2012 DD Consulting. All rights reserved. DD Consulting M&A Integration: Back Office Danny A. Davis m: + 44 (0) 77 99 678 088 e: danny.davis@ddavisconsulting.com w: www.ddavisconsulting.com M&A integration and separation specialists
Danny A. Davis Deals small to large, from 2 days to 3 years Training: teaching you how to integrate Coaching: helping you through Consulting: planning and delivery along side you Integration Director or sitting on the steering committee Speaking: Conferences, Business schools (Henley, LBS, Ashridge, CASS, Brunel) Author of M&A Integration: how to do it: planning and delivery, articles with Finance Director Europe (FDE), The Chartered Institute of Management Accountants (CIMA), The British Compute Society (BCS) Developing HR Strategy, Journal of Brand Management, Corporate Financier, The Treasurer. Sits of the CMI experts panel DD Consulting is a founding partner of the Global PMI partners network Danny.davis@ddavisconsulting.com 077 99 678 088
Danny.davis@ddavisconsulting.com 077 99 678 088 M&A integration overview Motivation for M&A Integration Overview Methodology Or playbook M&A Integration Integration Planning Integration Control Integration Process Integration Strategy Synergy Delivery Tracking Delivery CONSOLIDATION & GROWTH TOGETHER Tax Legal HR IT Finance Comms S&M Supply Chain Procurement HSSE Property
Danny.davis@ddavisconsulting.com 077 99 678 088 Different Types of M&A Type 1 Geographic merger 3 Different Countries (customers, power, control) A B C Type 2 Classic overlap Same country similar size Merger of equals Type 3 Reverse takeover they are larger than us A D A E A Type 4 We are much larger Buying skills, IT, process control to make us better F Type 5 Purchase Customers, for our products (similar geographies) Type 6 Purchase new technology or product, to put through our sales channels A G A H A Type 7 Conglomerate & Diversification Acquire R&D, technology, people, market I Type 8 Strategic Pull through - Service business Partnership, advertising agency, consultancy A J Type 9 Supply chain protection Defence of a raw material with only one supplier A K
2012 DD Consulting. All rights reserved. M&A INTEGRATION FINANCE Danny A. Davis m: + 44 (0) 77 99 678 088 e: danny.davis@ddavisconsulting.com w: www.ddavisconsulting.com M&A integration and separation specialists
Danny.davis@ddavisconsulting.com 077 99 678 088 Danny A. Davis: Financial Integration Model AP AR Payroll KPI Finance Business as usual Decision Making Business strategy Finance strategy Integration strategy Mgt Acc Integration Tracking PMO KPI Cash Cost Synergies Finance function, activities, process integrated Business as usual Location Financial integration Financial Systems strategy & Delivery Process Reporting Interaction with other functions Administration Routines Size of future function 2 nd wave integration People Structure centralised, de-centralised, Insource, outsource Culture Data & Data analysis & Mgt information
Shared services, outsource, consolidation Operating Unit A Decentralized Operations Human Resources Information Technology Finance & Accounting Procurement Real Estate Corporate Staff Operating Unit B Operations Human Resources Information Technology Finance & Accounting Procurement Real Estate Copyright 2007 by ScottMadden. All rights reserved. Operating Units Shared Services Corporate Staff Danny.davis@ddavisconsulting.com 077 99 678 088 Shared Services Centralized Corporate Staff Human Resources Information Technology Finance & Accounting Procurement Real Estate Operating Unit A Operating Unit B Operating Unit C Transaction processing and strategic decision support can be provided by separate entities. Strategic, value adding services remain close to the business and repeatable Shared Services is a distinct operating model that ensures excellent customer service What will we share Corporate Services Finance, Procurement, HR. IT, Facilities & Comms transactional services that are not core business
Danny.davis@ddavisconsulting.com 077 99 678 088 Review Financial Process Strategic Leadership Leadership commitment Managerial Commitment Resource Management Risk Management Integrated Risk Management Integrated Management Control Framework Finance Information Operating Information Managerial information Financial Information Accounts Payable Accounts Receivable Inventory Management Motivated People Modern management practices competencies Employee satisfaction Enabling Work Environment Sustainable Workforce 1 Non-existent / Undeveloped 2 3 Good Management 4 Advanced 5 Practice Practice Early Stages of Development Best Practice
2012 DD Consulting. All rights reserved. M&A INTEGRATION HR Danny A. Davis m: + 44 (0) 77 99 678 088 e: danny.davis@ddavisconsulting.com w: www.ddavisconsulting.com M&A integration and separation specialists
