Post-merger Integration Training

Post-Merger Integration Training
- Day One Capabilities
- Synergy Capture
- Functional Integration
-IT, page 29
-Finance, page 37
-Supply Chain, page 44
-HR, page 101
-Communications and Change, page 113

Day One Capabilities - Our Approach to Establishing the Day 1 Plan
Key Deliverables
1. Functional Scope / Strategy
a. Required Day 1 Activities
b. Post Day 1 Activities
2. Functional High-level Milestone Plan
3. Functional 30-day Action List with Accountable Resources
4. Functional / Program Risks
5. Functional / Program Issues
6. Functional / Program Assumptions
Identify Functional /
Program Risks, Issues and Assumptions
Identify Functional /
Program Risks, Issues and Assumptions
Identify 30-day
Action List
Identify 30-day
Action List
Identify Functional
High-level Milestone
Plan
Identify Functional
High-level Milestone
Plan
Identify Functional Scope
- Day 1
- Post Day 1
Identify Functional Scope
- Day 1
- Post Day 1
Written
Transition
Plan
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/post-merger-integration-training-756

Process Day One Plan Post Day One Plan Issues / Dependencies
General Ledger Migrate to New Co GL on
Day 1 for post Day1 activity
First Financial Close on both
Buyer and seller Systems
How will local legal
reporting be finalized?
Obtain licenses; SAP, …,
etc.
Entity structure must be
same as Honeywell
Responsibility for business
changes:
Logo’s
Lock boxes
Domain Names
Checking Accts
IP Addresses
Intercompany Pricing Determine intercompany
pricing policy
Minimize intercompany
between entities within first
30 days. Establish and
implement pricing policy
Fixed Assets Confirm/validate Fixed
Assets and confirm
valuation
Migrate Fixed Assets &
assoc. deprec to one entity
within 60 days
Billing/Invoicing Issue consistent invoicing
for all new invoices post
Day 1
A/R Mgmt. Migrate open A/R balances
to uniform on Day 1
Accounts Payable Post all new payables to
unified system
Close all pre-Day 1 payables
in predec. Systems
Day One Capabilities - Sample Functional Scope / Strategy Template
Once the high-level scope / strategy is developed, we will identify details regarding activities, cost,
benefits, resource requirements, issues, etc.

Capturing Synergies

Key Drivers
Streamline span of control and
de-layering
Optimize staff mix and tenure
Improve utilization and
productivity
Eliminate functional
duplication
Relocate to lower-cost areas
Eliminate low value-add
activities
Business / Partnership
Development
Product Management
Campaign Management
Modeling / Optimization
Customer Research & Analytics
Customer Communications
Branding / Advertising
Telemarketing
P/L Analysis and Reporting
eStrategy Development
eCustomer Support
Business
Customer Delivery
Collections &
Recovery
Credit Operations
Cust Rel Call
Centers/Serv Del/
Telemarketing
Fulfillment
Services
Site
Management
Fraud
CRM/Internet
Servicing Group
Fin’l Mgmt Cust
Delivery Tempe
System Advocacy
eCard
Management
eBusiness
Development
IM, Website,
Campaign & Risk
Management
Finance & Admin
eStrategy
Marketing
Acquisitions &
Market Expansion
Strategic Partnership
& Rewards Programs
Financial
Manage-ment &
Quality
Business Card
Wallet Share
Growth
Sales & Relationship
Mgmt/Project
Trigger
Branding &
Voice of the
Customer
Retail Co-Brands
& Business
Development
Bank Partnerships
Decision Science
Risk & Knowledge
Management
Portfolio
Development
Analysis
Knowledge
Mgmt.
Customer Risk
Policy
Acquisition
Policy
Finance/Quality
Control
Co-Brand Risk
Management
Mgmt Reporting
& Analysis
CFO & Controller
Chase U.S.A.
Compliance &
Operational Risk
Mgmt.
Portfolio
Acquisition/ New
Ventures
Competitive
Analysis &
Investor Rel.
Chase Merchant
Services
Productivity &
Quality
Cust
Requirements
Process
Management
MBB Six Sigma
T&D
Supplier Quality
P&Q Business
Analysis
Quality
Assurance
Channel
Integration
MBB Six Sigma
Coaching
Illustrative
eCustomer
Management
eBusiness
Financial
Management
Company X
Company Y
Capturing Synergies - Focused organization simplification efforts can drive significant year 1 saves.
Organizational Simplification

Capturing Synergies -. Interdependencies among cost reduction opportunities
Opportunities for Improvement
in Real Estate-Related Spend
Occupancy Capital Projects Services
Baseline
Real Estate-Related
Costs
Industry
Benchmarks
RentUtilities
Maintenance
& Operations
Taxes
Depreciation
Land
Buildings
Improvements Service
Providers
Internal Staff
Information
Systems
Compare to
Benchmarks
Effort (months)
Impact
(dollars)
High
Low
0 6 12
Quantify, prioritize and assess effort to capture
■ Identify / dispose of non-
essential properties
■ Outsourcing, strategic
sourcing, service delivery
optimization
■ Portfolio finance (e.g.,
Sale / leasebacks
■ Like-kind exchanges /
creative tax structures
■ Location optimization
(consolidate/redeploy)
■ Structured project finance
■ Identify and obtain public
incentives for new
facilities
■ Audit leases and landlord
charges
■ Analyze and appeal real
estate taxes
■ Cost segregation
■ Energy management
■ Facilities Planning / Space
Standards
■ Capital projects
reengineering
■ CRE operations and
technology
Baseline, benchmark and identify potential opportunities
Sustainable Facilities Cost Reduction1
Fact-based Cost Reduction Portfolio
■ Execution of facilities strategies generally achieve savings between 10-
20%; and, if approached comprehensively and aggressively can
approach 25%-30%.
1Significant facilities opportunities typically exist; these can be pursued through the ‘spend reduction’ and/or ‘infrastructure reduction’ tools
Facilities-related opportunities typically have flow-on cost impacts – e.g. payroll and delivery – and can also affect
overall firm culture. These impacts should be factored into execution plans

