FINANCIAL INDUSTRY STRATEGY FORUM 10 12 JUNE 2010 10–12
G Growth th Opportunities O t iti Th Through h Mergers & Acquisitions
Christian Fischer Partner, MilleniumAssociates AG
Introduction Christian Fischer
MilleniumAssociates
Professional
M&A adviser focused on the financial services industry with particular expertise in banking and asset management
Founded in 2000 and owned by its partners and management Ö absolute independence!
Swiss Bank Corporation 1987 – 1995
Zurich: Controlling & Finance
1995 – 1996
g New York: Private Banking
1997 – 1998
Regional Head Controlling & Finance
Offices in Zug, Zurich and London (FSA regulated)
UBS AG
1998 – 1999
CFO Corporate Banking, Member of the Mgmt Board
15 professionals supported by a Global Ad i Advisory Board B d off 20 industry i d t veterans. t
1999 – 2000
Private Banking M&A Team
Unique industry insight with a broad relationship network throughout Europe.
Since 2000
MilleniumAssociates
y specialists. p Sell- and buy-side
More than 50 successfully completed transactions.
Education
Eidg. dipl. Betriebsökonom FH
INSEAD Advanced Management Programme
&
has sold
have sold a majority stake in
to
to
The undersigned acted as exclusive financial adviser to Basellandschaftliche Kantonalbank
The undersigned acted as exclusive financial adviser to Basellandschaftliche Kantonalbank and Basler Kantonalbank
has sold its local business in the Bahamas has acquired
to
The undersigned acted as exclusive financial adviser to BNP Paribas Wealth Management in this transaction
April 2010
July 2009
June 2009
The undersigned acted as exclusive financial adviser to the shareholders of Banque de Patrimoines Privés Genève BPG SA
March 2009
Table of Contents
1. The European Financial Services Industry M&A Landscape 2. Growth Strategies 3. Key Success Factors or How to Capture Growth Opportunities by M&A 4. Implementation is What Makes a Deal Work 5. Conclusions
Table of Contents 1. The European Financial Services Industry M&A Landscape
The Years 2008 and 2009 Were Affected by State Aid
Selection of Capital Injection Deals Through Governmental Bodies
Implications p of the Financial Crisis on European p Deal Making g
The Players Have Changed Roles
Trend in M&A Prices
2 Growth Strategies 2. 3. Key Success Factors or How to Capture Growth Opportunities by M&A 4. Implementation is What Makes a Deal Work 5. Conclusion C l
The Years 2008 and 2009 Were Affected by State Aid The global financial crisis had a huge impact on European Banks and subsequently on European M&A transactions in the financial services sector. sector Since the beginning of the crisis, the European Commission has looked at restructuring plans for 40 banks and signed off on 13 of them. The g goal of the restructuring g measures is to re-focus and stabilize the business models of the banks, so they can survive independently. State Aid for Banks 70'000
10
Deal Value Number of Deals
50'000
8
6
40'000
5 30'000
4
Northern Rock nationalized
3
20'000
2 10'000 1
Source: Mergermarket, proprietary data collections of MilleniumAssociates
05.2010
04.2010
03.2010
02.2010
01.2010
12.2009
11.2009
10.2009
09.2009
08.2009
07.2009
06.2009
05.2009
04.2009
03.2009
02.2009
01.2009
12.2008
11.2008
10.2008
09.2008
08.2008
07.2008
06.2008
05.2008
04.2008
03.2008
0
02.2008
0
Number off Deals
7
Lehman Brothers bankruptcy
01.2008
Deal Value (recapitalization) in EURm D
9 60'000
Selection of Capital Injection Deals Through Governmental B di Bodies #
Banks
Austria
1
Kommunalkredit lk d Austria
Belgium
3
KBC, Ethias Group, Fortis Bank SA
Denmark
1
Roskilde Bank
Germany
1
Bayerische Landesbank
Iceland
3
Kaupthing Bank, Landsbanki, Glitnir
Ireland
1
Anglo Irish Bank
Luxembourg
1
Fortis Banque Luxembourg
The international liquidity shortage dramatically worsened and after the collapse of Lehman Brothers in September, a series of E European b banks k received i d state aid. id
Netherlands
4
Fortis Bank Nederland, Fortis Bank Nederland (Holding), SNS Reaal, ING Group
United Kingdom
5
Northern Rock, Royal Bank of Scotland, Lloyds Banking Group, HBOS, Bradford & Bingley
The EU commission has authorized total guarantees and capital injections of EUR 4’131 billion. To rescue the banks,, EUR 1’235 billion have been used, of which 993 billion in form of guarantees and EUR 241 billion to recapitalize the banks.
