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JUNE 27 2017
INTERNAL AUDITrsquoS ROLE IN HIGHLY AQUISITIVE ORGANIZATIONS
Jeff Hemphill | Central Region Risk Advisory Services Practice LeaderChris Alger | Management Advisory Services Managing Director
2
CPE AND SUPPORT
CPE Participation Requirements | To receive CPE credit for this webcast Yoursquoll need to actively participate throughout the program Be responsive to at least 75 of the participation pop-ups Please refer the CPE amp Support Handout in the Handouts section for more information
about group participation and CPE certificates
QampA | Submit all questions using the QampA feature on the lower right corner of the screen Presenter(s) will review and answer questions submitted as time allows Please note that questions and answers submittedprovided via the QampA feature are visible to all participants as well as the presenters
Technical Support | If you should have technical issues please contact LearnLiveClick on the Live Chat icon under the Support tab OR call 1-888-228-4088
Audio | Audio will be streamed through your computer speakers If you experience audio issues during todayrsquos presentation please dial into the teleconference 1-855-233-5756 and use teleconference code 226 838 6759
3
JEFF HEMPHILLCENTRAL REGION LEADER | RISK ADVISORY SERVICES
Jeff is a leader in BDOrsquos Risk Advisory Services practice with more than 25 years of public accounting and industry experience including 20 years of risk governance and internal controls engagements His practice emphasis is in risk management internal audit Sarbanes-Oxley readiness and compliance fraud program development IT audit and quality assurance for private and publicly held companies Much of that work involves collaborating with management teams on growth strategies and board of directorsrsquo matters as well as working with audit committees involving governance and with private equity firms to coordinate strengthening management activities as new requirements are undertaken
He joined BDO with Big Four experience previously with KPMG and Deloitte In addition Jeff has experience developing and managing compliance programs with responsibility for North America Europe and Asia
Jeff is a frequent sought-after speaker on advisory matters for professional and civic audiences As an active member of the Institute of Internal Auditors Jeff remains on the forefront of industry regulations and changes He serves on many community boards and civic committees
PROFESSIONAL AFFILIATIONSNACDCIAIIA Dallas ChapterUniversity of North Texas Accounting Department Board
EDUCATION MS Accounting University of North TexasBS Accounting University of North Texas
4
CHRIS ALGERMANAGING DIRECTOR | MANAGEMENT ADVISORY SERVICES
Chris Alger is a Managing Director of our Business Performance Improvement practice located in the Pittsburgh PA office of BDO USA He has more than 30 years of practical solution deployment experience focusing on the planning design and delivery of growth-oriented performance improvement synergy realization solutions as well as focusing on operationalizing business strategies Mr Alger commonly works with client leadership who has aggressive growth or performance agendas commonly triggered by marketplace disruptions by a shift in strategic priorities or by the demands of growth expectations He is actively working with the BDO Transaction Advisory Services leadership to leverage management consulting skills and PMI experience to deliver PMI planning and support services to our TAS clients geared to mitigating stabilization risk and enhancing ldquospeed to valuerdquo Additionally Mr Alger leads efforts around finance operations and value chain performance improvement linked to integrated planning forecasting and performance management
Prior to BDO Mr Alger was a Management Consulting Partner with Accenture LLP Throughout his career Mr Alger has worked with medium to large Fortune 1000 companies and global multinationals to drive material bottom line business value and improved returns to shareholders He has led and managed several small medium and large business change teams through the full project lifecycle from due diligence and feasibility to support design and benefits realization efforts He has provided guidance and coaching to executives seeking to undertake aggressive performance improvement change programs across multiple disciplines
Mr Alger provides business advisory and management consulting services to clients across multiple industries
EDUCATION MBA Katz Business School University of PittsburghMS Geology West Virginia UniversityBA Geology and Economics Ohio Wesleyan University
5
TODAYrsquoS LEARNING OBJECTIVES
At the conclusion of this course participants will be able to Discuss the key considerations associated with internal
