M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

14
This Dog This Dog Won’t Hunt Won’t Hunt Examining the Mystery Examining the Mystery of of M&A Transaction Failure M&A Transaction Failure To play these slides, select “Slide Show” – “View Show” from your Wind To hear the narratives, turn your spe

description

 

Transcript of M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Page 1: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

This Dog Won’t This Dog Won’t HuntHunt

Examining the Mystery of Examining the Mystery of M&A Transaction FailureM&A Transaction Failure

To play these slides, select “Slide Show” – “View Show” from your Windows menu

To hear the narratives, turn your speakers ON

Page 2: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

The M&A Reality“The same sad story plays out time and time again in the aftermath of large-and small scale corporate mergers. …some 55 percent to 77 percent of completed M&As fail to meet the strategic and fiscal objectives that initially justified the deal.”

BearingPoint Institute

“In the one-year period after a “successful” merger, the average return for combined companies was 25 percent below their peers in the same industry. After 24 months, 80 percent of these new entities were still showing negative results”

Business Week

“…more than 50% of acquisitions reduce shareholder value or fail to meet expectations. Big deals with more complicated businesses are even less forgiving, and tend to yield twice as many losers as winners”

Ernst & Young

“The perception gap is wide – 93 percent of companies interviewed believed that their deal enhanced value, and over one third said that they would not do anything differently on their next deal. …objective assessment of whether deals enhanced or reduced value, showed that only 31 percent of these deals enhanced value.”

KPMG International

Key Learning: A poor post close integration phase is the #1 reason behind transaction failure.

Page 3: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Planning and Analysis

Key Learning: Most integration efforts are too little and start too late.

Page 4: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Staff Devoted to Integration

Key Learning: Integrations are typically done by people who are not trained nor expert at integration.

Page 5: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Integration Challenges

Interesting Fact: Contrary to popular belief, “Cultural Incompatibility” is rarely the main cause of post deal failure.

Page 6: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Control of Key Issues

Key Learning: More than half of all transactions are under estimated and under funded.

Page 7: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Value Driver Analysis

Best Practice: Build Executive consensus with a Value Driver Analysis and update the analysis periodically.

Page 8: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Integration Options

Integration Time >>

Sha

reho

lder

Val

ue >

> - Status Quo -

Bolt On

Adopt & Go

Green Field

Best Practice: An Adopt & Go or Green Field integration are best for obtaining better shareholder value in the long term

Page 9: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Executive Incentive Plans

Best Practice: Use the results of the Value Driver Analysis to set performance measures for leaders.

Page 10: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Communications Matrix

Best Practice: No Secrets, No Surprises, No Hype, No Empty Promises

Page 11: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Integration Approach

TE

CH

NO

LO

GY

PROCESS

SPACE PLAN

PE

OP

LE

Best Practice: Start with process definition which will in-turn drive the form of the 3 enablers.

Page 12: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Change ManagementTechniques

• Peer Coaching

• Direct Involvement in the Redesign

• Executive Committee Presentations

• Q&A Hotline

• One-on-One Counsel

• Performance Measure and Annual Review Systems

• Direct Confrontation

• Special Events

Best Practice: Perform Stakeholder Analysis resulting in individual CM Techniques.

Page 13: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

Speed in Transition

Memorable Quote: “If I had to do it over again, I would have done it faster.” William Zuendt, President Wells Fargo Bank commenting on their take over of First Interstate Bancorp.

Page 14: M&A Examining Why So Many Fail to Produce the Shareholder Returns Expected

ABOUT THE FIRM

M&A Integration Services has assisted its clientele in both pre and post close integration activities including:

Pre Close

• Due Diligence. The identification of opportunities for reducing expense or increasing cash flow leading to deal valuation improvement.

• Integration Planning. The building of comprehensive plans that are directly connected to deal goals and company strategic plan.

Post Close

• Operational Integration. The redesign of all four levers of change (i.e. process, technology, people and space plan) along with Change Management techniques.

• Reconciliation. The unbiased source of analysis and testimonial impacting arbitrated adjustments, holdbacks or bonuses.

Need your next or a previous transaction to produce the shareholder returns projected? Contact

Bryan Peregoff, Director

443-474-2004 in the United States.