Year 2009
The stock market turned in the second half of 2007 and British Northern Rock was the first European bank facing liquidity problems in early 2008 after refinancing difficulties and clients withdrawing approx. GBP 2 billion within 2 business days. days
The recovery continues. continues At the end of 2009, 2009 only 4% of the capital market transactions had to be secured by state guarantees. This compares to 30% at the end of 2008.
Country Year 2008
Total 2008
20
Austria
1
Kommunalkredit Austria
Belgium
1
KBC Group
Germany
5
Investitionsbank des Landes Brandenburg, Hypo Real Estate Holding (3x), (3x) Commerz Commerzbank
Ireland
1
Anglo Irish Bank
Norway
1
Kommunalbanken
United Kingdom
2
Royal Bank of Scotland, Lloyds
Total 2009
8
Year 2010 Denmark
1
Skaelskor Bank
Ireland
1
Allied Irish Banks
Total 2010
2
Implications of the Financial Crisis on European Deal Making
The Financial Crisis also had its impact in the number of European Banking and Wealth Management deals. deals In 2009, the overall deal activity was even somewhat lower with total 212 transactions compared to 292 in the previous year. Until the end of May 2010, another 72 transactions were recorded.
The Players Have Changed Roles There is not a significant change in number of deals but there is a tremendous change in terms of who acts as a buyer/acquirer of companies. companies Many of the most acquisitive banks had to be rescued by governments and have started to sell their non-core assets:
02.2008
Italian Wealth Management Business Division
Ö
Banca Euromobiliare
05.2008
Diners Club Italia S.r.I.
Ö
Findale Enterprises
07.2008
Germany based Retail Bank
Ö
Credit Mutual SA
07.2009
UK based credit card portfolio of Citibank
Ö
09.2009
30 consumer credit branches
09.2009
08.2008
Dresdner Bank Monaco
Ö
Bank Audi SAL
05.2009
Global Agency Securities Lending Business
Ö
Deutsche Bank AG
07.2009
Commerzbank (Schweiz) AG
Ö
Vontobel Holding AG
SAV Credit Limited
07.2009
Dresdner Bank Switzerland
Ö
Liechtenstein Global Trust
Ö
Instituto Bancario Del Lavoro S.p.A.
07.2009
Reuschel & Co
Ö
Conrad Hinrich Donner Bank
Portuguese credit card business
Ö
Barclays Portugal
10.2009
PrivatInvest Bank AG
Ö
Zürcher Kantonalbank
10.2009
Norwegian consumer finance business
Ö
Gjensidige Bank
10.2009
Kleinwort Benson
Ö
RHJ International SA
12.2009
Finnish consumer loans business
Ö
S Bank
04.2010
Allianz Dresdner Bauspar AG
Ö
Wüstenrot Bausparkasse AG
02.2010
Italian Credit Card Business
Ö
Barclays
04.2010
Swedish Operations
Ö
Marginalen AB
05 2010 05.2010
Norwegian Shell MasterCard Portfolio
Ö
Ikano Bank
The Players Have Changed Roles
Certain commercial banking activities of former ABN AMRO business
Ö
International Asset Management Limited
Ö
Belgium and Luxembourg based banks
Ö
12.2009
Netherlands based bank
Ö
ASR Nederland NV
05.2010
Fortis Prime Fund Solutions
Ö
Credit Suisse
07.2008
07.2008 10.2008
10.2008
Sweden based bank
Ö
Deutsche Bank
11 2008 11.2008
Netherlands N th l d b based d open market credit card portfolio
Ö
IInternational t ti lC Card d Services B.V.