auditrsquos role in MampA activities Discuss practical examples of internal audit projects
related to acquisitions and Identify benefits and pitfalls for internal audit in highly
acquisitive organizations
6
INTRODUCTION TO BDO
158Countries
Including exclusive alliances of BDO Member Firms
ABOUT BDO INTERNATIONALLY
Accounting and Audit
57Tax
22Consulting Advisory
21$76
billion revenues
1400+offices
67000+Total personnel
60+offices
ABOUT BDO NATIONALLY
Accounting and Audit
50Tax
33Consulting Advisory
17
$129billion revenues
500+Alliance firm locations
6057+Total personnel
Statistics as of year ended 93016 Statistics as of year ended 63016
7
COMPLIANCE
BUSINESS PERFORMANCE IMPROVEMENT
ENTERPRISE RISK MANAGEMENT amp INTERNAL AUDIT
FRAUD PREVENTION
TECHNOLOGY ADVISORY
ACCOUNTING AND BUSINESS
SERVICES
CORPORATE GOVERNANCE ORGANIZATION
DESIGN
STREAMLINE OPERATIONS WE HELP CLIENTS ACHIEVE
STRATEGIC BUSINESS OBJECTIVE THROUGH
PROPER INTERNAL CONTROL SYSTEMS
BDOrsquos Risk Advisory practice works closely with clients to assist in the management of risk and the achievement of strategic business objectives through proper internal control systems
Our professionals provide the value-added risk management capabilities needed to mitigate business risk support business strategies and continuously improve operational performance
OVERVIEW OF RMTAS
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
2
CPE AND SUPPORT
CPE Participation Requirements | To receive CPE credit for this webcast Yoursquoll need to actively participate throughout the program Be responsive to at least 75 of the participation pop-ups Please refer the CPE amp Support Handout in the Handouts section for more information
about group participation and CPE certificates
QampA | Submit all questions using the QampA feature on the lower right corner of the screen Presenter(s) will review and answer questions submitted as time allows Please note that questions and answers submittedprovided via the QampA feature are visible to all participants as well as the presenters
Technical Support | If you should have technical issues please contact LearnLiveClick on the Live Chat icon under the Support tab OR call 1-888-228-4088
Audio | Audio will be streamed through your computer speakers If you experience audio issues during todayrsquos presentation please dial into the teleconference 1-855-233-5756 and use teleconference code 226 838 6759
3
JEFF HEMPHILLCENTRAL REGION LEADER | RISK ADVISORY SERVICES
Jeff is a leader in BDOrsquos Risk Advisory Services practice with more than 25 years of public accounting and industry experience including 20 years of risk governance and internal controls engagements His practice emphasis is in risk management internal audit Sarbanes-Oxley readiness and compliance fraud program development IT audit and quality assurance for private and publicly held companies Much of that work involves collaborating with management teams on growth strategies and board of directorsrsquo matters as well as working with audit committees involving governance and with private equity firms to coordinate strengthening management activities as new requirements are undertaken
He joined BDO with Big Four experience previously with KPMG and Deloitte In addition Jeff has experience developing and managing compliance programs with responsibility for North America Europe and Asia
Jeff is a frequent sought-after speaker on advisory matters for professional and civic audiences As an active member of the Institute of Internal Auditors Jeff remains on the forefront of industry regulations and changes He serves on many community boards and civic committees
PROFESSIONAL AFFILIATIONSNACDCIAIIA Dallas ChapterUniversity of North Texas Accounting Department Board
EDUCATION MS Accounting University of North TexasBS Accounting University of North Texas
4
CHRIS ALGERMANAGING DIRECTOR | MANAGEMENT ADVISORY SERVICES
Chris Alger is a Managing Director of our Business Performance Improvement practice located in the Pittsburgh PA office of BDO USA He has more than 30 years of practical solution deployment experience focusing on the planning design and delivery of growth-oriented performance improvement synergy realization solutions as well as focusing on operationalizing business strategies Mr Alger commonly works with client leadership who has aggressive growth or performance agendas commonly triggered by marketplace disruptions by a shift in strategic priorities or by the demands of growth expectations He is actively working with the BDO Transaction Advisory Services leadership to leverage management consulting skills and PMI experience to deliver PMI planning and support services to our TAS clients geared to mitigating stabilization risk and enhancing ldquospeed to valuerdquo Additionally Mr Alger leads efforts around finance operations and value chain performance improvement linked to integrated planning forecasting and performance management
