Post Merger Integration (PMI)underscores the ... - Roland Berger

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The process of professional synergy management breaks down into Several phases Starting with the discovery of effective levers and ending with the realization of defined actions. Yet the three phases in the middle – nomination, selection and alignment – are equally vital ✗ ✔ ✔ SELECTION Synergy levers must be selected based on their financial impact, the speed of implementation and the sustainability of the impact – always in line with the relevant corporate culture. ALIGNMENT The sequence of actions must be optimized: The right thing must be done at the right time. It is also important to identify cause-and-effect relationships between different actions, some of which may be mutually exclusive while others complement each other. NOMINATION A PMI manager must be nominated. Successful synergy management requires clearly defined areas of responsibility and a transparent executive hierarchy.
content Post Merger Integration Google ingests Motorola Mobility. Beer giant SABMiller launches a hostile takeover bid for Australia's number one beer brand Foster's. Fiat acquires a majority stake in Chrysler. US pharmaceuticals service provider Express Scripts swallows rival Medco Health Solutions. Microsoft buys Skype. And Volkswagen seeks to make a big splash on the international commercial vehicle market by snapping up MAN. Browse through the business press and it seems companies are acquiring and merging like there is no tomorrow. The specter of recession is driving speculation and stoking up fears that European blue chips could be sold out to well-heeled investors from booming emerging countries. Outgoing RWE boss Jürgen Grossmann alarmed his shareholders by claiming that the threat of a hostile takeover hung over the energy group. Daimler chief Dieter Zetsche prefers to pacify nervous stockholders, insisting that he sees no such danger for the auto giant. For his part, Roland Koch, former Minister-President of Hesse and now head of construction group Bilfinger Berger, proclaims that "We are becoming increasingly international" – and is setting aside a billion euros for acquisitions over the next two years. Not a trace of a hangover from the crisis, then. Thomson Financial puts the global volume of mergers and acquisitions (M&As) in the first half of 2011 at around EUR 900 billion, not including transactions in the private equity sector. That is a year-on-year increase of 50%. Roland Berger Strategy Consultants sees brisk M&A activity in the offing especially in the automotive engineering, capital goods, business services and consumer products segments. The scarcity of domestic targets is leading more and more predators to look beyond their national borders. Recently, an objection raised by the US Department of Justice only just thwarted the most spectacular of these projects. Accordingly, American network provider AT&T will, due to fears of market domination by the resultant telephony colossus, not be allowed to buy Deutsche Telekom subsidiary T Mobile USA after all. Not for the time being. Yet the failure rate seems almost as high as the takeover rate The stream of "dream weddings" such as that of Daimler and Chrysler has long since dried up. The list of failings is long and damning: The price was not right. Legal obstacles were underestimated. Hidden threats were either overlooked or played down. In interviews conducted as part of Roland Berger Strategy Consultants' study "Synergy Management in Post Merger Integrations", 84% of respondents regard corporate culture as an "important" or "very important" tool with which to realize synergies. Tellingly, however, only half of them believe that sufficient attention is genuinely paid to this criterion in the M&A process. Many mergers never even get off the ground. Roland Berger's analyses show that, in 2010, barely 74% of the trumpeted M&As were ever actually consummated. As late as 2008, more than 80% of the happy couples still at least made it to the altar. Even that, however, was no guarantee that one plus one would add up to more than two. The biggest stumbling block is going about integration and synergy management the wrong way. According to the Roland Berger study, this is the one factor to which 80% of the respondent experts primarily attribute the failure of acquisitions. Other reasons are also cited, but play a far less significant role. They include culture shocks that drain all the energy from the new entity, exorbitant acquisition prices and the egos of the chief executives in- Global volume of mergers and acquisitions in the first half of 2011 900 000 000 000 Year-on-year increase of 50 % Source: Thomson Financial Euro
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Post Merger Integration (PMI)underscores the ... - Roland Berger

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