11.2008
Private banking activities in Curacao
Ö
Van Lanschot Bankiers
06.2009
ING Personal Fund Services BV
Ö
Validas NV
10.2009
ING Bank (Switzerland)
Ö
Julius Baer Holding
Jefferies Group BNP Paribas
HQ Bank AB (formerly Hagstromer & Qviberg)
Norway based bank
Ö
SpareBank 1
10.2008
Finland based Investment firm
Ö
Management buyout
10.2008
RS Platou Markets AS (Norway based securities firm)
Ö
RS Platou Shipbrokers AS
11.2008
Luxembourg based bank
Ö
Nordea Bank
10.2008
(cont’d)
10.2008
Singer and Friedlander Private Client Business
Ö
Williams de Broe
11.2008
Kaupthing Finans AB
Ö
Resurs Bank AB
02.2009
Alpha Asset Management Company
Ö
Alandsbanken Abp
06.2009
Luxembourg based investment and corporate bank
Ö
Blackfish Capital Management
05.2010
KBL European Private Bankers S.A.
Ö
The Hinduja Group
Trend in M&A Prices The market has turned in 2008 from sellers into a buyers’ market with more (Swiss) targets becoming available. Drivers of this development were: −
Need for liquidity and focus on core businesses – therefore selling non-core entities;
−
International pressure on the Swiss banking secrecy, initiated by the US case against UBS and followed by some European governments, governments in particular France France, Germany and Italy. Many Swiss subsidiaries of nationalized European banks were put on sale.
Prices have generally dropped, however, each target/deal needs to be looked at individually as every company is different. The overall price trend is probably best reflected in the revenue multiple (red line). 7.0%
35.0x
6.0%
30.0x
5.0%
25.0x
4.0%
20.0x
3.0%
15.0x
2.0%
10.0x
1.0%
5.0x
0.0%
0.0x H1 2005
H2 2005
H1 2006 H2 2006 Goodwill/AuM
H1 2007
H2 2007 H1 2008 P/Net Revenues
Source: MilleniumAssociates, various
H2 2008
H1 2009 P/E
H2 2009
1. The European Financial Services Industry M&A Landscape 2. Growth Strategies
Most M&A Transactions Fail
Is Organic g Growth the Better Growth Strategy? gy
Conclusions Organic Growth Strategy
Pros and Cons of an Acquisition Strategy
Comparing Key Factors or Organic vs. vs Acquisition Strategy
3. Key Success Factors or How to Capture Growth Opportunities by M&A 4. Implementation is what Makes a Deal Work 5. Conclusions C l
Most M&A Transactions Fail Numerous studies conducted over the past 20-30 years conclude that most mergers and acquisitions fail to create positive shareholder value. value The reasons are manifold but include the following: −
Failed acquisition strategy (target business, business business size size, lack of compelling strategy, strategy lack of vision);
−
Overpaying (overly simplistic appraisal of market potential, overestimation of synergies, inadequate due diligence);
−
Post-merger integration (lack of leadership/commitment, ineffective integration, communication failures).
A study done by McKinsey showed that a M&A transaction including successful integration is the most difficult thing that a management team will ever take on.
Is Organic Growth the Better Growth Strategy? Organic growth strategies include expansion initiatives: −
New product introductions and new business initiatives;
−
Intensifying and strengthening of marketing efforts to win new business/new clients;
−
Geographical expansion (national and international network);
−
I Investing ti iinto t client li t service i excellence; ll
−
Trust and reputation building;
…but also efficiency measures such as: −
Cost-cutting programs such as downsizing, shedding poor performing products or business units, space consolidations, etc.;
−
Implementing efficiency-enhancing programs such as systems upgrades, reorganizing business units,, relocations,, etc.;;
−
Identification of internal deficiencies and improvement thereof, resulting typically in process optimization, outsourcing, cost-cutting (mostly) via headcount reductions;
−
Deployment of new technologies.