Prior to BDO Mr Alger was a Management Consulting Partner with Accenture LLP Throughout his career Mr Alger has worked with medium to large Fortune 1000 companies and global multinationals to drive material bottom line business value and improved returns to shareholders He has led and managed several small medium and large business change teams through the full project lifecycle from due diligence and feasibility to support design and benefits realization efforts He has provided guidance and coaching to executives seeking to undertake aggressive performance improvement change programs across multiple disciplines
Mr Alger provides business advisory and management consulting services to clients across multiple industries
EDUCATION MBA Katz Business School University of PittsburghMS Geology West Virginia UniversityBA Geology and Economics Ohio Wesleyan University
5
TODAYrsquoS LEARNING OBJECTIVES
At the conclusion of this course participants will be able to Discuss the key considerations associated with internal
auditrsquos role in MampA activities Discuss practical examples of internal audit projects
related to acquisitions and Identify benefits and pitfalls for internal audit in highly
acquisitive organizations
6
INTRODUCTION TO BDO
158Countries
Including exclusive alliances of BDO Member Firms
ABOUT BDO INTERNATIONALLY
Accounting and Audit
57Tax
22Consulting Advisory
21$76
billion revenues
1400+offices
67000+Total personnel
60+offices
ABOUT BDO NATIONALLY
Accounting and Audit
50Tax
33Consulting Advisory
17
$129billion revenues
500+Alliance firm locations
6057+Total personnel
Statistics as of year ended 93016 Statistics as of year ended 63016
7
COMPLIANCE
BUSINESS PERFORMANCE IMPROVEMENT
ENTERPRISE RISK MANAGEMENT amp INTERNAL AUDIT
FRAUD PREVENTION
TECHNOLOGY ADVISORY
ACCOUNTING AND BUSINESS
SERVICES
CORPORATE GOVERNANCE ORGANIZATION
DESIGN
STREAMLINE OPERATIONS WE HELP CLIENTS ACHIEVE
STRATEGIC BUSINESS OBJECTIVE THROUGH
PROPER INTERNAL CONTROL SYSTEMS
BDOrsquos Risk Advisory practice works closely with clients to assist in the management of risk and the achievement of strategic business objectives through proper internal control systems
Our professionals provide the value-added risk management capabilities needed to mitigate business risk support business strategies and continuously improve operational performance
OVERVIEW OF RMTAS
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
3
JEFF HEMPHILLCENTRAL REGION LEADER | RISK ADVISORY SERVICES
Jeff is a leader in BDOrsquos Risk Advisory Services practice with more than 25 years of public accounting and industry experience including 20 years of risk governance and internal controls engagements His practice emphasis is in risk management internal audit Sarbanes-Oxley readiness and compliance fraud program development IT audit and quality assurance for private and publicly held companies Much of that work involves collaborating with management teams on growth strategies and board of directorsrsquo matters as well as working with audit committees involving governance and with private equity firms to coordinate strengthening management activities as new requirements are undertaken
He joined BDO with Big Four experience previously with KPMG and Deloitte In addition Jeff has experience developing and managing compliance programs with responsibility for North America Europe and Asia
Jeff is a frequent sought-after speaker on advisory matters for professional and civic audiences As an active member of the Institute of Internal Auditors Jeff remains on the forefront of industry regulations and changes He serves on many community boards and civic committees
PROFESSIONAL AFFILIATIONSNACDCIAIIA Dallas ChapterUniversity of North Texas Accounting Department Board
EDUCATION MS Accounting University of North TexasBS Accounting University of North Texas
4
CHRIS ALGERMANAGING DIRECTOR | MANAGEMENT ADVISORY SERVICES
Chris Alger is a Managing Director of our Business Performance Improvement practice located in the Pittsburgh PA office of BDO USA He has more than 30 years of practical solution deployment experience focusing on the planning design and delivery of growth-oriented performance improvement synergy realization solutions as well as focusing on operationalizing business strategies Mr Alger commonly works with client leadership who has aggressive growth or performance agendas commonly triggered by marketplace disruptions by a shift in strategic priorities or by the demands of growth expectations He is actively working with the BDO Transaction Advisory Services leadership to leverage management consulting skills and PMI experience to deliver PMI planning and support services to our TAS clients geared to mitigating stabilization risk and enhancing ldquospeed to valuerdquo Additionally Mr Alger leads efforts around finance operations and value chain performance improvement linked to integrated planning forecasting and performance management