Danny.davis@ddavisconsulting.com 077 99 678 088 Team Structure Steering Committee Person A, B, C, D, E, F Meet monthly to review status and resolve issues Integration management Person G Coordinate and manage all integration activities. Identify risk factors, issues and recommend strategies to mitigate. Integration Resource Person H, I, J, K Management of Integration planning Day One Readiness Synergy capture planning 90 Day Post-Closing coordination Risk management Transition Service Agreements Organizational structure and design Provide information and support as required throughout integration Products Manufacturing & Supply Chain IT Finance Distribution Sales & Marketing Support & Services Functions: Attain functional process Integration, Minimize business disruption, Maintain customer focus, Transition Service Agreements Facilitate teams through design and implementation for their core area. Resolve issues or escalate to Integration Manager Lead L M N O P Q R S U Team V, X, Y Z, AA, AB 1 2,3,4 5,6 7,8,9 10,11 12 13,14 HR Procurement & Purchasing Communications & Culture: Enabler integration teams Progress Controlling/Reporting, Synergy Management, Assess cultural alignment, Enable change, Address transition issues, Create communication plans Business Unit 1 Business Unit 2 BU 3 Customer facing teams, growth synergies and customer focus
Danny.davis@ddavisconsulting.com 077 99 678 088 HR Tools, People, Culture OFF SITES Change Management Structure COMPANIES TOGETHER Positive energy 2011 DD Consulting. All rights reserved. 2011 DD Consulting. All rights reserved. TEAM BUILDING TRAINING Change technology or systems Enables you to change the culture or what you do PEOPLE TOGETHER CULTURE TOGETHER Time INTERNAL PEOPLE US CUSTOMERS SUPPLIERS INTERNAL PEOPLE THEM GOVERNMENT OTHER STAKEHOLDERS CHANGE SOME PEOPLE Current vs Future State of HR Strategic Partner Change Agent Internally-focused A B Low cost work force A B Company power A B Risk-averse A B Tactically driven A Centralized A B Strategic-alignment A Company A B B Customer-focused Company B 35 2011 40 Administrative Expert 20 2011 DD Consulti ng. All 25 rights reserved. Employee Advocate
ESTABLISH CASE FOR CHANGE Danny.davis@ddavisconsulting.com 077 99 678 088 HR Building Blocks Workforce Transition Learning & Capability Transfer Talent Requirements Organisational Design Governance HR Organizational Structure Employee Relations COMMUNICATIONS STAKEHOLDER MANAGEMENT Employment Legal Issues Cultural Integration LEADERSHIP COMMITMENT TO CHANGE GETTING PEOPLE INVOLVED HR ALIGNINGS WITH THE BUSINESS ENSURING LONG TERM CHANGE Performance Management Resourcing RESISTANCE TO CHANGE UNCERTAINTY JOB, POWER, STATUS Rewards Leadership READINESS TO CHANGE People Risk & Uncertainty Leadership Alignment Stakeholder Engagement Communications Culture Engagement & Communication Business Structure
2012 DD Consulting. All rights reserved. M&A INTEGRATION IT Danny A. Davis m: + 44 (0) 77 99 678 088 e: danny.davis@ddavisconsulting.com w: www.ddavisconsulting.com M&A integration and separation specialists
IT will potentially help future business goals IT Supporting profit IT Portfolio analysis HIGH LOW LOW IT Creating Profit HIGH COMPETITIVNES Quick Wins or low hanging fruit : Valued by CIO/CEOs Killer Applications TODAY BASCIS Earl s IT Portfolio VISION Bold moves, Create new strategies / positions, Max 1-2 New technologies allow repositioning of business in market EXPERIMENTS Learn by doing good strategy for unknown future May be innovative and may shape tomorrow s business Max 2-3 TOMMOROW Support: These applications are valuable to the organisation but not critical to its success. Key operational: The organisation currently depends on these applications for success (mission-critical). High potential: These applications may be important to the future success of the organisation. Strategic: Applications that are critical to sustaining future business strategy. High Potential Strategic H I G H Methodology Business plans and goals Top down Analytical Teamwork Bottom up Current systems Evaluative Surveys and audits Users and specialists Application strategic plan Danny.davis@ddavisconsulting.com 077 99 678 088 IT opportunities Techniques, processes and environment Inside out Creative Brightsparks and product champions Support LOW Key Operational Source: Ward and Peppard (2002). HIGH Business dependence on IT Focused mainly on Today s strategies, Focus of government mainly on efficiency and cost reduction not on competitiveness, Heavily focused on supporting & shaping today s business process L O W
Danny.davis@ddavisconsulting.com 077 99 678 088 Level of Integration Do we need to integrate everything from the start If we want to integrate the DATA does this mean we necessarily must integrate the people, system, software and the data centres (possibly but not straight away) Outsourcing PROCESS LOCATION (property) DATA PEOPLE Management IT Strategic IT Basic IT functions
Danny.davis@ddavisconsulting.com 077 99 678 088 Q&A Session