Initiatives that enhance productivity or increase market share (revenue based), or those that reduce expense or improve efficiency (cost based), allow a company to grow in an orderly fashion, building a strong organization along the way.
Is Organic Growth the Better Growth Strategy? Advantages
Implementation p is relatively y easy y and predictable.
Harmony: No clash of cultures.
Diversification of client base: More likely to build around core products and services bebe cause companies that grow organically will likely focus and invest in new products or services to sell and it is cheaper to sell more services to existing clients than to get new clients.
Career opportunity: in an organic growth environment, the staff typically has the opportunity to be considered for new advancement opportunities due to the expansion of the company before outside talent is sought. Less stress: Steady organic growth has less organizational stress.
(cont’d)
Limitations
Automatisation and straight-through g g processing will reached a stage when further automatisation is not justified by the investments becoming necessary (negative return on investment).
Pure efficiency strategies have their limits. Only very view banks can operate with cost/income ratios of below 60% on a longterm basis.
Speed: A solely organic growth strategy can open a company to be outflanked by a competitor who is an efficient and effective consolidator.
Human capital: There may be attrition if company is growing slower than developing staff.
Vulnerability: Smaller companies may spend more time defending their turf (clients) rather than expanding their businesses.
Capitalization: Slower growth may less likely attract additional investment. investment
Conclusions Organic Growth Strategy Organic business expansion strategies are costly, in particular when it comes to international expansion. expansion There is no assurance that an expansion strategy will be successful. Streamlining and optimizing internal processes is the most efficient growth strategy plus also a good “homework” to embark on an acquisition strategy.
Pros and Cons of an Acquisition Strategy Benefits
Market expansion: p Speed p of entry y into a new market. Competition: Elimination of a competitor. Management talent: Acquire human and intellectual capital. Economies of scale: Lower operating costs. Sales force: Increase business development channel and regional presence. New technology: Potentially improve technology in operating platform. New products or services: Improve suite of service or product offerings. Acquisition target can be investigated (due diligence). Acquiring cash flows vs. loading cost in an organic growth strategy. Time advantage (rapid growth). growth) Financial investment can be defined Accretive to earnings: Improved earnings and efficiency.
Risks and potential drawbacks
Business risk: The acquired q company p y may y not perform as expected. Financial risk: there may be undisclosed liabilities, risk factors, or contingencies. Integration: There may be difficulties in converting/merging technology and processes. Retention: Many acquisitions result initially in above-normal levels of client attrition. Culture shock: A poorly planned integration and communication plan may cause employee attrition and create a culture of fear.
Comparing Key Factors of Organic vs. Acquisition Strategy Factor
Organic Growth
Acquisition Strategy
Timing
Can be planned and executed within a defined time frame.
Difficult to plan plan. Need to look at the right opportunities when they arise. Also need to be prepared for the opportunities. opportunities
Revenue Growth
Low security for revenue growth, i.e. if a particular strategy really works out.
High security for revenue growth.
Cost of strategy
Principally cheaper but deployment of internal resources.
More expensive because of goodwill being paid for an acquired business.
Risk
The only thing which can be properly planned are the costs.
Through an acquisition, one is acquiring a flow of cash flows
Speed
Slow
Fast
Culture
Culture grows along people and expansion of business.
Cultural integration is one of the main challenges but can also offer opportunities.
1. The European Financial Services Industry M&A Landscape 2. Growth Strategies 3. Key Success Factors or how to Capture Growth Opportunities by M&A
Don’t Plan Acquisitions, q but be Prepared p
Do a Proper Due Diligence on Any Target
Get the Valuation Right
Why Should an Acquirer Hire an M&A Adviser?