Prior to BDO Mr Alger was a Management Consulting Partner with Accenture LLP Throughout his career Mr Alger has worked with medium to large Fortune 1000 companies and global multinationals to drive material bottom line business value and improved returns to shareholders He has led and managed several small medium and large business change teams through the full project lifecycle from due diligence and feasibility to support design and benefits realization efforts He has provided guidance and coaching to executives seeking to undertake aggressive performance improvement change programs across multiple disciplines
Mr Alger provides business advisory and management consulting services to clients across multiple industries
EDUCATION MBA Katz Business School University of PittsburghMS Geology West Virginia UniversityBA Geology and Economics Ohio Wesleyan University
5
TODAYrsquoS LEARNING OBJECTIVES
At the conclusion of this course participants will be able to Discuss the key considerations associated with internal
auditrsquos role in MampA activities Discuss practical examples of internal audit projects
related to acquisitions and Identify benefits and pitfalls for internal audit in highly
acquisitive organizations
6
INTRODUCTION TO BDO
158Countries
Including exclusive alliances of BDO Member Firms
ABOUT BDO INTERNATIONALLY
Accounting and Audit
57Tax
22Consulting Advisory
21$76
billion revenues
1400+offices
67000+Total personnel
60+offices
ABOUT BDO NATIONALLY
Accounting and Audit
50Tax
33Consulting Advisory
17
$129billion revenues
500+Alliance firm locations
6057+Total personnel
Statistics as of year ended 93016 Statistics as of year ended 63016
7
COMPLIANCE
BUSINESS PERFORMANCE IMPROVEMENT
ENTERPRISE RISK MANAGEMENT amp INTERNAL AUDIT
FRAUD PREVENTION
TECHNOLOGY ADVISORY
ACCOUNTING AND BUSINESS
SERVICES
CORPORATE GOVERNANCE ORGANIZATION
DESIGN
STREAMLINE OPERATIONS WE HELP CLIENTS ACHIEVE
STRATEGIC BUSINESS OBJECTIVE THROUGH
PROPER INTERNAL CONTROL SYSTEMS
BDOrsquos Risk Advisory practice works closely with clients to assist in the management of risk and the achievement of strategic business objectives through proper internal control systems
Our professionals provide the value-added risk management capabilities needed to mitigate business risk support business strategies and continuously improve operational performance
OVERVIEW OF RMTAS
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
4
CHRIS ALGERMANAGING DIRECTOR | MANAGEMENT ADVISORY SERVICES
Chris Alger is a Managing Director of our Business Performance Improvement practice located in the Pittsburgh PA office of BDO USA He has more than 30 years of practical solution deployment experience focusing on the planning design and delivery of growth-oriented performance improvement synergy realization solutions as well as focusing on operationalizing business strategies Mr Alger commonly works with client leadership who has aggressive growth or performance agendas commonly triggered by marketplace disruptions by a shift in strategic priorities or by the demands of growth expectations He is actively working with the BDO Transaction Advisory Services leadership to leverage management consulting skills and PMI experience to deliver PMI planning and support services to our TAS clients geared to mitigating stabilization risk and enhancing ldquospeed to valuerdquo Additionally Mr Alger leads efforts around finance operations and value chain performance improvement linked to integrated planning forecasting and performance management
Prior to BDO Mr Alger was a Management Consulting Partner with Accenture LLP Throughout his career Mr Alger has worked with medium to large Fortune 1000 companies and global multinationals to drive material bottom line business value and improved returns to shareholders He has led and managed several small medium and large business change teams through the full project lifecycle from due diligence and feasibility to support design and benefits realization efforts He has provided guidance and coaching to executives seeking to undertake aggressive performance improvement change programs across multiple disciplines
Mr Alger provides business advisory and management consulting services to clients across multiple industries
EDUCATION MBA Katz Business School University of PittsburghMS Geology West Virginia UniversityBA Geology and Economics Ohio Wesleyan University
5
TODAYrsquoS LEARNING OBJECTIVES
