Developing a Post-Acquisition Strategy - Completion And Beyond
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The document outlines strategies and frameworks for effectively managing mergers and acquisitions (M&A), emphasizing the importance of a strong post-acquisition strategy during the critical first 100 days. Key concepts include the need for integration of systems, alignment of corporate culture, and addressing staff compensation and benefits to retain top talent. Additionally, it discusses the role of operational excellence, product leadership, and customer intimacy to ensure successful M&A outcomes.
Developing a Post-Acquisition Strategy - Completion And Beyond
- 1. DEVELOPING A POST-ACQUISITION STRATEGY: COMPLETION AND BEYOND Case studies, Concepts, and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
- 2. The first 100 days In-house systems synergy Staff, Compensation and Benefits www.myCNI.com.my www.OOBEY.com
- 3. Rewarded vs. Unrewarded M&As From: “Habits of the busiest acquirers”, Robert Palter and Dev Srinivasan, McKinsey Toronto www.myCNI.com.my www.OOBEY.com
- 4. 1. The First 100 Days www.myCNI.com.my www.OOBEY.com
- 5. Strategies for M&A “ Double-Digit Growth”, Michael Treacy www.myCNI.com.my www.OOBEY.com Base Retention Share Gain Positioning Adjacent Market New Business GROWTH
- 6. Post M&A Type 1: Buying Market Share No evidence of previous company One Kingdom Pre-integration Blueprint Slow Trigger, Fast Bullet www.myCNI.com.my www.OOBEY.com Integration Operating Model Price Premium Buying Market Share Net Cost per Customer < Direct Acquire
- 7. Make or Buy? It is easier to meet the standards of competition if you buy an existing player Adjacent acquisitions must remain as a SEPARATE ENTERPRISE Integrate Management Control (systems, technology) Inter-transfer of management talent, knowledge and capability are important Post M&A Type 2: Invade Adjacent Markets www.myCNI.com.my www.OOBEY.com
- 8. Post M&A Type 3: Acquire New Business No core advantage to bring in Investors mind-set vs. Managers mind-set Value unlocking via operational improvements Invest in Management/Leadership Premium = Combined value > stand alone www.myCNI.com.my www.OOBEY.com
- 9. First 100 Days: Conflict Points Leadership style differences Who’s is charge? (Who won?) Organic vs. bureaucratic cultures Open vs. closed communication Decision making speed & style Collegial vs. competitive Structures that don’t match Values incongruence www.myCNI.com.my www.OOBEY.com
- 10. The First 100 Days 25 50 75 100 Save Star Performers Revise Strategy/Value Maps Staffing Plans Assess HR Value Re-align Strategy Coaching/Team Dev Restructure Capabilities Audit Culture Integration www.myCNI.com.my www.OOBEY.com
- 11. 2. In-house systems synergy www.myCNI.com.my www.OOBEY.com
- 12. Strategy: Disciplines, Priorities, and KPIs Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
- 13. Product Leadership New, state of the art products or services Risk takers Meet volatile customer needs Fast concept-to- counter Never satisfied - obsolete own and competitors' products Learning organization Strategy: Disciplines, Priorities, and KPIs Operational Excellence Competitive price Error free, reliable Fast (on demand) Simple Responsive Consistent information for all Transactional 'Once and Done' Customer Intimacy Management by Fact Easy to do business with Have it your way (customization) Market segments of one Proactive, flexible Relationship and consultative selling Cross selling www.myCNI.com.my www.OOBEY.com
- 14. Product Leadership Each Discipline Requires Different Priorities & Resources Operational Excellence Customer Intimacy Organization, jobs, skills Management systems Information and systems Culture, values, norms www.myCNI.com.my www.OOBEY.com
- 15. Each Discipline Requires Different Priorities & Resources Operational Excellence Central authority, low level of empowerment High skills at the core of the organization Disciplined Teamwork Process, product- driven Conformance, 'one size fits all' mindset Integrated, low cost transaction systems The system is the process Command and control Quality management Organization, jobs, skills Management systems Information and systems Culture, values, norms www.myCNI.com.my www.OOBEY.com
- 16. Product Leadership Ad hoc, organic and cellular High skills abound in loose-knit structures Concept, future-driven Experimentation and 'out of the box' mindset Person-to-person communications systems Technologies enabling cooperation Rewarding individuals' innovative capacity Risk and exposure management Product Life Cycle profitability Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms www.myCNI.com.my www.OOBEY.com
- 17. Each Discipline Requires Different Priorities & Resources Organization, jobs, skills Management systems Information and systems Culture, values, norms Customer Intimacy Empowerment close to point of customer contact High skills in the field and front-line Customer-driven Variation and 'have it your way' mindset Strong customer databases, linking internal and external information Strong analytical tools Customer equity measures like life time value Satisfaction and share management Focus on ‘Share of Wallet’ www.myCNI.com.my www.OOBEY.com
- 18. Post M&A: 4-Wheels Model Culture Business Objective M&A Strategy www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
- 19. Post M&A : Framework Joint-Boards Org Structure Job Design C&B Policies & procedures Decision making Transition/Integration Team Revise structure to strategy Process alignments www.myCNI.com.my www.OOBEY.com Share Gain Adjacent Market New Business Structure
- 20. Post M&A : Framework Info and Comm Technology Integration Cost Centers Real Estate Operating Assets Procurement* Combined Cost Savings KPI Product lines Geographic Parking: Services, Production Customer Problems Database R&D www.myCNI.com.my www.OOBEY.com Share Gain Adjacent Market New Business Resources
- 21. Special Note: Procurement Prices and Terms of current contracts Supply market dynamics Tactics for Supply Purchase Consolidated spending database Opportunities to save money Cutting T.C.O. Manuals on Negotiation Strategies www.myCNI.com.my www.OOBEY.com
- 22. Activity Grid to optimize resources www.myCNI.com.my www.OOBEY.com Eliminate (-) What are features/ activities/services to eliminate? Reduce (↓) What are features/ activities/services to reduce? Create (+) What are features/ activities/services to introduce? Increase ( ↑) What are features/ activities/services to increase?