Capturing Synergies - Given the fluid nature of most integrations, understanding likely benefit timing,
potential impact and operational inter-dependencies is critical to achieving and exceeding established targets.
Impact and Timing of Various Cost Reduction Techniques
Conceptual
Timing of Benefits Realization
Impact
Savings as % of spend
High
(>25%)
Medium
(10-25%)
Low
(5-10%)
Long
(> 12 months)
Medium
(6-12 months)
Short
(3-6 months)
• Relocation
Spend Reduction
• Demand Management
• Supply Mgmt.
• Tax Management
• Supply Mgmt.
• Redesign
• Benchmark,
‘Adopt & Go’
Process
Streamlining
• Improve Policies
and Procedures
• ABC
Infrastructure
Rationalization
• Rationalize
Software Licenses
• Rationalize Projects
• Curb Demand
• Consolidate Apps.,
Hardware, Svcs.
• Consolidate
Data Ctrs
• Instill Strong
Perf. Mgmt.
• Establish
Shared
SvcsOrganizational
Simplification
• Enhance
Staffing
& Tenure
• Expand
span-of-
control
• Functional De-
duplication
• Utilization/
Productivity
• De-layering
• Elimination
of Low
Value-Add
Activities
• Relocation

Capturing Synergies - Overall governance and operating model – e.g. center-led v decentralized – also needs to be
decided at the front end. Both program-specific requirements and longer-term firm-wide principles should be considered.
LOB ownership of execution
Limited segment flexibility
Creating a “team” feeling
Leverages scale economies
Simpler overall control,
management; clear accountability
Enables fast replication
Consistent management, execution
Avoiding excessive loads on few
individuals
Avoiding loss of cross-LOB benefits
Greater responsiveness to BU needs
Enables BU specific customization
Crystal clear accountability
Increased flexibility, control & cost
management
Improved LOB responsiveness
Avoids “one size fits all” approach
Early identification of “hot spots’ for
center-led deep dives
Facilitating cross-LOB initiatives
Creating organizational “memory”
Advantages Challenges
Centralized
Decentralized
Hybrid
Strong
Medium
Weak
Centralized
Decentralized
Hybrid
Builds Org
Expertise
AdaptabilityResponsiveness
Scale
Economies
Control
Summary – Governance Structure Advantages & Disadvantages
Scorecard

Additional, and perhaps significant, tax-related opportunities are likely achievable.
Tennessee unitary group planning to reduce the number of entities
subject to Tennessee taxation
Review total telecom annual spend (including sample invoices) to
identify excise tax refund opportunities
Opportunities regarding Unclaimed Property can apply to all aspects of a
bank, not just savings accounts and safety deposit boxes
Captive insurance company can provide cost effective
coverage against currently uninsured risks such as business
interruption, loss of data, terrorism, etc. It may also
generate both financial statement benefit and annual state
tax benefits
Loan participation company may be used to create
favorable state apportionment and generate state tax
savings
Limited partnership and other flow-through entity planning
to reduce state income taxes and allow for losses in certain
subsidiaries to be off-set against income or gains in other
subsidiaries. May also produce apportionment planning
opportunities.
Procurement company to reduce sales and use taxes and
property taxes
Leasing company can provide sales and use tax deferrals
and permanent savings
Review of experience rates and rules for carryover of successor rates
and new employer rates to ensure the lowest state unemployment tax
rates are applied
Tax reductions through the identification of discrepancies between
assessed values of property and actual values
Credits and Incentives planning to assist with decision-making
regarding location on personnel and facilities
Tax Efficient Restructuring Tax Cost Recovery Opportunities Directly Related to the Merger
Tax Cost Recovery Opportunities Indirectly Related to the Merger
Capturing Synergies - Additional Tax-Related Opportunities

Capturing Synergies - The Resource Factory
Headcount reduction typically drives 40-50% of total integration savings; tight PMO management of the
“resource factory” is needed to meet merger targets
Speed of deployment needs to be improved from the previous merger
Frequent and transparent communications around staffing process are critical for remaining employees to
commit to the new organization
Key Considerations
SeparationOrganization Design
DeploymentCritical Talent Retention
Selection / Deselection
Define end-state org structures
Set staffing levels by LOB/
function and geography
Develop position descriptions
Develop criteria for
identifying top talent
Establish and manage talent
lists
Create financial and non-
financial retention programs
Determine selection approach
Identify
– Unaffected positions
– Affected: work
elimination, staff
reduction, job
restructuring
Develop assessment approach
and tools
Draft candidate slates
Fill slots
Notify employees of
individual status
Track outcomes
Develop severance
packages
Transition work to
remaining employees
Prepare systems to
process increased
separation volume
Confirm reporting and
stakeholder relations
Relocate departments/
individuals as needed
Confirm overall
resource deployment
HR Policies and Programs
Communication
Inputs
End-state org vision,
including financial and
operational goals
Guiding principles for
integration
Synergy targets
2 separate organizations,
cultures, operating models,
and geographic footprints
Baseline headcounts, HR
policies, and compensation/
benefits programs
Outputs
Streamlined, integrated
organization of retained staff
Employee exits
Clear responsibilities and
reporting lines
Retention and effective
deployment of top talent
Integrate comp/benefits programs (including titling/leveling)
Standardize performance/career management
Communicate openly and promptly on selection process and progress
People moves (e.g. exits, redeployments) often require a significant percentage of merger reserves. Central
Finance should therefore work closely with HR to coordinate reserve impacts driven by the ‘resource
factory’

