Integration Support for Financial Institutions - PwC · PDF fileIntegration Support for Financial Institutions ... our client successfully achieved the financial goal set at the time

Service Overview

Amid a slowdown in long-term economic growth in the Japanese domestic market, the accelerating trend for

the development of global business platform leveraging M&A in a short period of time can also be seen among

the Japanese financial institutions targeting fast-growing Asian markets and other large-scale markets

including the US financial market. On the other hand, it is not always easy to unlock the potential of acquired

local companies for group-wide synergy maximization in the face of various barriers, such as differences in

competitive environments and business models of each country, country-specific financial regulations and

taxation system, together with gap in languages and cultures. With our global network of experts specializing in

the financial industry in157 countries, PricewaterhouseCoopers Co.,Ltd(PwC) is capable of providing assistance

for our clients with supports from the initial stage of M&A strategy development to the full-scale post-closing

business integration followed by transformation.

Client Issues

While M&A has become widely known as one of the most important strategies, there are only a limited number

of Japanese financial instiutitons that have actually succeeded in post-merger integrations along with the

consequent full-scale transformation of organization/process/systems that are indispensable for the realization

of the initial purpose of M&A planning.

Integration Support for Financial Institutions

Do you have any concern regarding cross-border business integration?

Our Approach

Through the findings from synergy/risk analysis focused on business model/operation process/system, PwC

assists our clients to acquire the value expected at the time of M&A planning in a short period of time and to

promote the transformation for the strategy realization with the development of integration planning from the

pre-close phase and regular tracking of synergy initiatives.

By leveraging tools/templates developed based on PwC’s past integration/transformation experiences, we

provide support for early-establishment of Integration Management Office (IMO)/ Workstreams, strict overall

progress/risk management, visualization of synergy effects, as well as creation of explicit

knowledge/organizational knowledge regarding integration.

Impacts

Case Example 1: Support for cross border business integration utilizing PwC global network

We provided assistance for a major Japanese bank which has made a foreign bank into its full subsidiary for the

business integration. More specifically, we helped this client to design the new bank’s integration business

model for the management of integrated business/operation to solve the issues for achievement of the goal by

providing the supports of PwC members specializing in Finance/Accounting, HR, Risk Management, System,

and Business Administration of the local office.

In Japan and the local country, PwC Japan’s consultants also

supported the client with the agreement formation to enable

appropriate incorporation of the global governance structure

through close coordination with the Integration Management

Office and relevant stakeholders while ensuring the local

autonomy of the new bank. As a result, we could contribute to

stable integration of business as initially planned.

Case example 2: “Transformation Management Office” for promotion of post-acquisition value

enhancement

Our private equity fund (PE) client had a goal of “enhancing business platform to improve EBITDA by 30% in 3

years” regarding an acquired subsidiary. For this endeavour, we worked to identify all findings from due

diligence, cost reduction measures planned by the subsidiary, and recommendation from an external advisor to

define improvement measures for over 60 items upon prioritization and placed the person responsible as well

as the deadline. We also established the Transformation Management Office (TMO) to facilitate the firm-wide

value enhancement initiative and supported the following areas as the TMO members.

•Planning ：Design the improvement measures set by the top-down approach to the field level

•Tracking： Operate the Management Reporting process through the progress measurement with EBITDA

impact amount

•Driving： Provide expert advice for promotion of improvement measures

With the implementation of the value enhancement system mainly around TMO and visualization of the

progress along with the incentive system, our client successfully achieved the financial goal set at the time of

acquisition within 3 year.

Benefits Tracking

Compiling of plan and actual project effects

Consolidation of project effects on programme level

Reporting of results in defined formats

• Reporting of plan and actual project performance

• Bottom-up support of reported effects with measures

• Validation of actual EBITDA effects via actual controlling concepts aligned with available IT systems

• Consolidation of individual project sheets to overall programme master tool

• Allocation of financial impact on legal entity, P&L line and business unit

• Analysis of plan vs. forecast vs. actual deviations per financial effects

• Definition of management presentation format

• Reporting of EBITDA/ cash impact by maturity grade

• Execution status of major initiatives / improvement levers

• Current status, critical issues, and future milestones by lever

Project reporting sheet Measure tracking sheet

PLAN“Top down target setting”

ACT/FC“Bottom up target fill level”

1

2

2007 2008 2009 2010 2011

IPO case

Management plan

EBITA (incl. add-on)

Maturity grades

MG 1

MG 2

MG 3

MG 4

MG 5

Lever 1

Plan YE

Plan month

Actual

120

30

25

Lever 2

Plan YE

Plan month

Actual

150

40

30

Lever 3

Plan YE

Plan month

Actual

80

35

25

FI TI

TP = Total potential FI = Financial Impact TI = Timing

Headwinds Cost reduction

Tariff/

pers.

Price

decay

Cost

reduction

Volume

& mix

2006

EBITA

Material

price

Recurr.

costs

GAP 2011

EBITA

GAP

Brand 1

Brand 2

Brand 3

TP

Execution per lever & maturity grade YTD financial impact per lever

Overall status of the program EBITA bridge incl. gap

ACT PLAN ACT PLAN Bottom-up Top down

FC Target Budget IPO PM Cum.

EBITA

Lever 1

Lever 2

Lever n

Total

CASH

Lever 1

Lever 2

Lever n

Total

2011

MTD YTD Full year Status

FIΔ (Bottom-up) FC

Setup of master reporting tool

Project

sheets

Plan / FC

deviations

Output

analysis

Master file overview

Master

report

…

Project 1

Project saving calculation update

Project 2

Project saving calculation update

Project n

Project saving calculation update

Grosssavings

Recurr.cost

One-timeexpenses

Capex FTE

Master reporting tool

Output analysis for

management reporting

Consolidation

Plan / actual deviation

Originally planned

32

1

4Summary

PlanForecast

Gross savings

Recurring cost

One-time expenses

Capex FTE

Act BD Plan Act BD Plan Act BD Plan Act BD Plan Act BD Plan

Project 1

Project 2

...

Project n

Lever 1

Project 1

Project 2

...

Project n

Lever 2

Lever n

Total

ActualDeviation

Business Cases

Monthly Status Report

Master Initiative Plan

TMO Dashboard

Program Management

Transition Management Office

Biz Strategy Initiative

Distribution Strategy

Human Resources

Manufacturing

Real EstateContract Management

FinanceIT

Procurement MarketingProductDevelopment

Sales

Steering CommitteeXX

TMO XXX

Contacts

Yusuke Aiba +81 80 4073 6938 [email protected]

Akira Hirashima +81 80 4171 9385 [email protected]

Yuichiro Iwakami +81 80 4347 3441 [email protected]

Nic Wilson +81 80 4179 8083 [email protected]

© 2015 PricewaterhouseCoopers Co., Ltd.. All rights reserved. PwC refers to the PwC network member firms and/or their specified subsidiaries in Japan, and may sometimes refer to the PwC network. Each of such firms and subsidiaries is a separate legal entity. Please see www.pwc.com/structure for further details.

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

© 2015 PricewaterhouseCoopers Co., Ltd. All rights reserved. PwC refers to the PwC network member firms and/or their specified subsidiaries in Japan, and may sometimes refer to the PwC network. Each of such firms and subsidiaries is a separate legal entity. Please see www.pwc.com/structure for further details.

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.