At the conclusion of this course participants will be able to Discuss the key considerations associated with internal
auditrsquos role in MampA activities Discuss practical examples of internal audit projects
related to acquisitions and Identify benefits and pitfalls for internal audit in highly
acquisitive organizations
6
INTRODUCTION TO BDO
158Countries
Including exclusive alliances of BDO Member Firms
ABOUT BDO INTERNATIONALLY
Accounting and Audit
57Tax
22Consulting Advisory
21$76
billion revenues
1400+offices
67000+Total personnel
60+offices
ABOUT BDO NATIONALLY
Accounting and Audit
50Tax
33Consulting Advisory
17
$129billion revenues
500+Alliance firm locations
6057+Total personnel
Statistics as of year ended 93016 Statistics as of year ended 63016
7
COMPLIANCE
BUSINESS PERFORMANCE IMPROVEMENT
ENTERPRISE RISK MANAGEMENT amp INTERNAL AUDIT
FRAUD PREVENTION
TECHNOLOGY ADVISORY
ACCOUNTING AND BUSINESS
SERVICES
CORPORATE GOVERNANCE ORGANIZATION
DESIGN
STREAMLINE OPERATIONS WE HELP CLIENTS ACHIEVE
STRATEGIC BUSINESS OBJECTIVE THROUGH
PROPER INTERNAL CONTROL SYSTEMS
BDOrsquos Risk Advisory practice works closely with clients to assist in the management of risk and the achievement of strategic business objectives through proper internal control systems
Our professionals provide the value-added risk management capabilities needed to mitigate business risk support business strategies and continuously improve operational performance
OVERVIEW OF RMTAS
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
5
TODAYrsquoS LEARNING OBJECTIVES
At the conclusion of this course participants will be able to Discuss the key considerations associated with internal
auditrsquos role in MampA activities Discuss practical examples of internal audit projects
related to acquisitions and Identify benefits and pitfalls for internal audit in highly
acquisitive organizations
6
INTRODUCTION TO BDO
158Countries
Including exclusive alliances of BDO Member Firms
ABOUT BDO INTERNATIONALLY
Accounting and Audit
57Tax
22Consulting Advisory
21$76
billion revenues
1400+offices
67000+Total personnel
60+offices
ABOUT BDO NATIONALLY
Accounting and Audit
50Tax
33Consulting Advisory
17
$129billion revenues
500+Alliance firm locations
6057+Total personnel
Statistics as of year ended 93016 Statistics as of year ended 63016
7
COMPLIANCE
BUSINESS PERFORMANCE IMPROVEMENT
ENTERPRISE RISK MANAGEMENT amp INTERNAL AUDIT
FRAUD PREVENTION
TECHNOLOGY ADVISORY
ACCOUNTING AND BUSINESS
SERVICES
CORPORATE GOVERNANCE ORGANIZATION
DESIGN
STREAMLINE OPERATIONS WE HELP CLIENTS ACHIEVE
STRATEGIC BUSINESS OBJECTIVE THROUGH
PROPER INTERNAL CONTROL SYSTEMS
BDOrsquos Risk Advisory practice works closely with clients to assist in the management of risk and the achievement of strategic business objectives through proper internal control systems
Our professionals provide the value-added risk management capabilities needed to mitigate business risk support business strategies and continuously improve operational performance
OVERVIEW OF RMTAS
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
6
INTRODUCTION TO BDO
158Countries
Including exclusive alliances of BDO Member Firms
ABOUT BDO INTERNATIONALLY
Accounting and Audit
57Tax
22Consulting Advisory
21$76
billion revenues
1400+offices
67000+Total personnel
60+offices
ABOUT BDO NATIONALLY
Accounting and Audit
50Tax
33Consulting Advisory
17
$129billion revenues
500+Alliance firm locations
6057+Total personnel
Statistics as of year ended 93016 Statistics as of year ended 63016
7
COMPLIANCE
BUSINESS PERFORMANCE IMPROVEMENT
ENTERPRISE RISK MANAGEMENT amp INTERNAL AUDIT
FRAUD PREVENTION
TECHNOLOGY ADVISORY
ACCOUNTING AND BUSINESS
SERVICES
CORPORATE GOVERNANCE ORGANIZATION
DESIGN
STREAMLINE OPERATIONS WE HELP CLIENTS ACHIEVE
STRATEGIC BUSINESS OBJECTIVE THROUGH
PROPER INTERNAL CONTROL SYSTEMS
BDOrsquos Risk Advisory practice works closely with clients to assist in the management of risk and the achievement of strategic business objectives through proper internal control systems
Our professionals provide the value-added risk management capabilities needed to mitigate business risk support business strategies and continuously improve operational performance
OVERVIEW OF RMTAS
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
7
COMPLIANCE
BUSINESS PERFORMANCE IMPROVEMENT
ENTERPRISE RISK MANAGEMENT amp INTERNAL AUDIT
FRAUD PREVENTION
TECHNOLOGY ADVISORY
ACCOUNTING AND BUSINESS
SERVICES
CORPORATE GOVERNANCE ORGANIZATION
DESIGN
STREAMLINE OPERATIONS WE HELP CLIENTS ACHIEVE
STRATEGIC BUSINESS OBJECTIVE THROUGH
PROPER INTERNAL CONTROL SYSTEMS
BDOrsquos Risk Advisory practice works closely with clients to assist in the management of risk and the achievement of strategic business objectives through proper internal control systems