“Corporate” buyers look for an M&A
Partner that:
-They trust
-Has done M&A before
-Has a methodology and tools to
accelerate the migration
-Can help deliver an issue free
Day 1
-Can help deliver synergies
Buy PMO and
Functional
Workstream Support
Together (including
IT)
Buy IT Functional
Support Only
Decision FactorsBuyers
IT Integration - Selling M&A IT Services
The buyer depends heavily on deal size, the volume and complexity of the IT work, and the
power and influence of the IT organization. Therefore, the sales effort must follow a dual track;
corporate-focused AND IT-focused
CEOCEO
CFOCFO
VP, Business
Development
VP, Business
Development
Integration
Program Manager
Integration
Program Manager
VP, Mergers
& Acquisition
VP, Mergers
& Acquisition
CIOCIO
VP, Application
Development
VP, Application
Development
VP, Infrastructure
Development
VP, Infrastructure
Development
Purchase Options
“IT-focused” buyers look for an M&A
IT Partner that:
-All of the above, plus
-Has done M&A IT before
-Has a solid IT track record
-Knows the clients’ applications
and architecture

IT Integration - XYZ’s M&A IT Lifecycle Capabilities and Opportunities
Better Leverage Our
M&A / ERP Practice
Synergies
Achieve Additional IT
Due Diligence
Penetration
•IT Cost Reduction / Synergy
Identification
•IT Outsourcing
•IT SLA Development
•IT Infrastructure
Consolidation / Carve-out
Planning and Implementation
•ERP Consolidation / Carve-
out Planning and
Implementation
•IT Strategy
•Marketing /
Brand
Awareness
•IT Organization Design
•IT Integration / Divestiture
Management Setup and
Support
•Legacy System Consolidation
and Retirement
•IT Due Diligence
•Relationships
and Alliances
•Strength of
Team
•Knowledge
Capital
•Strength of
Qualifications•Focus Area
Better Integrate Our IT
Cost Reduction Tools
into the M&A Toolkit
Our M&A IT practice has a solid foundation and significant opportunities exist to bring it to the
next level Further Develop
Our M&A IT Team

Functional Integration:
Finance

M&A Lifecycle Stage Value to Client
Definitive Due Diligence Revenue Growth, Tax and Legal Strategy, Cost
Reduction and Synergy Identification
Negotiation of Final Transaction Definition of Transition Services Agreement
Implementation and Transaction
Closing Preparation
Organizational Readiness for Day 1:
Implementation of People, Processes and Systems
Governance, Policies and Procedures
Closing and Execution of
Implementation Plan
Organizational “Steady State”:
Revenue Growth
Synergy Capture
Cost Reduction and Operational Efficiencies
Finance Integration – Value at different stages of the M&A Lifecycle

How strong is our practitioner base in this area?
Who are our primary competitors in this space?
Extremely Strong
Global Corporate Finance - 70 professionals in the U.S., supported by more than 500 professionals
worldwide with offices in more than 30 countries
CFO Services – 200 dedicated professionals in the U.S., supported by a global consulting
organization
Our MDP and Global capabilities are a competitive differentiator
We are well positioned in the marketplace - Finance Integration is in our power alley.
IBM / PWC
CGE&Y
Bearing Point
Accenture
Boston Consulting Group
Various Boutique Consulting Firms
Finance Integration – Our capabilities and the competitive landscape

Supply Chain Integration - High Level Work Flow
Collect Additional DataCollect Additional DataCollect Additional Data
Acquirer / Target
Purchasing “Lock
Down”
PurchasingPurchasing ““LockLock
DownDown””
New Acquirer /
Clean Team
Define Data
Requirements
Define DataDefine Data
RequirementsRequirements
Acquirer /
Target
Customize Templates
Finalize Request
Collect DataCollect DataCollect Data
Conduct Kick-Off
Collect Data
Validate Data
Analyze & Identify
Opportunities
Analyze & IdentifyAnalyze & Identify
OpportunitiesOpportunities
Integrate Data
Level 1-4 Analyses
Prioritize & Prepare
Recommendations
Prioritize & PreparePrioritize & Prepare
RecommendationsRecommendations
Clean Team
Estimate Effort
Prioritize
Define Implementation Steps
Final Priorities
Final Work Plans
Acquirer /
Target
Clean
Team

