Post-Merger Integration

1. The Destruction or Creation of Value? Post-Merger Integration 

2. 1 Why so many �Good Mergers" Fail ?

3. 2 �However with a Well Managed Merger Process�

4. 3 But the Integration Process Must Deliver on 3 Fronts 1. Properly grafting the two organizations together A relatively short-term task : connecting and getting to work together Within three months, the arrangements are mostly worked out The quality of the grafts vary greatly : from seamless to highly dysfunctional arrangements Eliminating obvious duplications : better done as soon as possible, when expected 2. Maintaining current operational performance of both entities A merger brings about severe disruption in decision making and motivation Meeting pre-set objectives in a new environment fraught with uncertainty: a challenge Business taken over can suddenly and often do deteriorate

5. 4 The Integration Process (contd.) 3. Building and growing the new organization that will yield the anticipated synergies Can only start once the two organizations are grafted together The quality of the "graft" is paramount in determining the combined effectiveness Achieving synergies demands a highly effective combined organization

6. 5 Integration Challenges Dans un contexte de changement, l'organisation et l�individu vivent le changement suivant deux axes; ils cheminent selon leur niveau de confort face au contexte de changement et selon leur acceptation des changements propos�s (ou impos�s selon le cas). Le changement n�cessite donc souvent que l�on sorte de sa zone de confort. Malgr� les risques que cela comporte, le changement devient l'occasion d'effectuer de nouveaux apprentissages et de s'�panouir. Un changement fait na�tre chez l'individu diff�rentes attitudes en fonction de sa progression dans la dynamique du changement; d�ni ou choc; scepticisme ou remise en question; curiosit� ou int�r�t; conviction ou appropriation. � noter que chaque individu aura une capacit� d�adaptation tr�s diff�rente selon son exp�rience de vie, son �ge, son �tat de sant�, son bien-�tre psychologique, ses valeurs, ses possibilit�s sociales, financi�res, etc. Dans un contexte de changement, l'organisation et l�individu vivent le changement suivant deux axes; ils cheminent selon leur niveau de confort face au contexte de changement et selon leur acceptation des changements propos�s (ou impos�s selon le cas). Le changement n�cessite donc souvent que l�on sorte de sa zone de confort. Malgr� les risques que cela comporte, le changement devient l'occasion d'effectuer de nouveaux apprentissages et de s'�panouir. Un changement fait na�tre chez l'individu diff�rentes attitudes en fonction de sa progression dans la dynamique du changement; d�ni ou choc; scepticisme ou remise en question; curiosit� ou int�r�t; conviction ou appropriation. � noter que chaque individu aura une capacit� d�adaptation tr�s diff�rente selon son exp�rience de vie, son �ge, son �tat de sant�, son bien-�tre psychologique, ses valeurs, ses possibilit�s sociales, financi�res, etc.

7. 6 Integration Challenges (Contd.) Expect an initial drop in productivity Expect a �Me� type of attitude Expect an initial drop in morale Expect a loss of external focus Expect difficulties in realizing expected ROI

8. 7 Integration Key Critical Success Factors Sharing a common purpose Both sides buy into a common vision of the new entity and the values that define it Sharing common objectives and performance targets about what constitutes merger success A well-understood and trusted integration process Key objectives: decisions which are timely, good and widely perceived as fair A clear integration agenda will reduce uncertainties and the hesitations it fosters To avoid : procrastination, lack of fairness, ambiguity An accepted new organizational structure Maintaining the legitimacy of the organization and the new reporting structures �Who� and �why�: clear answers must be available and well understood

9. 8 Key Critical Success Factors (contd.) Successfully meshing of two cultures into the desired one Each entity has a culture: shaping the resulting one is critical Making it easier to feel at ease in the new entity, whatever one�s first affiliation Sustained business performance must be a priority During the transition, maintaining a focus on the bottom line Achieving immediate synergies beyond forecasted operating results (efficiency gains) Time is of the essence Moving swiftly when expectations are high as well as properly aligned

10. 9 The Integration Process : A Four Phases Model

11. 10

12. 11

13. 12

14. 13

15. 14

16. 15 Integration Management Structure

17. 16 Steering Committee - Roles and Responsibilities

18. 17 Committee/Team Dynamics

19. 18 Measuring success: Key Transition Indicators Notes: Notes:

20. 19 Key Transition Indicators (contd.) Notes: Notes:

21. 20 Integration Planning and Work Load

22. 21 Integration Planning and Work Load (contd.)

23. 22 Integration Planning and Work Load (contd.)

24. 23 Integration Planning and Work Load (contd.)

25. 24 Integration Planning and Work Load (contd.)

26. 25 Integration Planning and Work Load (contd.)

27. 26 Integration Planning and Work Load (contd.) Main Activities