Practical M&A Execution and Integration: A Step by Step Guide To Successful Strategy, Risk and Integration Management

Overview

Few business activities can match Mergers & Acquisitions (M&A) in terms of the potential for reward and for danger. A successful merger or acquisition can allow a mid-tier company to leap into the top tier, bringing rich rewards to that company, and its employees and shareholders. The failure of a merger can, on the other hand, have a devastating impact, resulting a loss of credibility, destruction of value and in some cases bringing the parties to ruin. Depending on how you measure it, between 50% and ...

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Practical M&A Execution and Integration: A Step by Step Guide To Successful Strategy, Risk and Integration Management

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Overview

Few business activities can match Mergers & Acquisitions (M&A) in terms of the potential for reward and for danger. A successful merger or acquisition can allow a mid-tier company to leap into the top tier, bringing rich rewards to that company, and its employees and shareholders. The failure of a merger can, on the other hand, have a devastating impact, resulting a loss of credibility, destruction of value and in some cases bringing the parties to ruin. Depending on how you measure it, between 50% and 80% of M&A deals fail to attain their objectives, before or even after the deal is done. Practical M&A Execution and Integration is all about maximising your chances of success.

Merging, de-merging, acquiring or acquired, if your organisation is involved, or likely to be involved, you will need to manage the process, and following this Handbook will give you a clear, simple framework to get the job done and help your organisation move on and attain the benefits and promise of the deal.

The book covers the following core topics:

  • Fundamentals of M&A; the reasons for M&A, types of M&A deals and the challenges  they present
  • M&A Regulation
  • Successful M&A, covering M&A power and providing a detailed look at the processes and people involved
  • Delivering M&A
  • The unique issues of Banking M&A, which differs significantly from other types of M&A deals.

The final section consists of document templates and suggested tables of contents which are designed to be used alongside the advice in the book, thus making Practical M&A Execution and Integration the complete guide to constructing a successful M&A deal.

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Product Details

  • ISBN-13: 9780470687963
  • Publisher: Wiley
  • Publication date: 12/6/2011
  • Series: Wiley Corporate F&A Series
  • Edition number: 2
  • Pages: 326
  • Product dimensions: 6.00 (w) x 9.10 (h) x 1.10 (d)

Meet the Author

Dr. Michael McGrath is an established city professional, with over 15 years of experience working for some of the world's leading banks. He is currently a Head of Function for ADM Operations at Lloyds Banking Group. He is a former regional Chief Technical Officer at Merrill Lynch and Project Delivery Director at Bankers Trust and Deutsche Bank. He was a founder of Hibernia Consulting, a project delivery and risk management consulting firm serving major investment banking clients.

Michael has spent his professional life implementing complex change, in particular managing Mergers and Acquisitions from the announcement of the deal through to post-merger integration. M&A deals he has worked on include Lloyds TSB Group, the Deutsche Bank acquisition of Bankers Trust (then the largest banking acquisition ever made), the Bankers Trust acquisition of NatWest Markets (then the largest banking acquisition in the UK) and IBM's acquisition of Lotus Development.

Michael holds an MBA from the Smurfit School of Business; his MBA thesis won the Institute of Accountants in Ireland gold medal for research in 1996. His doctoral research examines risk behaviour in unfamiliar problem domains and he is probably the only person in the United Kingdom to hold a doctorate in banking M&A risk management.