Supply Chain Integration - Data Collection and Validation Prior to Clean Team Initiation
■ 5 - 10 days
■ Company A and B
will verify that
95% spend is
captured
(independently)
■ Data integrity and
categorical
groupings finalized
Collect DataCollect DataCollect Data
Collect Data
and Solve
Collection
Issues
Collect Data
and Solve
Collection
Issues
Review, Sort,
and Validate
Collected Data
Review, Sort,
and Validate
Collected Data
Forward MS
Access
Databases
(Company
A and B)
Forward MS
Access
Databases
(Company
A and B)
■ 3 - 5 days
■ Company A and
B to forward in
separate MS
Access files
■ MS Access
database with
separate files for
Company A and
B
■ 5 - 10 days
■ Review
templates and
methods with
purchasing
■ Deliver data
request
templates
Typical
Duration
Comments
Work-product
■ Total 2 - 4 weeks
Conduct Data
Collection Kick
Off
Conduct Data
Collection Kick
Off
■ 5 - 10 days
■ Parallel data
collection
conducted by
Company A & B
■ Produce
downloadable
files or
database;
reports on paper
only in extreme
circumstances

Supply Chain Integration - Clean Team Prioritization and Recommendation Steps
Prioritize & Prepare
Recommendations
Prioritize & PreparePrioritize & Prepare
RecommendationsRecommendations
Review
Complete
Opportunity
Set
Review
Complete
Opportunity
Set
Prioritize
Opportunities
Prioritize
Opportunities
Develop work
Steps to
Capture
Savings
Develop work
Steps to
Capture
Savings
Develop Savings
Estimates and
Resource
Requirements
Develop Savings
Estimates and
Resource
Requirements
■ 5 - 10 days
■ Develop order in
which to attach
opportunities
■ Priority-ordered list
of opportunities
■ 3 - 5 days
■ Review information from
analysis
■ Compile opportunities
from varied analyses into
common form for
prioritization and
comparison
■ Complete opportunity list
from each team for Level
1, 2, and 3 analyses
Typical
Duration
Comments
Work
product
■ 3 - 5 days
■ Utilize business case
tools to determine
savings potential
■ Estimate requirements
to implement supplier
changes, capture
savings
■ Business case; cost to
implement and benefits
■ Forward benefits to
PMO Synergy Capture
Database
Prepare for
“Lock Down”
Session
Prepare for
“Lock Down”
Session
■ 5 - 7 days
■ Format findings
into presentation,
prepare meeting
logistics
■ “Lock Down”
session
■ Total 4-6 weeks
■ 10 - 15 days
■ Develop listing of
steps necessary and
time to complete
each step
■ Work steps
necessary to
capture savings
provided to
purchasing teams

Analysis Deliverable
From Original
Data
Collection Analysis
Supplier Items
Similarities &
Differences
Template
Supplier Items
Similarities &
Differences
Template
Common
Supplier
Template
Common
Supplier
Template
Supplier Item
Detail
Template
Supplier Item
Detail
Template
Supplier
Master
Template
Supplier
Master
Template
Supplier Items
Opportunity
Template
Supplier Items
Opportunity
Template
Aggregated
List of Level 1
Opportunities
Aggregated
List of Level 1
Opportunities
Contract
Summary
Template
Contract
Summary
Template
Analysis
From Original Data
Collection / Additional
Data Request
Spend Item
Similarities &
Differences
Template
Spend Item
Similarities &
Differences
Template
Common
Commodity /
Class /
Templates
Common
Commodity /
Class /
Templates
Spend Item
Detail
Template
Spend Item
Detail
Template
Spend Data
Master
Template
Spend Data
Master
Template
Spend Item
Opportunities
Template
Spend Item
Opportunities
Template
Aggregated
List Level 2
Opportunities
Aggregated
List Level 2
Opportunities
Contract
Summary
Template
Contract
Summary
Template
Additional
Data Request
Template
(via legal)
Additional
Data Request
Template
(via legal)
Additional
Data Request
Template
(via legal)
Additional
Data Request
Template
(via legal)
Level 1 OpportunitiesLevel 1 Opportunities
Level 2 OpportunitiesLevel 2 Opportunities
for all common
suppliers
for all common
commodities/
classes
Supply Chain Integration - Sequence of Data Collection and Analysis Templates
Completing templates in this sequence will drive four-level opportunity
identification
From Original
Data
Collection

Supply Chain Integration - Data Collection Tools and Templates
• Supplier Master
• Supplier Item Detail
• Freight Carrier Item Detail
• Spend Master
• Spend Item Detail
• Freight Spend Item Detail
• Contract Summary
• Global Commodity Contracts
INITIAL DATA COLLECTION
TEMPLATES
• Additional Data Request
• Supplier Performance
• Specific Contracts
SECONDARY, TARGETED
DATA REQUESTS

SUPPLIER ITEM DETAIL
Company: Acquirer
Supplier: WW Grainger
Supplier
Item #
Co.
Item # Item Description Manufacturer
Mfr
Product #
Product
Specs
Total
Volume Units
Total
Spend
Avg unit
Price
Max Unit
Price
Min Unit
Price
Material
Group
Material
Commodity
Material
Class Loc
Data
Source
10034 2 HP SEWAGE PUMP Ingersoll 1003456 2 EA $1,495 $747.39 $800.00 $600.00 MRO Pumps
10035 3" CRIMP CUP BRUSH Fuller 483205 64 EA $760 $11.88 $12.00 $10.00 MRO Tools
10064 3/4" IMPACT WRENCH Stanley 2568739 15 EA $1,201 $80.08 $90.00 $70.00 MRO Tools Wrench
10134 3A528 TYPE C STAPLES Bostich 4583058 4 EA $242 $60.59 $62.00 $60.00 MRO Tools
11035 3L8 WIRE CMPR. LUGS LugCorp, Inc 530-3945 60 EA $182 $3.04 $4.00 $1.00 MRO Tools
11064 4-1/2" GRINDER Subway #3 special no mayo 72 EA $322 $4.48 $5.00 $3.00 MRO Lunch
After determining the top suppliers, a list of items that represent 80% of the
spend supplied by each supplier should be created using the following template
Supply Chain Integration - Supplier Item Detail Template