Our professionals provide the value-added risk management capabilities needed to mitigate business risk support business strategies and continuously improve operational performance
OVERVIEW OF RMTAS
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
8
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
9
POST MERGER INTEGRATION OVERVIEW
Why is Post Merger Integration important
Companies rely on mergers and acquisitions (MampA) to build critical mass expand markets and acquire new skills and technologies however the reality is a majority of todayrsquos mergers will ldquofailrdquo to achieve desired objectives
In the past executive management often assumed business synergies would naturally evolve once the MampA transaction closed however opportunity for a MampA failure is greatest after the deal is closed without deliberate focus
Companies and investors now view MampA integration plans as one of the most important parts of the deal
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
10
INTEGRATION ndash SUCCESS FACTORS
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
11
INTEGRATION - SOME KEY QUESTIONS
Reference National Association of Corporate Directors NACD Blue Ribbon Commission Report on Strategy Development 2014
bullWhy this deal If there are synergies what hard evidence indicates they will materialize What is our integration strategy What is the definition of success
Strategic considerations
bullWhat changes are needed to the current operating structure and logistics following the merger Will the supply chain be affected
Operations
bullAs we blend the human resources from the companies will we retain the right talent for successTalent
bullIs the companyrsquos technology infrastructure capable of supporting the planned merger How will the acquired companyrsquos technology be treated post-merger
Technology
bullWill the merger involve a blending of different cultures What are our plans for resolving conflicts Will there be a new post-merger culture How can we ensure all employees thrive
Culture
bullWhat are the dashboard components What elements will management monitor How frequently What metrics will the board use to measure overall success
Monitoring progress
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
12
INTEGRATION - PLANNING CONSIDERATIONS
12
Long
Ter
m
Day One Readiness
Ensure issue-free operational ldquoDay Onerdquobull People Interim reporting structure retention amp communication plans
bull Process Key interim processes transitionedharmonized (eg payroll amp benefits business development)
bull Technology Email phone expenses
Transition and Stability
Combine with minimal operational disruptionbull People Robust communication reinforcement of roles amp responsibilities
align compensation amp benefits
bull Process Teams rapidly plan amp execute back-office integration (programs amp operating units addressed later)
bull Technology Complete system integrationalignment
Strategic ldquoEnd-Staterdquo
OperatingModel
Realize full potential of expertise amp competenciesbull People Define strategy for combined organization
bull Process Consolidate program operations ensure processes amp policies support objectives
bull Technology System standardization amp optimization
Med
ium
Ter
m Shor
t Te
rm
ldquoFirst things firstrdquo Prioritize initiatives by importance amp urgency
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
13
INTEGRATION ndash HIGH-LEVEL COMPONENTSILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
PMI Phases
StrategyPlanning
Stabilization (First 100 Days)
Integration (Synergies)
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
14
INTEGRATION ndash TYPICAL TIMELINEPM
I Pro
cess
PMI Metrics and Tracking
PMI Planning Kick off
Execute pre-announcement tasks
2017Today
Week 1 2 3 4 5 6 7 8 9 10
Announcement ClosingDay 1
Tracking and reporting
PMIKick off
Execute Day 1 Tasks
Tracking and reporting
Target involvement as
necessary
Start detailed PMI planning
PMI performance tracking
Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Initial stabilization plan
Refine Project planbull Schedule and timelinesbull Risk planbull Stakeholder planbull Communication planbull Stabilization planbull Day 1 checklists
ReportsUpdates
ReportsUpdates
CLIENT EXAMPLE
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
15
INTEGRATION ndash KEY CONSIDERATIONSALIGN PLAN TO STRATEGY| ldquoMEASURE TWICE CUT ONCErdquo
Articulate Strategic Objectives
Acquisition Scenario Planning amp Alignment
StabilizationIntegration Playbook
Detailed Integration Planningbull Stabilization Plansbull Integration Plan
Serial acquirers who are committed to an inorganic growth strategy develop aligned core competencies of acquisition readiness and integration planning and preparedness capability
Agility
Power
Speed