- 23. 3. Staff, Compensation and Benefits www.myCNI.com.my www.OOBEY.com
- 24. Post M&A : Framework Tone, Speed, Direction, Principles, Requirements Post-M&A Roles & Responsibilities Geographic role differences Decision making processes Employee authorities Communication* Culture integration sessions Buy-in ‘Key Players’ www.myCNI.com.my www.OOBEY.com Share Gain Adjacent Market New Business Leadership
- 25. Communication: Internal What: Significance, Direction Top Management Roadshows Website Web TV (Vlogs) Employee Conventions, Re-Branding launch Concrete, Consistent Messages Generate Enthusiasm, allay Fears Questions: Workforce merge or separate? Let go? Role assignments? Compensation? www.myCNI.com.my www.OOBEY.com
- 26. Communication: External Media Interviews Media Day Single Face to Market (single proposition) Customer Communication Organization (Advantages of M&A) www.myCNI.com.my www.OOBEY.com
- 27. Post M&A : Framework Integration-era Incentives HR Value: Alignment HR Value: Capabilities HR Value: Engagement Star (‘A’) players Competency mapping Culture gaps Employee views on new entity www.myCNI.com.my www.OOBEY.com Share Gain Adjacent Market New Business Person
- 28. HR: Special Considerations Frontline (Sales) is key in post-M&A Targets for Competitors to poach Communication: Roadshows, Repetition, Emphasis Integration-era Incentives: Retaining key people Encourage Cooperation Sharing of Knowledge Cross-selling Temporary Management Structure: During transition period Cut thru Red Tape On-the-spot Decisions Priority Access to CEO www.myCNI.com.my www.OOBEY.com
- 29. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D C B A
- 30. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent E D Good C B A
- 31. MBO Standards www.myCNI.com.my www.OOBEY.com Useless Poor Average Good Excellent Commit Suicide E Not Good D Good C Very Good B Excellent A
- 32. MBO Standards www.myCNI.com.my www.OOBEY.com Commit Suicide Not Good Good Very Good Excellent Unacceptable performance E Did not fully meet planned results D Achieved Planned Results C Higher than planned results B Consistently achieved 4 for 3 quarters A
- 33. What to Pay? Pay for Service Pay for Job Pay for Performance Pay for Competency www.myCNI.com.my www.OOBEY.com
- 34. Performance and Incentives Internal Equity Internal Job Rates Performance differentials External Competitiveness External Job Rates - Benchmarking Demand & Supply www.myCNI.com.my www.OOBEY.com
- 35. What’s the Difference? Increment Bonus Promotion www.myCNI.com.my www.OOBEY.com
- 36. Compa Ratio Table Use this if your company: Pays for Performance , and Pays for Job rates Def: Mid-Point = Mid Point of Pay Grade Grade E2 Min RM2,000 MID RM2,500 Max RM3,000 www.myCNI.com.my www.OOBEY.com
- 37. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 38. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 1 2 5% 3 4 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 39. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 1 2 2 3 4 5% 7 9 3 7 4 9 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 40. Compa Ratio Table www.myCNI.com.my www.OOBEY.com 0 0 0 2 4 1 0 1 2 4 6 2 3 4 5% 7 9 3 3 5 7 9 12 4 7 8 9 12 15 5 > 1.3 ≥ 1.1 - ≤1.3 >0.9 - <1.1 ≥ 0.7 - ≤0.9 < 0.7
- 41. Employee Distinction Group I (Talent Pool) Group II ( Potential) Group III ( Performance) Group IV (Counseling) 2 3 4 5 2 3 4 5 PERFORMANCE POTENTIAL Identify www.myCNI.com.my www.OOBEY.com
- 42. Post M&A: 4-Wheels Model Culture Business Objective M&A Strategy www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
- 43. End Note for Post-M&A “ In the absence of leadership, the people will listen to whoever speaks” A.J., from the movie “The American President” www.myCNI.com.my www.OOBEY.com
- 44. Thank You. soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com