איתן

- ה ורכישות מיזוגים 8כנסM&A Best Practices

Turnarounds

Change Management

processes

M&A’s Life cycle

Growth Management

M&A Strategy

Scanning

Targeting

Initial Assessment

360 Due Diligence

Negotiation

Agreement formation

P.M.I. Approach

P.M.I. Planning

P.M.I. Execution

About us

S.G

. Sus

tain

able

Gro

wth

• We are an international partnership of consultancies specialising in Post-Merger Integration advisory services

• We advise our clients on the integration / separation of domestic or cross-border acquisitions / divestitures

• We work alongside our international clients in lean, highly experienced executive teams, focusing on transferring the benefits of our skills and experiences over to the internal staff.

• We can support you with everything from training course and integration capability enhancements through to setting up and managing your global integration programme

• We are the only global consulting network dedicated to merger and acquisition programmes

• With top firm consultancy and industry backgrounds, our team brings a richness of knowledge, skills and experiences

• We have a global network of experienced M&A consultants with functional expertise

• We are 10 member firms, in 8 countries and over 20 consultants

Global P.M.I. Partners

Our partners has in average:

27 years of professional experience

14 years in consulting,

11 years working with PMI

Delivered 23 PMI projects

About GPMIP

4

Selected…

5

Hundreds of clients’ interviews

70+S.G. Projects

NumerousTemplates, project

summaries, etc.

Corporates, M&A teams, advisors from acquiring and acquired companies

Over 25Benchmark meetings

Teva, Cisco, Amdocs, Broadcom, Marvel, etc.

Ness, Netafim, Bagir, Perion, AVT, Flash Networks, etc.

The information is validated by crossing multiple sources

Checking & Formulating the

Acquisition Concept

Decision Contract Signing

Closing

Acquisition Realization Stage

Integration Stage

Closing Preparations

Pre Deal:- M&A Strategy- Scanning- Targeting- Approaching

Deal:- Due Diligence- Valuation- Deal management

Post Deal:- PMI (post merger

integration) Planning- PMI Implementation /

change Program

Strategy Formulation

Deal Execution Integration

Pre deal: where the magic starts…

BEST PRACTICE # 1: Why are you acquiring? Be very very clear about the goal you’re trying to achieve. What is the real goal ? Is it achievable? Even in opportunistic situations, you should have a clear, realistic definition of what you want to achieve

Growth above all Breakthrough Global expansion

New products New technology Eliminate competition

BEST PRACTICE # 2: Your strategy should influence how you search for targets, negotiate the deal and plan the PMI phase

• Redefine the competitive landscape• Growth

• Expand to adjacent market • - Leverage sales force - scope

• Extend playground

• Deal with Market break-Up point - threats

• Vertical integration• Extend value chain • Secure supply chain• Distribution network• Secure technology• Reduce cross depandancies

• Horizontal / cost competitiveness• Critical mass • Eliminate redundancies (cost

efficiencies)• Reduce inharent development costs

• Gradual Expansions• Competative technology• Complementary

capabilities

• Financial markets and taxes• Leverage valuations

arbitrage• Leverage balance sheet

and share price to create share holder value

• Diversification

• Other• Brand• Talent• Patent portfollio - to settle

IPR issues, growth• Block Competition

BEST PRACTICE # 3: Research and experience show that in most types of M&A deals, an earnout model will create the best results for the middle and long term

Cash Share

Combined

Making Your Drinks Come True

BEST PRACTICE #4: (start) buying Small, especially if you have limited M&A experience. Small deals are much more successful

BEST PRACTICE #5: Synergies are overestimated. Try not to fall in love with the deal and not be overly optimistic. Remind your self that in 12 months you will have to explain to the board why the synergies you promised were not achieved.

Frequent Mistakes

66% Overestimated synergies

50% Failed to discover target had been dressed for sale

50% Failed to highlight critical Issues

45% Failed to recognize there was insufficient strategic fit

Best Practice #6: Always have a top person in the company who is not

involved with the deal and can play “devil’s advocate”

Remember the Statistics on M&A: 50-80% Failure

BEST PRACTICE #7: Build a pipeline of potential deals. Most opportunities you

will analyze – will not materialize. If you want to close a deal you should always

look in parallel at additional opportunities.

