LOOKING BEYOND THE DEAL:

WHAT YOU SHOULD EXPECT IN EFFECTIVELY INTEGRATING PEOPLE, PROCESSES, AND ASSETS INTO A VIBRANT

BUSINESS

THE BAD NEWS: MOST MERGERS AND ACQUISITIONS FAIL TO REALIZE THEIR POTENTIAL

While catastrophic failures are rare, the majority of mergers and acquisitions do not achieve their goals

Transaction itself absorbs most of the company's energy • Leadership focused on consummating the deal, not on making the combined

business workValue is created not only in the transaction itself, but in successful implementation

“Our analysis shows that 61% of buyers destroyed shareholder wealth” -- BCG, Business Week

“Many studies of mergers, stretching back to the last century have shown that, despite some successes, the overall record is decidedly unimpressive” --The Economist

“In 57% of these merged companies, return to shareholders lagged behind the average for their industries” -- The Harvard Business Review

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THREE FUNDAMENTALLY DIFFERENT OBJECTIVES NEED TO BE MANAGED FOR SUCCESSFUL INTEGRATION

The measure of successful integration: "the increase in performance of the combined firm

over what the two firms… accomplish as independent firms"

1. Continue to manage the current business

2. Design and build the new organization

3. Ensure expected "synergies" and value opportunities are realized

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M&A IN THE BIOTECH WORLD BRINGS PARTICULAR CHALLENGES...

• For many biotechs, key resources are already stretched in “business as usual” mode

• Typical concentration of on-market products and the portfolio pipeline means there is high vulnerability from disruption

• Industry is highly networked, with a well-oiled rumour mill and highly mobile top talent

• Much valuable intangible knowledge exists, which may be lost if key talent departs

• Titles and incentives/compensation structures may be quite different

• Cultures are fiercely cherished (at the company level, and in working teams)

• Processes on either side may not be scaleable for the new company’s size

...Which means that a rapid, disciplined integration process is critical

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THE TYPICAL M&A PROCESS HAS MULTIPLE PHASESIllustrative

Stage settingIntegration planning and data gathering

Design and decision making

Detailed implementation & progress monitoring

Read-out of•Integration

principles •Team charters•Key dates and

milestones

Preliminary read-out of •Budget with synergies•Organization•Integration plan•Site strategy options

Final read-out of•Budget with synergies•Organization•Integration plan•Site strategy

Pre-announcement Pre-closing and Month 1 post close

Month 2-4 post closing Varying

Timing of phases varies significantly, not just with size and complexity of deal, but by function and geography

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CRITICAL CHOICES TO MAKE AND COMMUNICATE UPFRONT TO ENSURE SUCCESS

• Make the "philosophy" of the underlying the integration effort explicit– Create a new business, combining the "best of both" – Or, default to a proven, successful formula from one side– Say explicitly if it is a real merger - or, if in some areas, it is a take-over

• Define the balance between scope and speed – Focus on critical areas first then move to other fronts later – Or, proceed in parallel on all fronts– Decide how much resource will be focused on integration versus on

day-to-day business and customers

• Determine the principles of the desired organizations– Clean sheet, brand new– Or, build from one of the existing organizations– Will the feel be a new creation or an evolution?

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THE TYPICAL INTEGRATION TEAM STRUCTURE IS MATRIXED

Functional Platformse.g., HR, Communications,

Finance, Legal, IT

Team 1e.g., Research Alliances

Integration Steering Committee

Integration Leadership

Operational Teamse.g., Research, Development,

Manufacturing, Sales, Marketing

Team 2e.g., Development portfolio

Integration Program Management Office

•Overall integration accountability

•Set process, guidelines, timelines and integration focus integration

•Seconded line manager •Day-to-day integration

responsibility

•Drive and co-ordinate the overall integration process and communications

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THIS IS ONLY A PARTIAL VIEW OF THE DOCUMENT. GET THE FULL DOCUMENT HERE.

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ADDITIONAL TEMPLATE PREVIEWS

Guides PMI Planning Guidelines Types of Merger Integration Approaches (Hostile vs. Friendly) How To Integrate Acquisitions Well Ways to Integrate - Ver2 7 Deadly Sins The First 100 Days CFO's Role in PMI Merger Communications Plan - Ver1 Merger Communications Plan - Ver2 (No Preview) Managing Receivables Blues Motivating the Teams Managing the Process

Integration Tools and Templates

Merger Integration Best Practices

Integration Initiatives By Functional Area

Integration Timeline By Functional Area

Integration Approach Kick-Off Presentation

PMI Planning & Execution Model

Integration Plan Example 1

Integration Plan Example 2

HR Integration Plan Example

Overall Merger Integration Plan

Sales Force Merger Integration

Treasury Department Merger Integration

Presentation and Report Charts and Graphics - Big Time Saver!

Biotech Merger Integration Plan

Telecom Merger Integration Plan

New Business, Product, and Startup Ideas

MARKET, INDUSTRY, AND COMPANY, RESEARCH