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
16
INTEGRATION ndash KEY CONSIDERATIONSSTABILIZE BEFORE YOU INTEGRATE | ldquoFIRST THINGS FIRSTrdquo
Plan stabilization early Establish a stabilization war room Establish targetsmonitor
performance
Stabilization should be closely managedmonitored to ensure solid
foundation for integration is established
GOALControl and minimize the depth and duration of adverse performance impacts during stabilizations
Importance of First 100 Days
One Plan Multiple Dimensions
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
17
Identify the right leaderteam
Best leader not just the available one
Rotational programs build skills
Budget accordingly
Too much is at stake to have leadership and integrators distracted by other mission critical operational andor strategic issues
Accountability for results is essential
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
18
BDOrsquoS HIGH-LEVEL METHODOLOGYILLUSTRATIVE ACTIVITIES | REPRESENTATIVE TIMING
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
Execute Day 1 Plan Communication Plan Execute Transition Plan Monitor Stability ManageEscalate Issues Sanction Stabilization
Projects (Swat Teams) Communicate Progress Finalize Synergy Realization
Plan Communicate Execution Sanction Special Projects Mobilize Teams Execute Projects Monitor Performance Reassess Business Case Source Integration Work
Stream Teams
Program Change Management
Stakeholder Management Communication Planning Resource Retention
Planning Organization Design Culture Gap Assessment
Alignment Manage IntegrationSynergy
Realization Teams Finance HRCompBenefits IT Etc
Post-close Integration SupportDealFinalized
PrioritiesFinancial Data Operational Data amp Insights Risks
LOI
Begin with the End In Mind Measure Twice Cut Once
2-3 Weeks 5ndash6 Weeks tbd Finalize Integration Strategy Define Executive Priorities Create InventoryAction Plan
For Critical Processes Critical People Critical Technology
Develop Transition Plan Formalize Communications Formalize Day 1-100 Planning
amp Checklists Define Synergy Realization
Projects Review Deal Rationale Prioritize Opportunities Develop Business Case Develop Integration Roadmap Formalize amp Communicate Source Work Stream Teams
Review Deal Business Case (Validate Rationale)
DevelopConfirm Integration Strategy amp Validate Synergy Assumptions
Conduct High-Spot Opportunity Review Interviews (as appropriate) Finance and Accounting HRCompBenefits Information Technology Procurement Supply ChainDistribution Etc
Build Risk Assessment Establish Prioritized High-
level Road Map Planning First 100 Days Integration
Pre-close DD amp Integration Planning
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
19
BDOrsquoS HIGH-LEVEL VALUE DRIVERSSOURCES OF VALUE FALL INTO THREE PRIMARY CATEGORIES
Value Levers
Risk Management Mitigation
Revenue Enhancement
CostOperating Synergies
Todayrsquos Focus
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
20
KEY CONSIDERATIONS ASSOCIATED WITH INTERNAL AUDITrsquoS ROLE IN MampA ACTIVITIES
Risk management considerations
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
21
BDOrsquoS RISK APPROACH TO INTEGRATIONRISK APPROACH ALIGNS WITH BROADER INTEGRATION METHODOLOGY
Planning Execution Monitor
Post Acquisition Integration
Risk Management Integration Assessment
Due Diligence
Value Diagnostic amp Integration
Strategy
Integration Planning
First 100 Days Execution
Management
Integration Support Services
PHASE 1 PHASE 2a PHASE 2b PHASE 3 PHASE 4-n
DealFinalized
LOI
Begin with the End In Mind Measure Twice Cut Once
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
22
BDOrsquoS RISK APPROACH TO INTEGRATIONCOSO ERM RISK MANAGEMENT FRAMEWORK ndash FOCUS EXAMPLES
Strategic
Synergies
Change Management
Operations
Reporting Lines
Efficiencies
Reporting
Financial
Managerial
Compliance
Regulatory
Policies and Procedures
COSO ERM Framework 2004
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
23
Planning Phase ConsiderationsTeamsCommittees ToolsSystems Communications
Synergies Facilities Stakeholders
Skills Standards Governance
Culture Leverage BestBetter Practices
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Acquisition Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
24
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
The Vision Sets Targets ndash Risk Mitigation Value Stream
bull Diversify revenue sourcesbull Extend life cycles (ProductTechnology)bull Supply chain diversification
bull Competitive pre-emptionbull Sourcing diversitybull Regulatory risk management
MinimumRequirements
StretchGoals
bull Combine overhead ndash Shared Servicesbull Optimize supply chainbull Optimize debtequity ratios
bull Rationalize assetsportfoliobull Leverage spend basebull Leverageshare best practices
