Operational Transaction Services

Transcription

1 Operational Transaction Services Working with you to make your acquisition a success Operational Transaction Services Working with you to make your acquisition a success 1

2 Operational Transaction Services Canada offers substantial growth opportunities for both corporations and private equity firms looking to grow through mergers or acquisitions. The success or failure of an integration depends largely on the level of preparation and readiness of all key functions and stakeholders. Focusing early on the drivers of value, when combined with a disciplined, agile and repeatable approach to integration execution, will lead to greater success, enhanced value and prevent costly issues. We can help Our Operational Transaction Services practice help corporations and private equity firms investing in Canada and around the world develop well-defined transaction strategies. Major companies that we advise have become skilled acquirers in a changing environment where failed acquisitions are no longer acceptable, providing them with a powerful competitive advantage. We support our clients across the deal continuum with a specific focus on the following: 1. Aligning strategy and target operating model for the future organization 2. Generating value through synergy assessment and delivery 3. Implementing a disciplined governance structure with a common Integration Management approach and playbook Managing Transaction Complexity Whether preparing for a merger, acquisition, joint venture or alliance, Canadian businesses are competing on a global stage and must perform at the accelerated pace of the M&A marketplace. Our perspective is that leading companies have been laser focused on achieving their transaction objectives. Shareholders have increasingly high expectations of their returns on transactions. As a result, management teams realize that the key to success is coupling great business strategies with flawless execution and synergy achievement. There is little room for error in the market place today. Not all transactions are alike, and companies look to surround themselves with strong, experienced and deep transaction capabilities. We bring together the right people to work on your engagement. We have access to global and local subject matter and industry experts to work with you to make your transaction a success. 2 Operational Transaction Services Working with you to make your acquisition a success

3 Our primary focus is helping you realize the business benefits created by your transaction A well run integration with focused and prioritized effort is needed to maximize synergies, minimize integration costs and avoid business disruption. Unlocking greater value from acquisitions begins with greater up front planning rigour. Involving key business functions early will set the stage for greater continuity through the entire deal process. It is not enough to identify synergies and hope that the business can deliver them. Some of the most critical pre-deal steps include: Analyze revenue and cost synergies: Integration team should take a holistic approach to determine untapped hidden upsides from all sources of synergies. Focus on creating future value: Team should look closely at the nature of the acquired assets and make a realistic assessment of their expected performance and transformational potential. Look closely at dis-synergies: Buyers must look at potential drains on value as transactions can trigger various dis-synergies. Acquisition value analysis Present value Purchase price Acquisition premium 10% 35% 15% 30% NPV target 30% 80% Synergy targets Dis-synergy 0% 10% Pre-acquisition value of company Business disruption 0% 10% Integration costs 2% 8% (Value to seller) Deal-intrinsic value Postintegration value of acquired company, before synergies Execution-dependent value Notes: 1. Values are all shown as percent of purchase price for consistency. Acquisition premiums are traditionally shown as percent of pre-acquisition value. 10% to 35% of purchase price is equivalent to 11% to 54% of pre-acquisition value 2. Value ranges are typical, although actual values are sometimes outside these ranges. For computation of minimum synergy level (30% to 80%), not all values were assumed high or low simultaneously 3. The values are intended to be illustrative, as actual values must be estimated for any specific deal based on the circumstances of that deal Operational Transaction Services Working with you to make your acquisition a success 3

4 Integration success lies in effectively managing four key integration elements: vision, value, change and control Defining the intent, rationale and competitive advantage Creating imperatives for preserving, enhancing, creating and measuring value Vision Articulate why the acquisition makes sense and obtain buy-in Proper attention given to scoping the future-state combined operating model and understanding impacts on key business processes Integration aligned with deal rationale and growth strategy Drives Clarity, Alignment, positive morale, Interest Sources of deal value and associated risks clearly defined Develop a portfolio view of all sources of value and prioritize them based on return vs. timing vs. risk Update synergy targets through confirmatory diligence after close refine existing initiatives/identify new ones Strong workstream involvement/ handoff to drive accountability Attainment, Creation, Credibility, Accountability Drives Track and measure realization post close Value Control Establish program priorities and milestones Define integration program governance, structure and resourcing Set up progress reporting Proactively identify risks, issues, and mitigations Clearly communicate success criteria for Day 1 and Day 100 Drives Visibility, Energy, Accountability, Collaboration Optimism, Assurance, Productivity, Commitment Drives Identify necessary changes to business structure and operating model Analyze impact on organizational design and resource capabilities Conduct talent transition and retention planning Manage key behavioural and cultural differences Coordinate program and stakeholder communications Change Managing risk, governance and decision-making Understanding the method and magnitude of change required Integrating new acquisitions effectively post-transaction is crucial if businesses are to realize the strategic ambitions for their deals. The integration process is unique, complex and challenging. If performed properly, it can help businesses grow successfully and accelerate the career of the integration manager in charge. Max Habeck, Global Operational Transaction Services Leader, EY 4 Operational Transaction Services Working with you to make your acquisition a success