Supply Chain Integration - Spend Data Templates Hierarchy
• Spend Item Detail template will
contain item summary data,
filtered to include the top 80%
of items by total spend
• Spend Master Template will
contain class-level data, that
represents 95 - 100% of the
total spend
Spend Data Templates are designed to identify class and items with
the greatest sourcing opportunities
GroupGroupGroup Operations
CommodityCommodityCommodity
Motors
Pumps
Pipes, Valves and Fittings
ClassClassClass
ClassClassClass
ClassClassClass
Copper
Cast Iron
Steel
ItemItemItem Avg. cost of 12
inch galvanized
ItemItemItem
Avg. cost of 14
inch galvanized
Avg. cost of 16
inch galvanized
ItemItemItem
ItemItemItem Avg. cost of 18
inch galvanized

The item level detail should be collected on the lowest level material groupings in
the previous step. Items that make up 80% of the total spend of the lowest category
level (e.g. commodity or class) identified in the hierarchy
SPEND ITEM DETAIL TEMPLATE
Company: Acquirer
Category: Operations
Material
Commodity
Material
Class
Dow
Item # Item Description
Co.
Supplier
#
Supplier
Name
Supplier
Product #
Manufactr
.
Mfr
Product #
Product
Specs
Total
Volume Units
Total
Spend
Avg unit
Price
Max Unit
Price
Min Unit
Price
Data
Source
Pumps Vacuum 10034 Vacuum Pump 1343 Gulch 2243 Ingersoll 1003456 2 EA $1,495 $747.39 $800.00 $600.00
Pumps Vacuum 10035 Ingersoll Vacuum Pump 1288 Ingersoll 113245 Ingersoll 483205 64 EA $760 $11.88 $12.00 $10.00
Pumps Vacuum 10037 Vacuum Pump 2 1343 Gulch 2244 Ingersoll 1003457 15 EA $1,201 $80.08 $90.00 $70.00
Pumps Vacuum 10134 Pump 1288 Ingersoll 114356 Ingersoll 4583058 4 EA $242 $60.59 $62.00 $60.00
Pumps Vacuum 10134 Pump for column 1288 Ingersoll 114388 Ingersoll 4583080 60 EA $182 $3.04 $4.00 $1.00
Pumps Vacuum 11064 Pump for vacuum blower 1288 Ingersoll 115667 Ingersoll 4583062 72 EA $322 $4.48 $5.00 $3.00
Supply Chain Integration - Spend Item Detail Template

Supply Chain Integration - Global Commodities Contract List
This template provides key information unique to contracts for
global commodities
GLOBAL COMMODITIES CONTRACT LIST
Company: Acquirer
Contract
ID Supplier Name
Company
Supplier
#
Commodity Name
(Include multiple commodities
if appropriate)
Commodity
Volume
(Total) Unit of Volume Regions Affected Hierarchy
Total Spend
U.S. Dollar
123094 Granger 54321 Motors 7302 piece US, Asia-Pacific Operations/Motors $12,453,803
43241 Gulch 24392 Pumps 12203 piece US, Europe Operations/Pumps $7,982,374

Non-
Sourceable
9%
Operations
27%
Raw Material
59%
Not Assigned
5%
Raw Materials
Raw Mat 1
Raw Mat 2
Raw Mat 3
Raw Mat 4
Raw Mat 5
Raw Mat 6
Raw Mat 7
Raw Mat 8
Raw Mat 9
Raw Mat 10
Raw Mat 11
Raw Mat 12
Inorganic Salts
Poly Vinyl Acetate
Amines
Potassium Hydroxide
Raw Material 13
Resins - Misc.
Bauxite
Alcohol
Aromatics
Ammonia
Organic Acids
Silane
Toluene
Stearic Acid
Other Raw Materials*
Not Assigned†
Operations
Freight
MRO
Outside Maintenance
Utilities
Packaging
Outside Labor
Computer
Environmental
Physical Plant
Equipment
Benefits
Communications
Travel
Office Supplies
Fleet
Advertising
Uniforms
Unassigned
Non-Sourceable
Tax
Miscellaneous
Accounts Payable
Affiliated Trade Pay
Import-Export Expense
Payroll Withholding
Accrued Allowance-Re
Loan
Commissions
Total Company A
Spend:
$XXXX M
Supply Chain Integration -Opportunity Analysis Guides and Tools – Total Company Spend
Top-Level Spend Profile for each company should be identified to verify data
accuracy

Not Assigned
4%
Freight, Fleet,
Travel
16%
Operations
27% Raw Material
50%
IT / Telecomm
9%
Raw Materials / Packaging Clean Team
Total Responsibility $ x,xxx,xxx,xxx
Team Members:
IT / Telecomm / Media Clean Team
Total Responsibility $ xx,xxx,xxx
Team Members:
Freight, Fleet, Travel Clean Team
Total Responsibility $ xxx,xxx,xxx
Team Members:
Supply Chain Integration - Sort Data Sections for Clean Team Use
The combined data should be separated for analysis by the individual clean teams
Operations Clean Team
Total Responsibility $ x,xxx,xxx,xxx
Team Members:

