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Merger and Acquisition Due Diligence

Investment Technology Services. Merger and Acquisition Due Diligence J. Scott Slater, Managing Director, Metavante Wealth Management Consulting Practice scott.slater@metavante.com 612.922.9990. M&A Objectives. Business strategy first “Triumph of hope over experience”

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Merger and Acquisition Due Diligence

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  1. Investment Technology Services • Merger and Acquisition Due Diligence • J. Scott Slater, Managing Director, Metavante Wealth Management Consulting Practice • scott.slater@metavante.com 612.922.9990

  2. M&A Objectives Business strategy first • “Triumph of hope over experience” • Most acquisitions fail (60-70%, depending on the study) • Study: 89% of acquired businesses lose market share • M&A is one of many strategies • Build-Buy-Partner • 50 years ago: focus on organic growth • Today: M&A is the preferred growth vehicle

  3. M&A Objectives So why are you seeking acquisitions? • Enter business you are not in • Broaden geographic footprint • Scale to drive productivity and efficiency • Defensive: competitive preemption

  4. Successful M&A Disciplines Characteristics of successful acquirers: • Clearly defined acquisition strategy • Disciplined acquisition mechanics • Tightly defined target criteria • Due diligence discipline • Ability to integrate acquisitions • Planning • Move quickly

  5. Successful M&A Disciplines Pre-Due Diligence: • Acquisition Targets: • Define what you want • You do the looking – not just the bankers! • “Synergy”: • Seek related businesses • Define what you bring to the table • Stay disciplined: • Set and stick to financial hurdles: be willing to walk • Expect the unexpected: don’t overestimate what you can achieve

  6. Successful M&A Disciplines Do the Due Diligence: • Financial • Dig: read the footnotes! • Private equity approach • Evaluate management – and your retention plans • Assess cultural fit

  7. Successful M&A Disciplines Operations • Operations: Can you take out cost? Should you? • Assess correlated businesses • How will you integrate the acquisition? • Objective evaluation of operating performance • Controls • Key performance measures • Regulatory and audit reviews

  8. Successful M&A Disciplines Technology • Should more often than not be a deal killer • Conduct a tough assessment: • Age of systems • Mainframe vs. Server • ASP / In-house licensed software / Outsource • Past IT Commitment: consistent investment? • Regulatory and Compliance technology components

  9. Successful M&A Disciplines Post-merger Integration Planning • Integration team representing all key functions • Move rapidly to change processes • Make leadership decisions as quickly as possible • Eliminate as much fear and uncertainty as possible

  10. Successful M&A Disciplines Remember – strategy first! • M&A is only one means of achieving growth • Develop strong disciplines • Targets • Objective hurdles • Review process – with the ability to walk away • Assess management, operations and technology too • Execute the implementation plan

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