The 3rd Annual New York M&A Integration Forum. April 21 st, 2016 / Georg-Michael Siedlaczek, VP Global Post Merger Integration, Bayer

Transcription

1 The 3rd Annual New York M&A Integration Forum April 21 st, 2016 / Georg-Michael Siedlaczek, VP Global Post Merger Integration, Bayer

2 Our Mission Bayer: Science For A Better Life The steadily growing and aging global population has a need for new and better medicines and for an adequate supply of safe food. Our innovations offer answers to these challenges. We invent new molecules which can positively influence the biochemical processes in living organisms with the goal of improving the quality of life. That is what our mission Bayer: Science For A Better Life stands for. Slide 2 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

3 Our Business Areas Pharmaceuticals Consumer Health Crop Science Prescription drugs Over-the-counter medicines, dietary supplements, dermatology products, foot care and sunscreen Innovative crop protection and seeds Slide 3 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

4 Our Products Bayer: Science For A Better Life Slide 4 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

5 Key Locations / Regions Europe North America Asia / Pacific Latin America / Africa / Middle East The Bayer Group is a global enterprise with companies in 77 countries. Slide 5 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

6 Key Data, Full Year 2015 By Subgroup and Segment, Million Sales EBITDA before special items Reconciliation 1, %* 2% Pharma 13, %* HealthCare 6, % 4,195 Covestro 26% 11, %* 46,324 30% HealthCare 22, %* ,224 2,416 1,659 22% 20% 1000 CropScience 10, %* Consumer Health 9, %* Pharma +13.4% Consumer Health +34.1% CropScience +2.4% Covestro +39.8% * year-on-year change currency- and portfolio-adjusted Slide 6 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

7 Innovation at Bayer Addressing Unmet Market Needs Challenges Our Approach Innovation Highlights Higher life expectancy and demand for innovative drugs increase cost pressure on healthcare industry Government desire to lower health care costs; increasing global self care trends Pharmaceuticals: Developing innovative treatments which offer added value compared to standard therapy; especially for diseases with a high medical need Consumer Health: Consumer-centric innovation Important launches: Xarelto Eylea Xofigo Important launches: Aleve.pm Aspirin with MicroActive technology Growing need for food, feed and renewable resources Crop Science: Solutions tailored to customer requirements, from seed to shelf Important launches: Council Sivanto In line with our mission Bayer: Science For A Better Life Slide 7 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

8 Integration And Carve Out Identifying The Vital Success Factors And Pitfalls To Avoid Overview Of Topics Setting & Communicating Objectives 1 Operational Integration VS Strategy Implementation 2 Assessing The Deal Complexity 3 Governance Model & Team 4 Stakeholder Analysis & Communication 5 Contract Set-up 6 Do Work Early 7 Post Day 1 Team 8 & Adherence & Timeline Give & Take 9 Focus On Integration VS 10 TSAs 11 Frameworks & Trainings 12 Running Day-to-day Operations Integration and Carve Out Integration only Carve Out only Page 9 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

9 Clear Integration / Separation Objectives Are Key Setting & Communicating Objectives Define integration / separation objectives that support the overall deal rationale Focus areas: Strategy, Finance, Identity & Culture, Systems, Processes Adapt the level of integration to the overall acquisition objectives Communicate the deal rationale clearly to internal and external stakeholders Page 10 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

10 Operationalize Your Long-term Strategy Operational Integration VS Strategy Implementation Align operational integration with strategy implementation and run both in parallel Define hard integration objectives that support the strategy Revenue / cost synergies, FTE, timeline Define hard KPIs to measure the strategic success Operational Integration Short-term Accounting IT Marketing Product Supply Strategy implementation Mid- to long-term Page 11 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

11 Don t Underestimate The Deal Complexity Factor In The Counterparty s Nature And Deal Structure In Your Planning Assessing The Deal Complexity Be conscious about the counterparty Be clear on acquisition / selling intent Analyze integration / separation capabilities upfront Examine the cultural proximity and the potential implications for collaboration Mind the deal structure Consider the generally higher complexity of asset deals vs share deals Factor in the desired level of integration Bear in mind the contract s level of detail Plan accordingly Do a rough internal planning upfront and develop a plan B for the worst-case scenario Discuss planning as part of the Due Diligence process Request a detailed planning from the counterparty as part of the binding offer Base your plans on critical milestones Page 12 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