5 Elements of a successful integration Create an integration framework Develop a well-defined integration strategy Outline the end state vision Establish an integration roadmap Functional planning and execution Design target operating model (organization process, technology and controls) Design integrated business processes, and IT application and infrastructure requirements Build enterprise synergies into business plans and budgets, and monitor/oversee execution of plans Develop communication/retention plans for all key stakeholders Segment key stakeholders to customize messaging and approach Define the strategy to retain key talent and begin cultural integration Initiate a centralized IMO (Project Governance) Organize and coordinate the multiple integration initiatives Proactively address issues, risks and decisions Functional Integration Integration Framework Key Stakeholders Integration Management Office Synergies Retention and Growth Day 1 Develop detailed top-down revenue and cost synergy targets Estimate Target s baseline numbers (financials, headcount, operational, etc.) Develop functional targets and priorities and obtain buy-in from functional teams Estimate sources of synergies Estimate negative synergies as well as onetime integration costs and CAPEX Determine synergy tracking approach Develop detailed plan for Day 1 to ensure stabilization and short-term integration Create a Day 1 plan focused on customers, employees, IT, etc. Establish organizational and financial controls Methodically plan and organize Day 1 implementation to minimize risks Create a clear customer retention and growth strategy Define approach to maintain service excellence and minimize disruptions throughout the integration process Operational Transaction Services Working with you to make your acquisition a success 5

6 Flawless integration planning and execution A successful integration program deploys the appropriate strategies, activities, and approaches to achieve integration objectives, maximize value creation, and move the organization forward together. Leading organizations are realizing substantial deal value from a disciplined, repeatable, and agile approach to transaction planning and integration execution. They focus on: Pre-deal planning: Prioritizing the key drivers of deal value and synergy realization Day 1 readiness: Ensuring business stability and realizing immediate value Value based execution: Implementing the identified value creation opportunities Pre-deal planning Day 1 readiness Value based execution Day 1 Value creation activities Overall program coordination Culture and change management Develop integration guiding principles Assess current and target operating model Validate synergy targets and realization integration costs Develop integration approach Establish integration governance, IMO and integration teams Identify key integration risks and mitigation strategies Scope TSAs and perform gap assessment Assess impact to organizations Develop change and communication plans Design target operating model and implementation roadmap Develop future organizations and key leadership roles Develop synergy business cases Launch integration program Identify, plan and execute Day 1 objectives Identify and plan long-term integration objectives Finalize TSAs and governance model Conduct change readiness assessment Launch Day 1 change and communications programs Day 1 communications and events (internal and external) Maintain business focus and accountability Stabilize organization by implementing talent and transition plans Implement target operating model Validate and execute synergies Lead integration efforts across the IMO and integration teams Manage cross-functional interdependencies and risks Monitor and report on status Execute TSA governance and exit activities Launch long term change and communications programs Support cultural integration through training and development 6 Operational Transaction Services Working with you to make your acquisition a success

7 Our clients recognize EY as a leader in operational transaction services Successful track record Strong record of delivering sustainable results Trust-based relationship and working style Assistance with over 500 transactions per year globally Comprehensive range of services Deep integration experience, methodologies and qualifications Full range of services, from business strategy to IT to functional support Integration with Ernst & Young s audit, tax, real estate and diligence services to help in making a quick start Audit relationship engenders reliable, objective advice throughout Global and local support Ability to access subject-matter and industry expertise across Ernst & Young s global network of over 10,000 transaction professionals in 96 countries and 15 sectors Ability to provide a local team in Canada to assist with integration/separation issues anywhere in the world Committed to exceeding client expectations We bring together the right people to work with you on your transaction integration We align our objectives and goals with yours EY made me feel confident throughout the entire transaction lifecycle that we were going to recognize an enhanced deal value through a successful integration. The team managed to turn a complex acquisition into a simpler transaction by ensuring we were on track and continually focused on delivering deal value from Day 1. Through the successful integration of multiple acquisitions, our company now stands out as a leader in the industry with a powerful competitive advantage as a skilled acquirer. Executive, EY client Operational Transaction Services Working with you to make your acquisition a success 7

8 Contact us To learn more about how our Operational Transaction Services professionals can make a difference for your transactions, contact one of our team members today. Graeme Deans Canadian Operational Transaction Services Practice Leader Direct Mobile graeme.deans@ca.ey.com Tim MacDonald Partner Direct Mobile tim.e.macdonald@ca.ey.com Raj Saxena Partner Direct Mobile raj.saxena@ca.ey.com Pierre Marc Seguin Associate Partner Direct Mobile pierremarc.seguin@ca.ey.com Sean Gunton Senior Manager Direct Mobile sean.gunton@ca.ey.com Dominic David Senior Manager Direct Mobile dominic.david@ca.ey.com Faith Rhodes Senior Manager Direct Mobile faith.rhodes@ca.ey.com EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. About Ernst & Young s Operational Transaction Services Our global network of experienced transaction support professionals can help you achieve your strategic goals, whether you are acquiring or divesting, restructuring, embarking on a joint venture or executing an initial public offering. We work with many of the world s largest organizations, fastest growing companies and private equity firms on some of the most complex deals in the global market and can tailor our comprehensive financial, commercial, accounting and people knowledge to your specific needs. We offer objective, responsive advice about potential value and risk and can provide confidence around key questions and the numbers. Our focus is on helping you to improve your growth, profitability and competitiveness and our global reach means that, wherever you are in the world, we can help you get the facts you need to achieve the value your investors expect. It s how Ernst & Young makes a difference. For more information about our organization, please visit ey.com/ca Ernst & Young LLP. All Rights Reserved. A member firm of Ernst & Young Global Limited ED None This publication contains information in summary form, current as of the date of publication, and is intended for general guidance only. It should not be regarded as comprehensive or a substitute for professional advice. Before taking any particular course of action, contact Ernst & Young or another professional advisor to discuss these matters in the context of your particular circumstances. We accept no responsibility for any loss or damage occasioned by your reliance on information contained in this publication. ey.com/ca