringcFidelitycLGTcHSBCcGartmorecJupitercKleinwortBensonbCommercialUnionbPrudentialbRoyalandSuncAbbeyLifebGeneralAccidentbClericalMedicalcIrishLifebScottishAmicablecThreadneedlebScottishMutualbNorwichUnionbBritanniaIMbCo-OpInsurancebRoyalLondonaScottishLifeaProlificaUnitedAssuranceaBritannicAssurancecColonialcSunLifecAmvescoNote:Marketcapitalisationandotherfinancialdatawasusedassupportingdata,butnotasascreenWefoundamulti-stepapproachwascriticaltodevelopinganobjectivescreeningprocessMulti-stepscreeningprocessItiscriticaltodevelopanobjectivescreeningprocess:Candidatelistputforthbyclientsoftenareemotionallyandpoliticallymotivated.NeedtoeliminateasmanycandidatesupfrontaspossibleassubsequentscreensrequireextensiveresearchandanalysisThe“aquirability”ofacompanybasedonownershipstructure,etc.isascreen1criteriaandcanbeusedtonarrowdownthe“longlist”quickly:Other“practical”criteriasuchasassetsorsizeofsalesforcealsohelptoreducethepooltomanageablesize.MustensurethatthecriteriauseddifferentiatebetweencandidatesWeighingofcriteriahelpsreflectcriteriawithgreaterorlessimportance.Screen1Screen2ScreenNHowever,noscreeningprocessiswater-tight,sowebuiltin“commonsense”checksthatre-assessedrejectedcandidates.ThevalueCGE&YdeliveredresultedinmajoracquisitionandclientsatisfactionCGE&Y’srigorous,informedsearch&selectpolicyallowedthebanktomakeaconfidentvalueaddingacquisitiondecisionTheultimateacquisitioncreatedoneofthelargestassetmanagementgroupsintheworld“Thisacquisitionrepresentsaquantumleaptowardsourgoalofbecomingagloballeaderintheassetmanagementbusiness,oneofthemostattractivesegmentsofthefinancialservicesindustry!”—MerrillLynch,Chairman&CEOCGE&Ymarketentrystrategyandtargetsearch&selectionteamFinancialServicesFrancesMannDavidBarrettChristopherHumphryTelecomMediaNetworksValSprietLifeScienceLindseyArmstrongxxxxxxPleasedonothesitatetocallAngusKnowles-Cutleroranyoftheteam.AppendixKeyfindingsofthestudy1.ConductAnalysis2.RecommendMarketEntryStrategy3.Screen AcquisitionCandidates4.BuildEconomicModel5.PlanImplementationKeyContentFindings:GrowthratesdifficulttoprojectforwardLegalregulationsenvironmentkeydriverandconstraintSignificantfragmentationinthecompetitiveframeKeyProcessFindings:SummaryofFindingsBuild/acquire/allyentrystrategiestoproducehighestrevenuesandprofitsNumberofacquisitiontargetsissmallAcquirabilityisamajorde-selectorThereis“nosilverbullet”acquisitionthatdeliversallcapabilitiesrequiredIFAnetworksarenotworthbuyingModeldrivers:Numberofcustomers,AUM,andproductivityofsalespeopleValuepropositionof“Integration”isuniqueinveryfragmentedcompetit