20120515 PMI Integrating universes teaser · Ensuring the sustainable success of M&A transactions through an • Integrated approach (and teams), especially at the beginning of a

Integrating universes – The goetzpartners guide through the PMI galaxygoetzpartners service line Post Merger Integration

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2_Integrating universes – The goetzpartners guide through the PMI galaxy

Integrating universes – The goetzpartners guide through the PMI galaxy _3

Value creation by inorganic growth In mature markets inorganic growth enables firms to create additional value

To capture the identified value, a successful integration (PMI) is key

Value drivers for inorganic growthOptions for inorganic growth

• Mergers and Acquisitions

• Joint Venture

• Partnering

• Gain/stabilize market share

• Diversify business portfolio

• Realize scale effects


• PMI is one of the most complex phases in the lifetime of an organization

• Familiar rules and procedures in the two existing organizations have to be revised

• Mindsets have to be changed and goals have to be redefined to find common ground

But: PMI is like integrating universes – a huge challengeBefore capturing the value of inorganic growth multiple challenges within the PMI process have to be mastered

• Different businesses’ types and rulese.g. end consumer vs. Business to Business

• Different company sizese.g. large scale conglomerates vs. small startups

• Different country culturese.g. developed countries vs. emerging countries

• Different communicatione.g. descriptive vs. concise

• Different management stylese.g. hierarchical vs. consensus-oriented

Typical challengesKey challenges of a PMI

The real challenge is that the situation within an integration changes over time. So, how does one navigate through this galaxy?


The goetzpartners guide through the PMI galaxy - frameworkTo make a PMI successfull an integrated approach along the entire investment process is essential –the service line PMI ensures a seamless handover from transaction to transformation

Ensuring the sustainable success ofM&A transactions through an

• Integrated approach (and teams), especially at the beginning of a transaction/PMI

• Results orientation, securingefficient processes through strictqualitative and quantitative controlling

• Deep market insights of PMI consultants who have a strong entrepreneurial mindset

TransformationTransitionTransactionInvestmentprocess

goetzpartners provides support along the investment process

Involvement ofgoetzpartners‘ service lines

gp Approach

Key question: How to make things happen within a PMI based on this framework?


The goetzpartners guide through the PMI galaxy - executionThrough its comprehensive approach goetzpartners ensures a successful execution during the transaction, transition and transformation phase

How to navigate through a PMI and what is the focus of thedifferent phases?

How to organize/align the activities of a PMI efficiently?

Organization

Orientation

How to operate a PMI successfully?

Operation

• Integration lifecycle-based path finding(Day 1 readiness check, 90 days program…)

• Review-based Qualification-gate (Q-gate) approach for each orientation point

• Work streams(Management, business, functional)

• Committees(Steering, business coach, regional head)

• Integration office

• Strict Program Management

• Target-oriented mediation support

• To-the-point interdisciplinary ad-hoc analysis

gp Approach

gp Approach

gp Approach

3

2

1


Find the right orientation through a PMIAmong the life cycle of a PMI, different mantras are set and tracked by means of a Qualification-gate (Q-gate)

1

TransformationTransitionTrans-action

Signing Closing 90 days 180 days 1 year time

Goi

ng li

fe

Ramp-upQ-gate

goetzpartners integration lifecycle-based Q-gate (Qualification-gate) approach

D1 ReadinessQ-gate

Q1-BusinessQ-gate HY1-Business

Q-gate Y1-BusinessQ-gate

“Speedit up”

“Make ithappen”

“Get every-body on board”

“Realizesynergies”

“Ensure hand-over to the line”

“Continuous hand-over to the line”

Mantra

ValueQ-gate

“Addresskey topics”

Invo

lvem

ent

inte

grat

ion

team

Invo

lvem

ent

tran

sact

ion

team


goetzpartners Q-gate approach – example: Readiness Day 1For each Q-gate goetzpartners provides a list of standard check points (enhanced by specific situations) to be reviewedand discussed onsite with all involved parties to give clear recommendations

Integration checklists

goetzpartners provides checklists for all functions at each Q-gate

Checklists are availabe for

Functional:• Legal• HR• Finance/accounting• Marketing• Internal and external• communication• IT• …