4. Implementation is what Makes a Deal Work 5. Conclusions
Don’t Plan Acquisitions, But Be Prepared Be clear on what you want to achieve −
What is the overall company strategy and which dimension can be accomplished with an acquisition?
−
Goals of an acquisition (expansion of a particular segment, additional licenses, geographical foot print, product capacity, knowhow, additional clients, additional assets). assets)
Have the currency ready (financing) −
Be clear how much acquisition spending you can afford.
−
Third-party financing for M&A deals is hardly available these days.
−
Aligning investors, executing shareholder agreements and organizing the funding is a lengthy process which should be well-advanced prior to submitting offers for potential targets.
Have the people ready −
Who will be in charge of the acquisition process and who of the integration process?
−
Involving key people prior to deal closing also ensures proper allocation of responsibility and commitment level.
−
Identify candidates who can act as “ambassadors” within the newly acquired structure (board members, corporate development, people who can enable a rapid knowledge transfer and therefore realization of synergies in the integration phase) .
Don’t Plan Acquisitions, But Be Prepared
(cont’d)
Ensure rapid decision processes on all levels − −
−
Acquisition strategy should have been agreed in general by the Board of Directors. Pl Plan fl flexibility ibilit tto quickly i kl obtain bt i approvals l off corporate t b bodies di when h required i d [b [bad d example l is the company who has an “acquisition committee” only meeting on a monthly basis which needs to submit the proposal to the Executive Committee 7 days in advance of ….]. Deals need to gain momentum to succeed and rapid decision making will be required.
Practice by participating in M&A processes −
−
It is important to gain some practice and one should not shy away to participate in a number of processes/opportunities in order to gain some experience. This will help to sharpen the focus on the really important points. points Participating and not concluding is not for free but much cheaper than overpaying or not being able to extract the anticipated acquisition value from an acquired target.
Act rapidly p y once an opportunity pp y arises − −
Opportunities do not wait for you and there are usually competitors also interested in the same opportunity. Certain process steps such as submitting a LOI can be done within a short time frame.
Be realistic in terms of acquisition criteria − − − −
Acquisition targets are no commodities. The number of targets and deals is limited. Itt is s unlikely u e y to find d the t e perfect pe ect match. atc Important is to stick to a low number of key criteria.
Do a Proper Due Diligence on Any Target Including those T Targets t Y You B Believe li tto K Know iin Detail D t il Understand sustainability of revenues and cash flows, business model, products, clientele − − − − −
Analysis of historical results, budgets and business plans; Analysis of assets under management (volume, structure, performance, profitability); Analysis of credit portfolio and processes; Compensation system; Pension system and potential commitments/liabilities.
Compatibility of cultures − − − − −
Hard and soft factors; Compensation and incentive systems; Ethnic/religious compatibilities; Country/region/language y/ g / g g compatibility; p y; Company size compatibility (small number of entrepreneurs vs. international group).
Reputation is key − − −
You can enhance your reputation with an acquisition but you can also destroy it. How will the acquisition be viewed from your clients’ and the target’s clients’ perspectives? Background research on company and people is crucial.
Get the Valuation Right Valuation and price is not the same −
− − −
The value of a company can be determined with various valuation methods which will include assumptions about the potential of a company including budgets and business plans. There is no scientific correct value. P i iis d Price dependent d t on demand d d and d supply. l Agreeing to a price will be influenced by balance of powers, tactic of the acquisition process, timing of the deal as well as contractual terms and conditions (e.g. representations and warranties).
Apply various valuation techniques − − − −
Financial modelling incl. DCF valuation; Traded and transaction comparables; Identification and valuation of synergies and real options; Assessment, pricing and structuring of risk components.
