Practical M&A Execution and Integration
A Step by Step Guide To Successful Strategy, Risk and Integration Management
Wiley Corporate F&A
2. Auflage September 2011
326 Seiten, Hardcover
Wiley & Sons Ltd
ISBN:
978-0-470-68796-3
John Wiley & Sons
Covering the field of M&A execution, this accessible and practical book is divided into sections which broadly reflect the chronological order a typical M&A deal follows. Taking the reader through the M&A process, stage by stage, the book describes the challenges and goals for each, and suggests approaches to dealing with these challenges, presenting guidance on how to prepare for the stage. At each stage topics such as strategy, IT, communications, HR considerations and legal/regulatory constraints are addressed. Replete with practical tools such as process flows and sample control documents, the book also contains downloadable template control documents on an accompanying CD. The book also includes a number of interviews with those currently involved in M&A deals, industry perspectives from those outside the process, and is peppered with examples and over 30 case studies and examples. Covering the topic of M&A in general, the book also has a number of sections relating specifically to banking M&A in light of the unique nature of M&A in this industry and recent trends and activities in banking M&A.
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
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
