the major activities in integration can be described in the following sequence.
Premerger planning
Addressing communication issues
Defining the new organization
Developing staffing plans
Functinal and departmental integration
Building a new corporate culture
Premerger planning
By doing premerger integration planning, the buyer will have an opportunity to insert into agreement the apprpriate representations and warranties as well as conditions that facilitate postmerger integration process. The planning process creates a blueprint for a post merger integration organization that will be assembled immediately after the closing.
Part of the integration planning exercise is carried as a part of the due diligence exercise. One responsibility of the due diligence team is to identify ways in which assets, processes and other resources can be combined in order to realize cost savings, productivity improvements, or other perceived synergies. Valuation of the target involves estimating the rate at which the expected synergies may be realised. This step needs that how and over what time period the integration will be implemented has to be thought of as a plan to give numerical estimates of magnitude and timing of the cash flows of the combined companies
Showing posts with label Integration. Show all posts
Showing posts with label Integration. Show all posts
Monday, June 9, 2008
Wednesday, May 14, 2008
Clean Team for Merger Integration
A Clean (Team) Start On Merger Integration
The Clean Team: An Emerging Tool For M&A Success
By: John Koob Mercer Human Resource Consulting, Atlanta, GA
WorldatWork Journal - Vol. 15, No. 3, Pgs. 24-31
New tool for speedier integration. With M&A activity on the upswing, dealmakers are under increasing pressure to integrate the two companies as quickly and smoothly as possible. Good integration planning can spell the difference between a merger's success or failure.
To address the integration issues likely to arise after a merger, progressive companies field a clean team. (The name, explains HR consultant John Koob, comes from the computer and health sciences label for a designated work environment that is sealed off to prevent contamination.) The members collect, review, and assess confidential data after regulatory filing and before deal closing, a downtime that can span several months.
Unlike the due diligence process, which focuses mainly on the acquiror gathering financial information, the clean team is a collaborative effort focused on integration planning. Teams generally contain current or former employees and third-party experts such as accountants, consultants, or actuaries.
How to clean up dirty problems. Identifying key issues that are likely to emerge and recommending possible courses of action, clean teams give dealmakers a jump on stumbling blocks (e.g., differences in corporate culture or incompatible compensation and benefit plans) that often thwart or slow down successful integration. Doing so can shorten the time and enhance the quality of integration planning, while avoiding the problems associated with delayed rationalization of compensation and retirement plans.
The team's contribution to the new organization can translate into savings of several hundred million dollars, the author notes.
Two large industry leaders used a clean team when they formed a joint venture in 2004, creating the world's second largest producer of a particular product. They contracted with a consulting team to evaluate and analyze the venture's HR aspects. To avoid violating blackout and antitrust regulations, the independent consultants gathered information from the employees of the respective companies but did not disclose one company's information to the other. By implementing the resulting recommendations, the joint venture had decisions in place soon after its official launch, covering benefits, retirement plan design, a new payroll system, and an early retirement program. Other clean teams have identified cultural differences between companies, determined how those differences would affect the integration process, and made plans to accommodate them.
Guidelines for setting up a team.
The author provides guidelines for establishing and operating a successful clean team. For example, have the team leaders report directly to a steering committee of HR and other executive leaders from both entities. Follow clear, structured guidelines that conform with antitrust legislation. Keep sensitive information confidential; provide reports in an aggregated, anonymous format; restrict access to key information to certain personnel; provide complete documentation; and maintain all data and documents from both parties in distinct libraries. Restrict the target's personnel from seeing confidential information about the acquiror's operations or business.
The Clean Team: An Emerging Tool For M&A Success
By: John Koob Mercer Human Resource Consulting, Atlanta, GA
WorldatWork Journal - Vol. 15, No. 3, Pgs. 24-31
New tool for speedier integration. With M&A activity on the upswing, dealmakers are under increasing pressure to integrate the two companies as quickly and smoothly as possible. Good integration planning can spell the difference between a merger's success or failure.
