Professional Documents
Culture Documents
Dr Ashish Varma
Contents
Why Mergers and Acquisitions?
The Deal Continuum Road Map to Mergers and Acquisitions Key Components Challenges to M&A Pre Deal Post Deal Role of an Advisor Concluding Thoughts
Contents
Why Mergers and Acquisitions? The Deal Continuum Road Map to Mergers and Acquisitions Key Components Challenges to M&A Pre Deal Post Deal Role of an Advisor Concluding Thoughts
Mergers & Acquisitions are at the core of Corporate zeal for Growth
Corporate Growth could be:
Integration - Backward/forward/lateral
Scale economies - Cost Savings/Increased Profitability Restructuring - Concentrate on core competencies and Businesses
Financial
Strategic
Contents
Why Mergers and Acquisitions? The Deal Continuum Road Map to Mergers and Acquisitions Key Components Challenges to M&A Pre Deal Post Deal Role of an Advisor Concluding Thoughts
Deal/Target Identification
Evaluating Deals
Executing Deals
Harvesting Deals
Confidentiality Identification of Deal Issues Information Value Adj. Reps & Ballpark Value Warranties
Confidentiality Identification of Negotiations Deal Issues Information Value Adj. Agreements Reps & Ballpark Value Warranties Exit Options
Confidentiality Identification of Negotiations Deal Issues Information Value Adj. Agreements Reps & Ballpark Value Warranties Exit Options
Consideration Synergies Documentation Control Closing Date Remittances Approvals Integration Compliance People
Confidentiality Identification of Negotiations Deal Issues Information Value Adj. Agreements Reps & Ballpark Value Warranties Exit Options
Deal/Target Identification
Evaluating Deals
Executing Deals
Harvesting Deals
Contents
Why Mergers and Acquisitions? The Deal Continuum Road Map to Mergers and Acquisitions Key Components Challenges to M&A Pre Deal Post Deal Role of an Advisor Concluding Thoughts
Investmen t Banking
Pre Deal
Valuation
Cultural Issues
Integration Issues
Post Deal
Process Integration Harvesting the deal
Deal Synergies
Although A and B are in the same industry there could be cultural differences
Company A Voice-mail driven Consensus driven Short Term Consultative Risk Averse Company B
E-mail driven
Hierarchy driven
Dislike projects Deadlines cause stress Non confrontational Scientific debate Gentlemanly
Fear of numbers
Centralised Decisive management
Fear discomfort
M&A STRATEGY Corporate/portfolio strategy Business unit strategy Acquisition strategy Market reviews Business planning Exit strategy
ACQUISITIONS Criteria formulation Target / partner identification Assessment Financial & tax structuring Negotiations Public company takeovers
PRIVATE EQUITY Investment identification Investment evaluation Assistance in negotiation Documentation Deal Closure Fund Raising
DISPOSALS Options appraisals Value enhancing initiatives Buyer identification Information memoranda Marketing Negotiations Project management
JVs & ALLIANCES Corporate & legal structuring Capital structuring Valuation of JV assets Debt restructuring Negotiations Documentation
Buy Side Diligence (Are you buying what you think you are buying) No Access Diligence (How reliable is the Information Memorandum) Market Diligence (Helps understand the competitive position) Operational Diligence ( Are your Operational Assumptions reasonable)
Sell Side Diligence (Do you know the issues buyers may negotiate on) No Access Diligence (Determine how to get maximum, by giving the least)
Realisability of receivables
No material change in the Companys business, etc.
Preventing Failures
(Post Closure)
Integration could get difficult, on account of the following: Poor Evaluation of Internal strengths and weaknesses of the parties involved. Lack of clarity on how to harvest deal synergies and other potential benefits Technological Incompatibility No proper tracking mechanism for the progress made and how is it being managed Cultural Clashes
Companies are slow to move and Shareholders Value bears the brunt
The integration phase
Rs
Primarily on account of loss of market share and slow market growth reduced productivity
diminished margins
downturn in morale
Shareholder Value
internal competition
Time
How will post deal progress be tracked and managed? Value and Synergies
Robustness Key revenues and costs drivers - products/customer base - market penetration - R&D, new product development - Rationalisation
How will the business operate post-deal? How will the post deal period be managed? Establishing Control
Performance KPIs key personnel Resources for implementation
Issues
What is the culture of the business? How do we keep employees, customers etc happy? Cultural Integration (across the organisation)
Management & workforce interaction Achieving change
Contents
Why Mergers and Acquisitions? The Deal Continuum Road Map to Mergers and Acquisitions Key Components Challenges to M&A Pre Deal Post Deal Role of an Advisor Concluding Thoughts
Contents
Why Mergers and Acquisitions? The Deal Continuum Road Map to Mergers and Acquisitions Key Components Challenges to M&A Pre Deal Post Deal Role of an Advisor Concluding Thoughts
Concluding Thoughts
Successful deals a risk/reward game more sophisticated vendors are making life (much) harder The deal does not finish on signing that just gives you the opportunity to win or lose later Best practice processes can reduce risk pro-active management of issues is key get ahead of the process, its very difficult to catch up small(er) deals require just as much effort and attention