Business:• Sales• Direct/indirect

procurement• SCM• Operations• Real estate/

site management

Completed>= 50% achieved< 50% achievedNot yet started

1

Day readiness review Recommendation framework

Onsite meeting withall involved parties

goetzpartners Integration Check list FunctionGoals Scope

–Integrate the finance organizations and build a scalable –Includedinfrastructure to accommodate future growth while minimizing disruption to the business operations •10Q and

•Public reportingKey interdependencies •Accounting/Tax (payroll, A/R, A/P, GL, Tax)

–All integration teams for baseline and synergy tracking •Treasury (risk management, credit, insurance)–IT (on system integration and platform selection) •Internal audit/SOX–Hr (on policies, selection processes, outplacement process, •Real estate (including leases)retention processes) •Billing including bill generation and dispute–Legal (for tax issues and collateral agreements –Excluded

•It integration•Local business control unit integration

Key issues to be resolved Responsible Due date Status Comment

Closing–Are there any tax implications as a result of the merger and related financing?Organization design

–What functions should be kept separate, if any? How should the countries be supported?–How should accounting/tax/treasury/internal audit be integrated? Should it be a centralized group? Are there any existing outsourced arrangements to be restructured??Systems and processes consolidations –Whose systems, policies and controls should be used? Are there any best practices that can be transferred across the two organizations?–What are the uniform consolidated financial reporting standards needed to ensure fulfillment of financial reporting requirements (e.g., uniform chart, …)–How will banking services be provided in the future?–Should shared services be considered; can any services be outsourced?–What should the new capital structure for the combined business be?–Are there any revenue recognitions issues? How should they be dealt with?Billing–What are the improvement/synergy opportunities in billing?

Finance

Go north

Turn around

Follow the current pathand move on

Stop all standardactivitiesFocus on crucialtopics

Redirect

Follow the current pathin general and fixopen items of readinesscheck

The Q-gate checklists are based on both • hard facts (financial, business)• soft facts (human, cultural focus)

Predefined reports


Function

Reporting Status

Efficient PMI organization/alignmentThe various activities of a PMI process are organized by work streams. The integration office ensures a seamless involvement and alignment with all stakeholders

[1] : e.g. if there are multiple legal entities / countries involved

Involvement (timing, etc.) to be defined at the beginning

2

Involvement of stakeholder

Decisions with regards to the integration process

Steering Committee

Alignment with line organization

Business Coach Committee

Teaming up with country/regional organization

Regional Head Committee

Integration office

Work stream overview (example)

Inform the entire (project)-organization

News call

• Strategy/Business planning

• Organization• Change/

Communication• …

• Sales• Supply Chain

Management• Operations• R&D• …

• Finance• IT• HR• Legal• Compliance• …

Bi-weekly updates to be ensure continuous involvement

Management

Business


Successful operation of a PMIThe combination of strict program management, target-oriented mediation support and to-the-point based interdisciplinary ad-hoc analysis makes an integration successful

PProgram ManagementStrict andcontinuous

3

Ready to use App to:• Define measures• Easy to top level reporting• Drill down functionality

MMediation supportTarget-oriented

IInterdisciplinaryad-hoc analysisTo-the-point

Tablet based App: Measure tracker


Why goetzpartners?With its proven approach, proven tools and broad experience, goetzpartners is well prepared to support your PMI project

Source: goetzpartners

• Comprehensive OOO approach based on orientation, organization and operations

• Proven, ready-to-use and scalable tools• Clear and structured

• Proven success in numerous PMI/PMO projects• Adaptation to specific project situation

Proven approach

Proven tools

Broad experience

Confidence

Efficiency

Flexibility


Selected goetzpartners' PMI Referencesgoetzpartners has supported numerous PMI projects mastering the addressed challenges of the PMI process

Client Task Role Results

Cable network operator Completion of PMI Program management and direct COO support

Total cost reduction of 30%

Technology conglomerate Concept and implementation of a shared service center

Status quo analysis, shared services concept and implementation

Cost reduction of more than 25%

Global high tech conglomerate

Realignment of sales and service organization

Synergy analysis and development of a staff and organization concept

Cost savings of more than 5m EUR

Industry conglomerate Set-up of a Russian-German JV

Completion of PMI Up and running business with ~ 150 employees from Day 1

Source: goetzpartners

Indu

strial

s

Utilities company Set-up of an integrated customer service and billing center

Status quo analysis, shared services concept and implementation

More than 35 % efficiency gains

European utilities company Integration of German electricity sales unit into gas-oriented organization