Supplier Items Similarities and Differences Template
Supplier: McMaster-Carr Supply Company
Spend Items
Air Compressor
(Deluxe Electrical - Horizontal) $1,002,540 420 $2,387 $476,900 190 $2,510
Item no: 42715K22
Air Compressor
(Standard Electric - Vertical) N/A N/A N/A $282,000 150 $1,880
Item no: 41905K55
Liquid-to-Liquid Heat Exchanger
(Stainless Steel Shell & Tube) $1,534,560 480 $3,197 $203,400 60 $3,390
Item no: 34965K58
Total Spend
AcquirerAcquirer
Volume Total Spend
TargetTargetTarget
VolumeUnit Price
(Average)
Unit Price
(Average
Supply Chain Integration - Conduct Level 1 Analysis
Illustrative

Common Class Template
Group: Operations
High and Medium opportunities Classes should be analyzed at the supplier and item levels (see
following slides)
* Note: Some commodities which are common among the companies will not have class-level detail available. In this case, all
items within the commodity should be examined
COMMON CLASS TEMPLATE
Acquirer # Common # Common Opportunity
Group Commodity Class Annual $ # Suppliers # Items Annual $ # Suppliers # Items
Hi-Volume
Suppliers
Hi-Volume
Items
Low - Med - Hi
Target

• Step 1: Review the Supplier Items Similarities and Differences template
(Level 1 analysis) for a common supplier
• Step 2: Review Contract Summary template for selected items
• Step 3: Identify all items that may be potentially bundled
• Step 4: Repeat the process for all common suppliers
• Step 5: Complete the Supplier Items Opportunity template to summarize
all Level 3 opportunities (reference Level 1 analysis)
Level 3 Analysis reviews all items bought through a common supplier and
pursues product bundling opportunities

Not
Assigned
6%
Non-
Sourceable
9%
Operating
Expenses
26%
Raw
Material
59%
Raw Materials $xxx,xxx,xxx
Raw Mat 1 $xxx,xxx,xxx
Inorganic Salts $x,xxx,xxx
Poly Vinyl Acetate $x,xxx,xxx
Amines $x,xxx,xxx
Potassium Hydroxide $x,xxx,xxx
Raw Material 13 $x,xxx,xxx
Resins - Misc. $x,xxx,xxx
Bauxite $x,xxx,xxx
Furfuryl Alcohol $x,xxx,xxx
Aromatics $x,xxx,xxx
Acrylated Polymer $x,xxx,xxx
Ammonia $x,xxx,xxx
Organic Acids $x,xxx,xxx
Silane $x,xxx,xxx
Toluene $x,xxx,xxx
Stearic Acid $x,xxx,xxx
Ester - Misc. $x,xxx,xxx
Surfynol $x,xxx,xxx
Sodium Sulfonate $x,xxx,xxx
Other Raw Materials* $xx,xxx,xxx
Not Assigned $xx,xxx,xxx
Operating Expenses $xxx,xxx,xxx
Freight $xx,xxx,xxx
MRO $xx,xxx,xxx
Outside Services $xx,xxx,xxx
Utility $xx,xxx,xxx
Shipping Supplies $x,xxx,xxx
Labor $x,xxx,xxx
Computer $x,xxx,xxx
Environmental and En $x,xxx,xxx
Physical Plant $x,xxx,xxx
Equipment $x,xxx,xxx
Benefits $x,xxx,xxx
Communications $x,xxx,xxx
Travel $x,xxx,xxx
Office Supplies $x,xxx,xxx
Fleet $x,xxx,xxx
Advertising $x,xxx,xxx
Uniforms $x,xxx,xxx
unassigned $x,xxx,xxx
Non-Sourceable $xx,xxx,xxx
Tax $xx,xxx,xxx
Miscellaneous $xx,xxx,xxx
Accounts Payable $xx,xxx,xxx
Affiliated Trade Pay $xx,xxx,xxx
Import-Export Expense $xx,xxx,xxx
Payroll Witholding $xx,xxx,xxx
Accrued Allowance-Re $xx,xxx,xxx
Loan $xx,xxx,xxx
Commissions $xx,xxx,xxx
Total Company A
Spend:
$xxxx M
Not Assigned $xx,xxx,xxx
Country A $xx,xxx,xxx
Division 1 $x,xxx,xxx
Division 2 $x,xxx,xxx
Unassigned IT $xxx,xxx
* - Raw materials under $1.5 million spend
Supply Chain Integration - Final Deliverables - Spend Profile

Supplier
McMaster-Carr Supply Company $9,874,234 $296,227 Select best agreement
Fedex $5,006,520 $100,130 Same as above
Boise Cascade $2,197,380 $65,921 Same as above
Other suppliers . . .
New AcquirerNew Acquirer
Rationale CommentsPotential
Savings
TOTAL LEVEL 1 OPPORTUNITIES $600,000,000 $30,000,000
Supply Chain Integration - Final Deliverables - Aggregated Level 1 Opportunities
Combined
Spend On
Common Items
Illustrative

Class/Commodity
Pipe $4,300,000 1400
Valves $5,000,000 2000
Other Opportunities ...
Combined
Spend
New AcquirerNew Acquirer
Reasons for
Fragmentation
Comments# of Unique
Items
Supply Chain Integration - Final Deliverables - Level 4 Opportunities by commodity
TOTAL $160,900,000
Group: Operations Commodity: Pipes, Valves, and Fittings
Critical to have unique
specs
Are there
opportunities
to unify
specs?
Illustrative

