Cover Subtitle - Working Council for Chief Financial Officers ...

Illustrative Tool or Best Practice
Additional Tools or Best Practices
CFO1AJDG19 © 2008 Corporate Executive Board. All Rights Reserved.
Key CFO Executive Board Services | 19
Support on Mergers and Acquisitions
Tools and best practices to help members optimize their M&A processes
Opportunity
Identification
Partnering Decision
Process Map
This DuPont tool enables
businesses to better
evaluate new deal ideas
and prospective partners
by separating evaluation
of the idea from the
prospective partner
assessment.
Growth Strategy Evaluations
Growth Strategy Evaluations
Partnering Decision Process Map
Partnering Decision Process Map
External Business Development Decision Process and Deliverables
External Business Development DuPont, Illustrative Decision Process and Deliverables
Idea Evaluation DuPont, Illustrative
Partner Evaluation
Idea Evaluation Partner Evaluation
Stop Build
Stop
Stop Build
Stop
Acquire
Yes Yes No
Acquire
Should
Yes Yes No
JV
we Should
Can needed
JV
pursue
Are barriers to
we
No No
Can needed
pursue
Are barriers to
capabilities be
Is an optimal
Yes
What is the
a new
winning position
No No
capabilities be
Is an optimal
Yes
What is the
a new
winning position
easily built?
partner available?
optimal structure? Minority
business
insurmountable?
2–4 weeks 1–2 weeks 1–2 months
easily built?
partner available?
optimal structure? Stake Minority
idea? business
insurmountable?
2–4 weeks 1–2 weeks 1–2 months
Stake
idea?
Contract
Contract
1–2 weeks
Capability Gap Assessment
Partner Option Evaluation
1–2 weeks
Capability DuPont, Illustrative Gap Assessment
Partner DuPont, Option Illustrative Evaluation
Partnering Options
Prospect Prospect
Winning DuPont, Position Illustrative
for
DuPont, Illustrative
DuPont, Partnering Illustrative Options
Market Presence
(1) (2)
Prospect Prospect
Winning Position for
DuPont, Illustrative
Market Presence
1. Ability to delivery superior
(1) (2)
Acquisition
value to the customer
1. Ability to delivery superior
Joint Venture Acquisition
DuPont
2. Time value to achieve to the winning customer
Minority Joint Stake
Build Criteria
position
Venture
DuPont
DuPont
2. Time to achieve winning
Contractual Minority Alliance Stake
DuPont, Build Illustrative Criteria
3. Financial position return
DuPont DuPont
Contractual Alliance
Winning Position
Winning Position
DuPont, Illustrative
3. Financial return
for Processes
DuPont for Technology
Internal development does not affect speed-
4. Probability of success
Partner Criteria
Winning Position
Winning Position to-market
for Processes
for Technology
Internal development does not affect speed-
4. Probability of success
Partner Criteria
to-market
5. Resulting competitive
A less complex arrangement is not possible
Capability Criteria
Learning by doing provides valuable benefi ts
landscape is favorable
5. Resulting competitive
For an A less alliance, complex DuPont arrangement brings unique is not value possible to
Capability Criteria
Internal Learning development by doing adds provides scale valuable (supports benefi ts
6. Compatibility landscape of is cultures favorable
the partnership
Opportunity must be demonstrably larger than
For an alliance, DuPont brings unique value to
multiple Internal projects)
identifi development adds scale (supports
Opportunity ed capability must gaps be demonstrably larger than
6. Compatibility of cultures
For an the alliance, partnership exit provisions are easily
7. Partner’s degree
multiple projects)
implemented
Needed identifi capabilities ed capability are not gapstoo
distant from
Internal development provides unique means
of commitment
For an alliance, exit provisions are easily
7. Partner’s degree
core
implemented
Needed business capabilities AND core are capabilities
of attracting
not too distant from
Internal development talent provides unique means
of commitment
For an acquisition, control is essential for
8. Experience with alliances
core business AND core capabilities
of attracting talent
overcoming For an acquisition, speed-to-market, control risk, is essential or
If market uncertainty is high, technological
for