Completion of PMI Dual fuel offers provided in Germany

German municipal utilities Preparation of merger of equals with another municipal utilities company

Pre-merger support across the value chain Ready to merge utilities

Ener

gyTI

ME


About the goetzpartners PMI teamOur clients rely on many years of experience in PMI projects – supported by Corporate Finance and Management Consulting know how

PMI Team Management Consulting PMI Team Corporate Finance

Sebastian OlbertPartner

Co-head of the Service LinePost Merger Integration

Consulting experience> 10 years

Günther SchermerPartner

Head of the Service LinePost Merger Integration

Consulting experience> 15 years

Dr. Thomas Sittel Director

Co-Head of the Service LinePost Merger Integration

M&A experience> 10 years



About goetzpartners

goetzpartners is a leading independent European consulting company that combines M&A (mergers & acquisitions) advisory and managementconsulting under one roof. With this unique service offering goetzpartners advises companies along their whole value chain, thus creatingsustainable value for them. The Group is represented with offices in Munich, Düsseldorf, Frankfurt, London, Madrid, Moscow, Paris, Prague,Shanghai and Zurich, and maintains international cooperation ventures.goetzpartners Management Consultants concentrates mainly on the fields of strategy, operational excellence, and business transformation.goetzpartners Corporate Finance focuses on M&A advisory services. goetzpartners was classed a "Hidden Champion" 2009 in the fields ofstrategic due diligence, financial and merger strategies as well as post-merger integration (result of the latest "Hidden champion" studycarried out by Professor Fink in collaboration with the magazine "Capital").

Service Line Post Merger IntegrationPMI is one of the most complex phases in the life time of an organization. Familiar rules and procedures in the two existing organizations haveto be revised, mindsets have to be changed and goals have to be redefined to find common ground. Therefore cultural aspects and financialtargets have to be taken into account. Using our proven tool sets (e.g. PMO – program management office, decision meeting for quantitativeand qualitative tracking of results), we ensure that the process is as efficient as possible. We employ experienced and PMI-specialized teammembers on the project, who have their ear to the ground and ensure that everything runs smoothly.

Disclaimer

The report is not only based on primary research conducted by goetzpartners, but also on public information taken from different sources, including reports, press articles, expert interviews, databases, and company publications. In preparing this report, goetzpartners has relied upon and assumed, without independent verification, the accuracy and completeness of information from these public sources.

goetzpartners points out that, if only limited, partly outdated, and/or inconsistent information was available on the topics covered in this report, they amended this information by own analysis and assumptions. goetzpartners accepts no liability whatsoever for the accurateness of these analysis or assumptions.

This report should not be used as sole source of information for any decisions related to the topics covered in this report. Any information taken from the report should be verified independently and completed by information from additional sources. This report does not carry any right of publication. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of goetzpartners.

Contacts

goetzpartnersMANAGEMENT CONSULTANTS GmbH

Günther SchermerPartner, [email protected]

Sebastian OlbertPartner, [email protected]

Prinzregentenstrasse 5680538 Munich, GermanyTel.+49 (0)89 290725-0

Königsallee 60 b40212 Duesseldorf, GermanyTel. +49 (0)211 60042-570

Bockenheimer Landstrasse 2460323 Frankfurt, GermanyTel. +49 (0)69 2475048-0

32 Brook StreetLondon W1K 5DL, UKTel. +44 (0)20 76477700

Calle Marqués de Urquijo n°30, piso 1°28008 Madrid, SpainTel. +34 (0)91 7451313

Prechistensky per. 14/1119034 Moscow, RussiaTel. +7 (0)495 9810791

19, Avenue George V75008 Paris, FranceTel. +33 (0)1 70725500

Melantrichova 17110 00 Prague 1, Czech RepublicTel. +420 (0)221 632451

Unit 1610, No.336 Middle Xizang Road, 200001 Shanghai, P.R.China

Schwerzistrasse 68807 Freienbach/Zurich, SwitzerlandTel. +41 (0)55 4102294

www.goetzpartners.com

goetzpartnersCORPORATE FINANCE GmbH

Dr. Thomas SittelDirector, [email protected]

Munich, 2012

Documents

20120515 PMI Integrating universes teaser · Ensuring the sustainable success of M&A transactions through an • Integrated approach (and teams), especially at the beginning of a