Price as a figure is meaningless − − −
Price is often used to tease a seller since it has a psychological aspect. aspect Many sellers or their boards have certain price ranges or minimum prices in mind which must be met. A transaction can usually be structured to show a specific “headline” price by using conditions and deferred payment mechanisms. mechanisms
Get the Valuation Right
(cont’d)
Identify the relevant risks and incorporate them into envisaged transaction structure or the contract − − − − − −
Key people risk; Risk of client attrition; Compliance risks; Legal risks (pending litigations, threatened claims, change of control clauses…); Regulatory risks; Tax risks.
P Properly l address dd synergies i − − − −
Synergies are often over-estimated; In most cases, synergies focus on the cost-side; Revenue synergies are often planned but rarely y g p y achieved;; It is advisable to do a detailed planning of the synergies (i.e. which cost item within what time frame and why/how it can be done).
Get the Valuation Right
(cont’d)
Don’t let you mislead by market multiples − −
−
Market multiples are useful to reconcile a DCF valuation. valuation Every company is different and it is important to understand in a good level of detail a target’s business model, the sustainability of the revenue generation and the level of risk involved. V l ti Valuation d drivers i are amongstt others th (example ( l fund f d managementt firm): fi ) o Historical investment performance (track record); o Historical growth and growth expectations; o Profitability; o Relation between management and performance fees; o Sustainability of revenue generation (trading income, extraordinary income etc.); o Type and length of client relationships (diversification vs. concentration); potential o Synergy potential.
Make sure your (realistic) return expectation can me met in a normal scenario − − − −
Be aware of the hockey-stick effect! Work with scenarios and perform sensitivity analyses on key value drivers. What has been the average growth rate of the company over the past 5-10 years? What are the industry growth expectations and why should a particular company perform better?
Why should an Acquirer Hire an M&A Adviser? Specialist knowhow −
− −
An M&A adviser is familiar with M&A process and has been involved into numerous transactions [while for the management of a company an M&A transaction is mostly a rather unique experience that abuses valuable management time/attention]. Profound understanding of an industry and its business model(s). I d t Industry-specific ifi d deall parameters t tto be b iincluded l d d iinto t the th process.
Capacity − − −
Several specialists who can act on behalf of a buyer independent of holiday schedules, other business commitments etc. etc Enables a buyer to act rapidly since work, preparation etc. is not dependent on a single person. M&A projects tend to be complex and very resource intensive.
Experience −
− −
Some advisers do have industry specific experience which can help a lot when it comes to the identification of the adequate targets, industry-specific valuation characteristics etc. Profound knowledge of the M&A process, valuation methods, business models, compensation and retention schemes etc. Project management including preparation of integration phase.
Why should an Acquirer Hire an M&A Adviser?
(cont’d)
Outside view −
M&A advisers d i can take k an independent i d d outside id view i on a project. j
−
External advisers have experience with many similar situations and companies and can thus provide valuable input with regard to competing business models, different deal structures of the type of problem-solving mechanisms worked in what situation, etc.
Relationship network −
M&A advisers have a broad relationship network which is essential to identify suitable targets.
−
Knowledge of industry, sector and company-specific decision parameters.
Save money on the price, not on the adviser −
Ag good adviser can add many y times the value of the fees paid. p
−
Buying a company is a significant event which can also destroy a lot of value if some basic mistakes are made.
1. The European Financial Services Industry M&A Landscape 2. Growth Strategies 3. Key Success Factors or how to Capture Growth Opportunities by M&A 4. Implementation p is what Makes a Deal Work
Focus on Implementation & Integration
Care about People
Maintain Client Focus
Plan the Synergy Realization
5. Conclusions
Focus on Implementation & Integration The implementation & integration phase starts prior to the closing of a transaction −
Most values of M&A deals are destroyed at the integration phase.
−
Superior post-merger execution significantly increases the chance of a successful deal.
−
Timely communication to staff, clients and business partners is essential.
Making a g an a acquisition acqu s t o work o is s a lot ot of o hard a d work! o −
Establish an integration team with well-defined scope and clearly assigned responsibilities.
−
Determine the requirements to minimize the gap between the day the merger is approved by the government and the day the merging companies are expected to begin operating as one integrated enterprise.