(FTE)
Resources
1.5
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
Initial TargetsInitial TargetsInitial Targets Secondary TargetsSecondary TargetsSecondary Targets
MRO
Office Supplies Computer Hardware / Software2
Fleet / Travel Temporary Services2
3
Freight
3
2
Facilities, Equipment & Services
1.5
Cellular
Professional Services
A recommended roll-out sequence will be developed based upon
prioritization analyses (magnitude / difficulty / contract restrictions / etc.)
Supply Chain Integration - Final Deliverables - Roll-Out Sequence

• Actual impact of synergies and costs to achieve recorded on an earnings
basis
– Realized synergies and costs recorded over four quarters
– Year 1 synergies incremental to the base period
– Year 2 synergies incremental to Year 1
– “Annual Amount at End of Year 2” captures the total impact of synergies
• Pre-loaded with qualitative information as well as final synergy
commitments in each measurement area
• Estimated impact of synergy after Quarter 8 (“Ongoing Annual Run Rate”)
• Clearly identifies any notable differences between committed and realized
synergies
• Integrated with other synergy databases
– Automatic feeds from the HR Net Headcount Reduction Database
– Automatic output into the Planned Integration Project Database
This database will enable the monitoring of synergy progress vs. commitments
Supply Chain Integration - Final Deliverables - Planned Integration Financial Tracking Database

Senior Executive and
Key Leader Integration
Retention and Rapid
Transition of Financially
Valuable People, Intellectual
Capital, and Relationships
Cost-Savings, Workforce
Consolidation, and Efficiencies
Merger Management Process
Workforce Transition and
Integration
Culture Integration and
Merger Communication
HR Integration - Merger Integration Objectives
Rapidly eliminate costs from duplicative processes and positions
Harmonize Acquire and Target workforces into a single team with shared goals and
career advancement opportunities
Integrate unequal employment and rewards programs (incentives and stock
options)
Manage, track the progress, and directly influence the achievement of the key HR
and other integration goals through early intervention in problems as soon as they
are identified
Remain customer- and business-focused during the transition
Provide critically important positive momentum within the workforce, and lead by
example to support the integration and achieve transition goals as quickly as possible
Perceive acquiring company leadership and culture as professional, high-quality,
welcoming, respectful, and aware of the value the target company partners bring
Harmonize two workforces into a single team with shared goals and career
advancement opportunities
Integrate unequal employment (benefits, retirement, etc.) and rewards programs
Provide consistent messages, accurate information and clear performance
expectations for both Acquirer and Target executives, traders and other
employees
Stabilize and ensure rapid completion of key merger goals including: integration of
predecessor systems; customer relationship transition; conversion of financial, HR,
payroll, and HQ functions consolidations
Integration Objectives Critical Success Factors

Key Priorities
• Identify key talent and resources
• Develop and implement retention strategy and
process
• Develop executive talent management
strategy and process
• Develop performance-based retention
strategies
• Develop selection process and structure
• Develop strategy and process for staffing open
positions
• Manage headcount and people-related cost
reductions
Deliverables
How
• Analysis of organizational capabilities,
competency availability and gaps, and
employee selection.
• Analysis of retention and severance
• Develop economic incentives, personal
incentives and organizational incentives
• Fit & Selection
• Exit Strategies
• Focus & Incentives
HR Integration – Selection and Retention

Key Priorities
• Identify key stakeholders
• Develop guiding principles and strategic
messaging for the deal
• Create immediate communications
• Assess communications, culture and
organizations’ change readiness, including focus
groups and interviews
• Identify key barriers and obstacles
• Develop integrated communication strategy and
plan to address internal and external audiences
at announcement and through pre-close
transition, Day One and integration
• Develop workforce stabilization strategy and plan
• Define role of acquirer and target leaders and
managers in driving change
• Monitor and plan for leadership and cultural
alignment
Deliverables
How
• Identify organizational opinion
leaders
• Capture an organizational view of
its employee value proposition
• Communicate and help to
communicate
HR Integration – Leadership, Culture and Communications

Key Challenges
• Retention of key groups, employees and
leaders critical to the business value
• Undistracted customer focus during and after
the transition of ownership
• Consolidation of headquarter functions and
other people-related savings
• Integration of marketing and sales force
• Blending cultures and reducing employee
resistance
• Compensation and benefits differences and
program integration
• Creating an environment perceived to be fair
• Redeployment of people and facilities
• Retraining and team building
• Risk management and insurance liabilities
Deliverables
ScienceofDesign
Art of Engagement
HR Integration – Challenges of M&A: Human Capital Integration

Communications & Change - Why is corporate culture in a transition process so important?
• Between 30-60% of mergers & acquisitions fail to achieve the strategic objectives of the acquirer
and actually destroy shareholder, employee and customer value.
1
• The top 2 internal reasons for failure are leadership and differences in corporate cultures.
2
1.
Various research studies
2.
XYZ M&A Survey
3.
Sudarsnam, The Essence of Mergers & Acquisitions
23%
22%
21%
18%
9%
7%
Merged Too Many
Activities
Merged Too Few
Activities
Leadership
Unclear
Poor Integration
Cultures Too
Different
Poor Leadership
Source: XYZ/Braxton M&A Survey
• Although widely acknowledged as important, an open, proactive and systematic treatment of
corporate cultures is difficult to accomplish and is usually neglected.
XYZ Consulting can act as a neutral, experienced third party to help initiate
and guide the cultural transformation process.
XYZ Consulting can act as a neutral, experienced third party to help initiate
and guide the cultural transformation process.
• Managing cultural change is a top factor associated
with successful acquisitions.
3