To address the integration issues likely to arise after a merger, progressive companies field a clean team. (The name, explains HR consultant John Koob, comes from the computer and health sciences label for a designated work environment that is sealed off to prevent contamination.) The members collect, review, and assess confidential data after regulatory filing and before deal closing, a downtime that can span several months.
Unlike the due diligence process, which focuses mainly on the acquiror gathering financial information, the clean team is a collaborative effort focused on integration planning. Teams generally contain current or former employees and third-party experts such as accountants, consultants, or actuaries.
How to clean up dirty problems. Identifying key issues that are likely to emerge and recommending possible courses of action, clean teams give dealmakers a jump on stumbling blocks (e.g., differences in corporate culture or incompatible compensation and benefit plans) that often thwart or slow down successful integration. Doing so can shorten the time and enhance the quality of integration planning, while avoiding the problems associated with delayed rationalization of compensation and retirement plans.
The team's contribution to the new organization can translate into savings of several hundred million dollars, the author notes.
Two large industry leaders used a clean team when they formed a joint venture in 2004, creating the world's second largest producer of a particular product. They contracted with a consulting team to evaluate and analyze the venture's HR aspects. To avoid violating blackout and antitrust regulations, the independent consultants gathered information from the employees of the respective companies but did not disclose one company's information to the other. By implementing the resulting recommendations, the joint venture had decisions in place soon after its official launch, covering benefits, retirement plan design, a new payroll system, and an early retirement program. Other clean teams have identified cultural differences between companies, determined how those differences would affect the integration process, and made plans to accommodate them.
Guidelines for setting up a team.
The author provides guidelines for establishing and operating a successful clean team. For example, have the team leaders report directly to a steering committee of HR and other executive leaders from both entities. Follow clear, structured guidelines that conform with antitrust legislation. Keep sensitive information confidential; provide reports in an aggregated, anonymous format; restrict access to key information to certain personnel; provide complete documentation; and maintain all data and documents from both parties in distinct libraries. Restrict the target's personnel from seeing confidential information about the acquiror's operations or business.
Article List on Integration
Article by accenture team
http://www.accenture.com/NR/rdonlyres/0BB9A876-CE12-4E91-872F-3FFD72F6E27E/0/postmerger_a4.pdf
Six sigma driven integration process
http://www.effectivemanagement.com/ASSETS/CF996DA97AA3475BA5DF1BA901C5E534/240302_postmerg.pdf
Tower Perrin article
http://www.towersperrin.com/tp/getwebcachedoc?webc=TILL/USA/2000/200009/2002050106.pdf
Article on Intelligent Clean Room concept of Accenture
http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/2880260307.html
Post merger IT integration - Cap Gemini Case Study
http://www.de.capgemini.com/m/de/cs/ss_Post-Merger_Integration.pdf
Cultural challenges - Transatlantic mergers
http://www.kultur-und-management.com/artikel1.pdf
IT integration blueprint
http://common.ziffdavisinternet.com/download/0/1575/0116_whiteboard_print.pdf
Very interesting paper that discusses research of various consultants on mergers with pure scientific studies
http://www.ftc.gov/be/rt/businesreviewpaper.pdf
100-day plan - presentation
http://www.case-study.ru/files/6.pdf
Two merger integtation imperatives
http://www.atkearney.com/shared_res/pdf/strat_and_leadership_S.pdf
DNA of Effective post merger integration
http://www.promethee.asso.fr/Globa%20RWelborn.pdf
http://www.accenture.com/NR/rdonlyres/0BB9A876-CE12-4E91-872F-3FFD72F6E27E/0/postmerger_a4.pdf
Six sigma driven integration process
http://www.effectivemanagement.com/ASSETS/CF996DA97AA3475BA5DF1BA901C5E534/240302_postmerg.pdf
Tower Perrin article
http://www.towersperrin.com/tp/getwebcachedoc?webc=TILL/USA/2000/200009/2002050106.pdf
Article on Intelligent Clean Room concept of Accenture
http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/2880260307.html
Post merger IT integration - Cap Gemini Case Study
http://www.de.capgemini.com/m/de/cs/ss_Post-Merger_Integration.pdf
Cultural challenges - Transatlantic mergers
http://www.kultur-und-management.com/artikel1.pdf
IT integration blueprint
http://common.ziffdavisinternet.com/download/0/1575/0116_whiteboard_print.pdf
Very interesting paper that discusses research of various consultants on mergers with pure scientific studies
http://www.ftc.gov/be/rt/businesreviewpaper.pdf
100-day plan - presentation
http://www.case-study.ru/files/6.pdf
Two merger integtation imperatives
http://www.atkearney.com/shared_res/pdf/strat_and_leadership_S.pdf
DNA of Effective post merger integration
http://www.promethee.asso.fr/Globa%20RWelborn.pdf
Integration - I
The key to driving long-term stakeholder value is efficient, strategic and well-paced integration.