Management attention −
The implementation and integration process needs a lot of management attention and leadership – something which can’t be delegated.
−
Management response to questions raised.
−
Communication of common values and merged group cultural values.
Integration success −
Platform and system architecture decision will have a major impact on future hierarchy.
−
Make joint systems work as quickly as possible because it is key to safe money.
Care About People Don’t underestimate nor overestimate emotions −
IIntensify if management efforts ff to offset ff the h inherent i h difficulties diffi l i in i putting i two organisations of any size and any complexity together.
−
People/employees should feel to be the centre of the company.
−
Sometimes it is better to let people go who have a negative attitude towards a transaction.
Get incentives right (ring-fencing rarely works) −
Compensation p systems y must be re-aligned; g ;
−
Equal people treatment;
−
Fair treatment of people who will lose their jobs Ö also impacts company culture and atmosphere.
Ensure clear responsibilities −
Announcement of key positions should take place more or less simultaneously with the closing of the transaction.
Care About People
(cont’d)
Communicate timely −
P Poor communication i i will ill cause rumours and db bad d atmosphere. h
−
Inform about status and progress made in the integration process.
−
Inform upfront about major cost-/headcount reductions and offer adequate and marketconfirm packages to people concerned.
People will make the acquisition work −
Populate the new organisation with sufficient talent.
−
Put the best people in charge of the integration process. process
−
Where possible select people nomination from both organizations.
Maintain Client Focus Clients are typically not happy −
Even at the best of times, the majority of customers feel they do not benefit from M&A (see figure to the right).
−
During an economic downturn it can turn into a real challenge.
−
−
Competitors could take aggressive measures in trying to solicit clients. So it is important to take a proactive approach to customer retention. Communicate the benefits of the combined organisation to the client.
Treatment
Result of Consumer Opinion Survey on M&A Survey Question: Do you believe consumers benefit when companies merge or ar acquired? Percent of resondents that answered "No" Banks
69%
Telephone companies good manufacturers Consumer g Retail stores Wireless service providers
66% 58% 54% 52% Source: Accenture M&A Survey
−
Act with speed during integration to get the combined organization back to ‘business as usual’ at the earliest time possible.
−
Treat your client well – maybe provide them with some sort of “acquisition acquisition treatment treatment” (rebate, additional benefit, lower price for new service or the like).
Ö Client should remain the most important asset of a company, even in an integration phase
Plan the Synergy Realization Use the original synergy valuation case and break it down in achievable sub-items −
Make M k sure the h major j synergies i get covered d and d appropriately i l planned l d plus l focus f on those which create most value!
−
Get management backing for the synergy execution.
−
Ensure appropriate (internal) communication.
−
Achieve quick wins.
−
Apply a realistic timing for the realization of the synergies.
−
Benchmark the synergy y gy cases with peers p / similar cases to determine if the planned p synergy cases are realistic and aggressive enough.
−
Maintain a controlling process over the achievement of synergies.
1 The European Financial Services Industry M&A Landscape 1. 2. Growth Strategies 3. Key Success Factors or how to Capture Growth Opportunities by
M&A
4. Conclusions
Conclusions Organic growth strategy − −
Every company should follow an organic growth strategy as it keeps the business focused. Streamlining and optimizing internal processes is an efficient growth strategy plus also a good “homework” to embark on an acquisition strategy.
Acquisition strategy − − −
Prices are currently attractive. Growing by acquisition is a mean of rapid growth achievement. Some growth ambitions can be realized more efficiently and with less risk via acquisitions compared to organic growth initiatives.
Acquisition process − − − −
Prepare to be ready for an acquisition. Due Diligence is the tool to make the deal more economic. Valuation # price -> use knowledge of target to structure the deal. Professional M&A advisers should help an acquirer to save costs.
Keep focus on implementation − − −
A speedy integration process will make the synergies work and pay for the deal. Maintain client and staff focus. Communicate rapidly and openly. openly
Questions & Answers