Transformation
Current
Corporate
Cultures
Goal Culture
Setting the early goal of a to-be corporate culture is critical for the transformation process
• heterogeneous
• conflicting
• established
• homogeneous
• performance
oriented
• continuously
reconfirmed
Months
Organizational
Performance
Any major change initiative, including mergers, acquisitions, integrations and restructurings, will initially cause
reductions in business performance. XYZ recommends openly dealing with resistance. Communication and
participation are key to reducing the performance dip and accelerating progression through the transformation
phases.
Any major change initiative, including mergers, acquisitions, integrations and restructurings, will initially cause
reductions in business performance. XYZ recommends openly dealing with resistance. Communication and
participation are key to reducing the performance dip and accelerating progression through the transformation
phases.
Understanding Acceptance
Enthusiasm
Shock
Resistance
Communications & Change

1 Corporate Culture Assessment
Organization A Organization B
Global Regional
Flexible, Informal Formal, Structured
Factual Emotional
Multicultural National
Quality maximizing Cost minimizing
Simplified Example
Where do we come from?
Prepare for departure from previous
corporate cultures.
Why did these cultural characteristics
develop?
What do we want to keep?
What do we want to change?
• Creates clarity and transparency regarding the key characteristics of the historically different
corporate cultures as well as the characteristics desired by employees and management for the
new, integrated organization
• Executing and communicating the findings of an objective Corporate Cultural Assessment
demonstrates that Leadership recognizes the importance of culture
• Acknowledging and honoring where the organizations are coming from is necessary to “free”
employees to start building a new, integrated high performance culture
Communications & Change – Corporate Culture Assessment

Implement the New Culture3
Specific initiatives for effective realization of a new, high-performance corporate culture
must be based on a few key factors:
- Management and employee ownership and participation
- Openness and transparency
- Ongoing structures for feedback and improvement
Based on assessment findings and the desired To-Be corporate culture, an analysis
of opportunities and barriers should produce a clear prioritization of action areas
and specific initiatives.
Internal & external communications
Anchoring, feedback, continual improvement of core values
Strengthened leadership culture
Retention program
Performance management
Conflict management
Premium teams (integration project teams, ongoing process and functional teams)
Key areas typically promising the highest payback.
Communications & Change – Implement New Culture

Focus Area – Services Result for Client Category of Value
Due Diligence – Financial analysis of purchase price model
and employment-related liabilities
Leadership Transition – integrated total executive cash and
equity compensation, incentives, employment contracts
360o Degree Communications and Change Management
Retention strategies for economically valuable leaders,
individuals, and groups
Global Total Rewards Strategy and Implementation
Spin-Off – comprehensive leadership and workforce transition
Negotiation of optimal deal terms and conditions
on employee-related matters
Stabilized undistracted leadership
Stabilized undistracted workforce
Retention of economically valuable people and
transfer of customers, market relationships,
and intellectual capital
Integrated compensation, benefits, pensions for
undistracted organizational focus and
performance
Day One Readiness
Marketplace communications – a component of 360o Degree
Communications
Positive perception of the merger and stable
relationships with customers, business
partners, suppliers and investors
Revenue Enhancement /
Market Stability
Work force transition and reduction
Transition Playbook – people management
Stable business continuity while reducing costs
Synergy Capture / Cost
Saving
Integration assessment and action planning Effective mid-course improvements to the
transition management process
Integration Process /
Governance
HR Function Transformation – including global HR delivery
and outsourcing
Optimally-structured HR function at the
appropriate cost level, delivering on the
future needs of the business
Infrastructure Stability

• Transition Workplan, Schedule and Management
Reporting Process
• Internal Communications
• Retention of Key Talent
• Terminations
• Labor Relations – where applicable
• Customer Communications and Retention
• Buildings and Contents
• Security
• Health and Safety
• Legal Issues
• Vendor Relations and Supplier Communications and
Revenue
• Community Relations and Media
• Confirm
involuntary
separation
policy and
practices
• Confirm
severance pay
and benefits
policy
• Select
employees for
separation
Implement
Plan and
Selection
Preparation
Notification &
Administration
Close Down &
Separation
• Conduct
separation/retenti
on discussions
• Manage time-
limited retention
agreements
• Communicate
• Manage
documentation
and reporting
• Complete
final employee
separation
• Complete
final branch
close down `
• Approval- Lists
& Schedules:
• Approve
severance and
benefits costs
• Create
separation/reten
tion notification
scripts
• Generate
personalized
separation
packages
Branch Close Down and Employee Transition Process
Transition Playbook
- People Management

1
Flevy (www.flevy.com) is the marketplace
for premium documents. These
documents can range from Business
Frameworks to Financial Models to
PowerPoint Templates.
Flevy was founded under the principle that
companies waste a lot of time and money
recreating the same foundational business
documents. Our vision is for Flevy to
become a comprehensive knowledge base
of business documents. All organizations,
from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
just to learn.
Contact Us
Please contact us with any questions you may have
about our company.
• General Inquiries
support@flevy.com
• Media/PR
press@flevy.com
• Billing
billing@flevy.com

Post-merger Integration Training

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Andere mochten auch

Andere mochten auch (13)

Mehr von Flevy.com Best Practices

Mehr von Flevy.com Best Practices (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Post-merger Integration Training