Avoid the common pitfalls of post-merger integration
Customer retention and the alignment of organizational responsibilities are important issues.
The key to a profitable merger hinges on the successful integration of two organizations, each with its own culture, processes and operating structures. All of these disparate elements simply cannot be consolidated overnight.
Long before the deal goes through, they should start developing a detailed action plan — one that recognizes that much of the real work begins only after the deal closes.
Develop an effective plan for the integration process
A smooth integration depends on identifying, prioritizing and measuring synergies early in the process. The integration planning should start well before the transaction closes. For instance, in addition to addressing financial, legal and operating issues, due diligence should be used to prepare for integration by examining issues such as cultural fit and shared organizational values.
Companies eager to hit the ground running on Day 1 will want to develop an integration plan that encompasses the following:
Establishing a project management office to provide guidance and tools, and to drive the integration process
Assigning a dedicated team, backed by executive support, to manage the integration program
Creating a tracking mechanism to measure how well they are capturing identified synergies
Planning for workforce integration and creating a retention strategy for key personnel
Implementing a communications plan to respond to concerns and provide quick answers to questions regarding people's ongoing roles and responsibilities
Addressing customer and supplier retention issues
Establishing a plan for addressing potential cultural differences
Developing a tactical plan for the first 100 days of the new entity's operations
By devising a comprehensive integration plan at the outset, and by implementing its various elements at a managed pace, companies can enhance their chances of structuring M&A deals that deliver long-term shareholder value.
http://www.deloitte.com/dtt/article/0,1002,cid%253D148623,00.html?theme=maen
Avoid the common pitfalls of post-merger integration
Customer retention and the alignment of organizational responsibilities are important issues.
The key to a profitable merger hinges on the successful integration of two organizations, each with its own culture, processes and operating structures. All of these disparate elements simply cannot be consolidated overnight.
Long before the deal goes through, they should start developing a detailed action plan — one that recognizes that much of the real work begins only after the deal closes.
Develop an effective plan for the integration process
A smooth integration depends on identifying, prioritizing and measuring synergies early in the process. The integration planning should start well before the transaction closes. For instance, in addition to addressing financial, legal and operating issues, due diligence should be used to prepare for integration by examining issues such as cultural fit and shared organizational values.
Companies eager to hit the ground running on Day 1 will want to develop an integration plan that encompasses the following:
Establishing a project management office to provide guidance and tools, and to drive the integration process
Assigning a dedicated team, backed by executive support, to manage the integration program
Creating a tracking mechanism to measure how well they are capturing identified synergies
Planning for workforce integration and creating a retention strategy for key personnel
Implementing a communications plan to respond to concerns and provide quick answers to questions regarding people's ongoing roles and responsibilities
Addressing customer and supplier retention issues
Establishing a plan for addressing potential cultural differences
Developing a tactical plan for the first 100 days of the new entity's operations
By devising a comprehensive integration plan at the outset, and by implementing its various elements at a managed pace, companies can enhance their chances of structuring M&A deals that deliver long-term shareholder value.
http://www.deloitte.com/dtt/article/0,1002,cid%253D148623,00.html?theme=maen
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