Risk Mitigation
Cost Reduction (Synergies)
bull Expand product linebull Enter new marketbull Rationalizestandardize salesforce
bull Attract new customerbull Rationalize amp strengthen brandsbull Establish processes amp disciplines
Revenue Enhancement
Aspirations
Inte
grat
ion
Goa
ls
IntegrationStrategy amp Priorities
Structure ExecutionPlans
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
25
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integrate Risk Mitigation Communications Into Broader Communication Strategy amp Plans
Evaluate major objectives
Review the communications
plan
Timely Feedback and
Resolution
Schedule of Communications
Messaging
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
26
Execution Phase Business Considerations
Key Business Cycles Monitoring KPI Customers Continuity
Business Continuity Procedural Consistency Vendors Management
Employee Retention Brand Rationalization Asset Rationalization
Policy Alignment Skill Drain Public Relations
BDOrsquoS RISK APPROACH TO INTEGRATION
BDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
27
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Integration Execution Considerations
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
28
Assessment Phase ConsiderationsSupport Monitoring Change Management Reporting
Resource Retention Process Improvement Results
BDOrsquoS RISK APPROACH TO INTEGRATIONBDOrsquos approach to Post Merger Integration is a phased approach which includes a roadmap for the new acquisitionrsquos first 100 days and beyond
Planning Execution Monitor
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
29
BDOrsquoS RISK APPROACH TO INTEGRATION
Planning Execution Monitor
Reassess the execution of the plan and consider process improvement opportunities
Opportunities
Process Improvement
Execution Results
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
30
PRACTICAL EXAMPLES OF INTERNAL AUDIT PROJECTS RELATED TO ACQUISITIONS
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
31
ACQUISITION PROJECTS FOR INTERNAL AUDIT
AcquiredTarget Risk Assessment ndash Strategy Operations Reporting Compliance AcquiredTarget Controls Assessment AcquiredTarget Governance Assessment AcquiredTarget IT Assessment Facilitate risk based planning of acquisition with business units Audit organization target identification process Audit Due Diligence Process Audit the integration process Post Acquisition Review Merger Objectives Assessment Evaluate Project Management Planning amp Escalation Evaluate assumptions for synergies
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
32
BENEFITS AND PITFALLS FOR INTERNAL AUDIT IN HIGHLY ACQUISITIVE ORGANIZATIONS
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
33
RECAP BE AWARE OF INTEGRATION PITFALLS
Treating all acquisitions alike with no tailored strategy Not planning the integration early enough Put too much emphasis on being fast and keeping the deal a secret Not focusing enough time on employees and culture alignment while over
focusing on external media and investment community Not considering Risk Mitigation a source of business value Not tailoring communication to meet the various audiences Understaffing integration effort (insufficient leadership) Discounting the role of professional communicators Not performing cultural or system audits instead relying only on ldquodue
diligencerdquo output Not getting the right resources to the table at the right time
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
34
INTEGRATION BENEFITS INTERNAL AUDIT
Focus on merger and acquisition objectives yields a strategic assessment of synergy opportunities
Internal Audit offers an independent and objective lens by which to evaluate acquisition effectiveness and efficiency
Internal Audit is uniquely qualified to assess and consult on critical aspects of acquisitionsbull Risk Management
bull Internal Control
bull Corporate Governance
bull Corporate Culture
bull Systems and IT Infrastructure
bull Human Capital Integration
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
35
QUESTIONS
Jeff Hemphilljhemphillbdocom
214-665-0649
Chris Algercalgerbdocom
412-281-4323
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
36
COMING SOONhellip
Internal Audit Webinar Series Course 4September 26 2017
Harnessing the Power of Data Analyticsand Continuous Monitoring
wwwbdocomglobal-risk-landscape-2017
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
37
CONCLUSIONTHANK YOU FOR YOUR PARTICIPATION
Certificate Availability | If you participated the entire time and responded to at least 75 of the participation pop-up questions you may click the Participation tab to access the print certificate button
Exit | Please exit the interface by clicking the red ldquoXrdquo in the upper-right-hand corner of your screen