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Table of Contents

Tables and Figures xi

Foreword xv

Acknowledgments xvii

SECTION A: ABOUT MERGERS AND ACQUISITIONS 1

Chapter 1: Introduction 3

Fundamentals of mergers & acquisitions 5

Types of M&A deals 6

Challenges of M&A deals 11

Reasons for M&A 14

Chapter 2: Role of regulation 21

Regulatory regimes 22

UK anti-trust regime 23

European Union regulation 26

US anti-trust legislation 27

Bid process 28

SECTION B: FUNDAMENTALS OF THE DEAL 31

Chapter 3: Anatomy of a deal 33

M&A Stages 33

Phase 1: Prelude (to a deal) 36

Phase 2: Deal negotiation 40

Phase 3: Pre-change of control 44

Phase 4: Change of control 50

Phase 5: Integration 50

Phase 6: Business as usual 53

SECTION C: SUCCESSFUL M&A 55

Chapter 4: M&A power 57

Clarity 57

Capacity 61

Speed 76

Chapter 5: M&A process 79

Risk management 80

Planning, management and control 106

Project lifecycle and structure 113

Issue management 133

Risk management practice 138

Reporting 149

Assumption management 152

Dependency management 154

Scope change management 157

Quality management 162

Resource management 164

Cost management 166

Communications management 170

Stakeholder management 173

Chapter 6: M&A people 175

Culture 175

Stakeholders 179

Personnel 179

SECTION D: PULLING IT ALL TOGETHER: DELIVERING M&A 185

Chapter 7: Timing 187

Managing the integration and change of control period 187

Project organisation and control 197

SECTION E: BANKING M&A 207

What makes banking M&A unique? 207

Planning for the post-merger period 211

Planning to get to the change of control 212

Organisational approach 225

Issue management 229

What if it all goes wrong? 235

SECTION F: DOCUMENT TEMPLATES AND SUGGESTED TABLES OF CONTENTS 239

Control documents 239

Report templates 245

Project document templates 255

Bibliography 289

About the author 291

Index 293

Tables

Table 5.1 Temporal impacts on risk behaviour, after Das and Teng 85

Table 5.2 Delphi participation 95

Table 5.3 Sample risk classifi cation 98

Table 5.4 Sample risk meta data 99

Table 5.5 Example classifi cation of risks identifi ed using CRIM process 104

Table 5.6 Project constraints at different stages of a deal 110

Table 5.7 Inherent project risk 144

Table 5.8 Example of Earned Value Analysis (EVA) 168

Table 6.1 Approaches to forging a common culture 180

Table 6.2 Approaches to motivation of retained and non-retained staff 183

Table 7.1 Establishing integration team contacts 1 198

Table E.1 Establishing integration team contacts 2 209

Table E.2 Example: Trading desk distribution 215

Table E.3 Build activities 217

Table E.4 Testing 217

Table E.5 Dress rehearsal planning 218

Table E.6 Operational readiness 218

Table E.7 Change of control requirements 219

Table E.8 Change of control/cutover activities 221

Table E.9 First trading day requirements 221

Table E.10 Reporting audiences 229

Figures

Figure 1.1 Three capabilities for successful M&A 4

Figure 1.2 Impact of a merger 7

Figure 1.3 Impact of an acquisition 8

Figure 1.4 Impact of a demerger 9

List of Tables & Figures

Figure 1.5 Merger values 1968–2007 12

Figure 1.6 Recent merger activity, 2008–2010 13

Figure 3.1 Strata model 35

Figure 3.2 High level M&A plan (1 of 2) 37

Figure 3.3 High level M&A plan (2 of 2) 38

Figure 3.4 Relationship of high level planning 41

Figure C.1 Key elements of successful M&A 56

Figure 4.1 M&A power pyramid 58

Figure 5.1 M&A process pyramid 79

Figure 5.2 Reconceptualised model of risk determinants, after Sitkin and Pablo 84

Figure 5.3 CRIM framework 88

Figure 5.4 Risk classifi cation 97

Figure 5.5 Bands of answers 102

Figure 5.6 Example results 102

Figure 5.7 Risk signifi cance (sorted) versus level of mitigation 103

Figure 5.8 Programme constraints triangle 111

Figure 5.9 Typical project lifecycle 115

Figure 5.10 ‘Gated’ waterfall approach 115

Figure 5.11 ‘Realistic’ waterfall approach 116

Figure 5.12 Single project iteration 117

Figure 5.13 An RAD project 118

Figure 5.14 Project controls active in each project phase 120

Figure 5.15 Initiation phase 121

Figure 5.16 Design phase 124

Figure 5.17 Execution phase 126

Figure 5.18 Testing phase 128

Figure 5.19 Implementation phase 130

Figure 5.20 Closure and review phase 132

Figure 5.21 Issue management process (1 of 2) 134

Figure 5.22 Issue management process (2 of 2) 136

Figure 5.23 Issue states 139

Figure 5.24 Risk management process (1 of 2) 141

Figure 5.25 Risk management process (2 of 2) 142

Figure 5.26 Risk signifi cance based on risk probability and impact 147

Figure 5.27 Mitigation impact 148

Figure 5.28 Risk states 150

Figure 5.29 Reporting cycle 151

Figure 5.30 Assumption management process 153

Figure 5.31 Dependency management process 156

Figure 5.32 Scope change management (1 of 2) 159

Figure 5.33 Scope change management (2 of 2) 160

Figure 5.34 Example of EVA 169

Figure 5.35 Communications planning 171

Figure 6.1 M&A people pyramid 176

Figure 6.2 Example: Cultural differences report 178

Figure 6.3 Staff motivational needs 182

Figure 7.1 Sample time line 189

Figure 7.2 Reporting hierarchy 205

Figure E.1 Cutover control infrastructure 227

Figure E.2 Issue states for CoC control 234

Figure E.3 Layout of a typical control centre 236

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