12 The Right Governance Model And Project Team Are Critical Success Factors Governance Model & Team Clearly define governance model internally and with the counterparty Only use the best people for your team Dare to reject team members External partners / consultants are important but you need to be in the driver seat Implement regional structures if necessary you can t beat the time Page 13 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

13 Having A Clear Picture Of All Stakeholders And Their Needs Is A Prerequisite When Setting Up A Communication Plan Stakeholder Analysis & Communication Know your opinion leaders Identify your target groups Define information needs Define ways of communication Page 14 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

14 Make Sure Everyone Understands The Deal Contract And Works Towards Meeting The Closing Conditions Contract Set-up & Adherence Distribute the contract within your team Ensure the team understands it and that the contract is the lead Organize a contract session Ensure that you track the closing conditions regularly Involve your lawyers to ensure that the contract reflects the latest alterations Minimize the room for interpretation when including collars (pre-closing), earn-outs or contingent value rights (post-closing) to manage risks Page 15 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

15 Never Put Off Till Tomorrow What You Can Do Today Do Work Earlier 4 months (prework) 2 months (Actual GTM) Not drawn to scale Go-to-market (~6 months) Due-diligence (3-4 months) Sign-to-close (7 months) ~2 wks ~4 wks ~2 wks ~1 month 4 5 Intent of selling NBO BO Signing Activity to start early Enabler Involve Accounting, Tax and IT in early discussions of potential business models in GTM phase Arrange workshops to discuss what services to / not to provide (TSA) Set up an extended project team in GTM phase. Assess during steps 1,2,3 and 4 when to start activities for functions Define scope of countries and operating models for 80% of the countries. Consider doing most work between NBO and BO Clarify operating models for the rest 20% of the countries in scope Agreement with org. on the business to be transferred and involvement of a small group of people - People from corporate functions and BU with broad knowledge & skills; Delegation within own org. - - Page 16 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

16 Do Not Take The Phase Between Day 1 And Day 2 Lightly Post Day 1 Team & Timeline Don t underestimate the Day 1 to Day 2 phase many companies do Maintain the team structure in this phase Define governance and collaboration bodies internally and with the counterparty Manage expectations and resource requirements towards your management Implement tracking of synergies, success and remnant cost Page 17 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

17 The Divergence In Interests Between Acquirer And Target Will Increase Over Time A Transparent Give & Take Is Critical Give & Take Define your willingness to compromise Maintain a list of compromises Don t do any favors without written confirmations and clear definitions of the compromise Carefully manage team along the process from Go-to-market till Day 2 interests on both sides will diverge Continuously remind the team to separate personal and business interests Page 18 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

18 Maintain Momentum In The Base Business Of Both Companies And Avoid An Integration Scope Creep Focus On Integration VS Running Day-to-day Operations Do integration process as quickly as possible target 4 to 6 months Continue focusing on running existing operations don t get distracted by the integration / separation Monitor the business performance of both parties closely Page 19 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st 2016

19 The Topic of TSAs Should Be Ever-present And Should Not Just Arise When A Deal Is In Sight TSAs General Maintain a TSA catalogue Define general price scheme it should incentivize exit Continuously maintain a TSA blacklist Outline TSA dependencies Manage a TSA handbook Dealspecific Define TSAs upfront in negotiation phase Set pricing before deal signing to avoid endless negotiations Page 20 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

20 The Gold Standard of M&A is a Repeatable Model Frameworks & Trainings Well-conceived and executed M&A can create greater value than ever before Maintain clear frameworks & handbooks Acquisitions completed during / just after the recession generated almost triple the excess returns of acquisitions made during the preceding boom years* Conduct very formalized lessons learned Provide continued internal trainings Downturn s effect on asset value Companies are getting better at M&A Run community management Keep external partners as preferred providers and measure their contribution reliably *Ted Rouse & Tory Frame, Bain Brief, Bain & Company, 2009 Page 21 Cultural Integration & Talent Management Challenges in M&A The 3rd Annual New York M&A Integration Forum April 21 st, 2016

21 Thank you! The 3rd Annual New York M&A Integration Forum April 21 st, 2016