Technology needs for the proposed business
Overall 8. Experience Assessment with and alliances
technology overcoming access speed-to-market, concerns
uncertainty
risk, or
If market must uncertainty be low (and is high, vice technological
versa)
are deemed Technology too needs proprietary for the to proposed share business Partner Ranking
Overall Assessment and
The technology cost of a collection access concerns of investment and
Technology uncertainty barriers must cannot be low make (and up vice majority versa)
Regulatory are deemed impediments too proprietary make it less to share desirable
Partner Ranking
licensing The cost arrangements of a collection does of not investment exceed JV and or
of margins Technology barriers cannot make up majority to build
Acceptable
Regulatory impediments make it less desirable
acquisition licensing cost arrangements does not exceed JV or
Gaps of will margins not take longer to fi ll than rivals
Unclear
to build
Acceptable
The acquisition cost of any cost of the partnering modes does
already Gaps or will just not emerging take longer in the to market fi ll than rivals
Geographic barriers make building undesirable
Unacceptable Unclear
not exceed The cost the of size any of the opportunity partnering modes does
already or just emerging in the market
Geographic barriers make building undesirable
Unacceptable
not exceed the size of the opportunity
Source: E.I. DuPont de Nemours; Corporate Strategy Board, Acquiring Growth Accelerators,
Source:
Washington,
E.I. DuPont
D.C.:
de Nemours;
Corporate
Corporate
Executive Board,
Strategy
2002,
Board,
pp.
Acquiring
32–33; Working
Growth Accelerators,
Council
Tools to Support Line Business Decisions for Chief
Washington,
Financial
D.C.:
Offi cers
Corporate
research.
Executive Board, 2002, pp. 32–33; Working Council 131
Tools to Support Line Business Decisions for Chief Financial Offi cers research.
131
Kappa* Corporation’s
Build Versus Buy
Evaluation Template
Merger and Acquisition
Teams
Supporting the Line:
Finance’s Role in M&A
Decision Support
* Pseudonym.
Complexity
Complexity
Due Diligence
M&A Due
Diligence Toolkit
This toolkit provides the
necessary tools to perform
due diligence, including
a model confi dentiality
agreement and a sample
due diligence checklist.
The company designates
a single The company “category designates
gatekeeper” a single “category responsible
for gatekeeper” each category responsible of
requested for each information.
category of
requested information.
“Closed Loop” Due Diligence Coordination
The team that reviews
documents The team within that reviews each
category documents reports within to that each
category’s category gatekeeper.
reports to that
category’s gatekeeper.
Each team member is
charged Each team with member responsibility is
for charged checking with with responsibility the
“category for checking gatekeeper” with the
before “category bringing gatekeeper” another
person before into bringing the process. another
person into the process.
The Procter & Gamble
Company’s M&A
Planning Top Sheet
Alpha* Corporation’s
Data Room and Due
Diligence Checklist
M&A: Balancing Central
Control with Business
Unit Autonomy
Integration
Planning
M&A Integration
Workbook
This spreadsheet-based
workbook contains many
of the common tasks and
responsibilities owned by
the fi nance function in
the integration process
and is designed to give
chief fi nancial offi cers
and other senior fi nance
executives a head start
with integration planning.
After the Acquisition:
Best Practices in Post-
Merger Integration
Post M&A Toolkit
Salerno’s* Merger
Integration Timeline
Upsilon’s* IT Systems
Pre-Conversion
Evaluation Form
Theta* Corporation’s
Deal Integration
Dashboard
Integration
Execution
Integration
Dashboard
Company Alpha*
leverages its Internetenabled
project tracking
system to create a
monitoring mechanism
that detects potential
integration diffi culties
early. The dashboard
tracks metrics that refl ect
the timeliness and quality
of the integration.
Capturing Value
During Post-Merger
Integration
Sigma* Corporation’s
Business Unit Post-
Alliance Analysis
Upsilon* Corporation’s
IT Systems Post-
Conversion
Evaluation Form