1-3 will be acquired (0.25%-0.75%)

10-12 may

reach DD

50-60 are relevant

400 opportun

ities

The 6 steps plan

Determine Business Plan &

Drivers

Determine acquisition constraints

Develop acquisition

candidates list

Build preliminary

valuation models

Rate / Rank acquisition candidates

Review & Approve

Acquisition

Organizational

Financing

Human Capital

BEST PRACTICE # 8:

Define the Acquisition Process, Criteria and who should be involved in what phase.

People who will be part of the PMI and Integration efforts should be part of the project as early as the DD or early assessment.

Proper handover should be planned as well.

BEST PRACTICE # 9: Involve HR in the early assessment phases, even before the DD. Have them assess the cultural fit and the complexity of integrating cultures and management teams.

Structure Culture

Management

As early as you can, map the shareholders and stakeholders. You must understand early on the “politics” of the deal (who wants it, who opposes, why, who can convince whom, etc.)

Checking & Formulating the

Acquisition Concept

Decision Contract Signing

Closing

Acquisition Realization Stage

Integration Stage

Closing Preparations

Pre Deal:- M&A Strategy- Scanning- Targeting- Approaching

Deal:- Due Diligence- Valuation- Deal management

Post Deal:- PMI (post merger

integration) Planning- PMI Implementation /

change Program

Strategy Formulation

Deal Execution Integration

Deal: Don’t mix business with pleasure… Be professional

360 Management

Team IT Systems

People & Culture Operations

Client Relations

BEST PRACTICE # 10: Do not focus your DD process only on legal and financial issues. Conduct a full 360 degree DD.Involve experts from your company and not only external help.

Major Objectives: - Have a clear idea of what you’re walking into- Find the “skeletons in the closet” to lower the valuation

BEST PRACTICE # 11: Conduct the DD as a synergetic team effort and not as separate parallel efforts. Use the information from one area to compliment findings in other areas and bring up new hypothesis.

Source :

Organizational Market Human

Organizational Culture Brand Leadership

Governance Client intimacy Employees

Agility Client loyalty Development and management

Communication and teaming

External networks Engagement

Energy and clarity Internal networks Productivity

Organizational structure

Innovation

BEST PRACTICE # 12: You can Lower the risk and Increase the probability of Success of every deal by focusing on the Intangible Assets

Checking & Formulating the

Acquisition Concept

Decision Contract Signing

Closing

Acquisition Realization Stage

Integration Stage

Closing Preparations

Pre Deal:- M&A Strategy- Scanning- Targeting- Approaching

Deal:- Due Diligence- Valuation- Deal management

Post Deal:- PMI (post merger

integration) Planning- PMI Implementation /

change Program

Strategy Formulation Deal Execution Integration

Post Deal: סוף מעשה במחשבת תחילה…

Preserving

Deleting

Through Existing Identities

Through New Identities

Confederation

Assimilation

Federation

Metamorphosis

Response to legacy identities

Integration

When analyzing the topic of post merger corporate identity, there are four major possibilities as shown in the model below:

BEST PRACTICE # 13: Before going into a detailed PMI plan, define the PMI concept. The PMI concept should answer critical questions like: are we integrating everything or just some elements? How fast should the integration be, do we preserve the identity of the acquired company or not, etc.

BEST PRACTICE # 14: Most books on M&A say you must do things quickly, “finish the integration process in 100 days”. Experience shows that certain aspects need to be handled fast and others need to take more time. You need to differentiate between them.

“In M&As sometimes fast is slow and slow is fast”

© 2

008

“I’m in a very stressful period !!”

BEST PRACTICE # 15: M&A times are perceived as chaotic and uncertain, good people tend to leave first. Map your key employees based on performance and potential and talk to all of them, design creative retention packages, remember it’s not only about the money.

“You didn’t get my email ??!!”

BEST PRACTICE # 16: Create a comprehensive communication plan including Stakeholders, channels, messages and timing. Communicate and over-communicate, not only on the announcement day…

BEST PRACTICE # 17: Throughout M&As “Me issues” dominate both companies at all levels...

Will I have a job?Will my pay and benefits change?Who will I report to?Will I have to move?What will ‘they’ be like to work for?Others...

Example “Me Issues”

BEST PRACTICE # 18: Mange PMI as a project with Integration Governance, project management tools and follow-up mechanisms, tasks, meetings, etc. (see details in the next slides)

Executive Committee

Functional Teams

PMI Office

Horizontal Teams

Functional Team Reps.

Quick Summary on M&A Value….

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