M&A Master Class

1. More companies fumble the M&A process than succeed at it! Here’s the proof:
   1. A Harvard Business Review article found that the overall M&A failure rate is between 70% and 90%.
   2. Companies spend more than $2 trillion a year on acquisitions, yet the executives of over two-thirds (68%) of these companies rated their company’s overall capability and readiness level for M&A as “very poor, poor, or average” (a 2014 study by MALC).
   3. Conversely, only 20% of finance executives involved in M&A said their transactions were “very successful” as measured by revenue growth, synergies, cost reductions and retention of key talent (a 2012 five-year study by the Canadian Financial Executives Research Foundation).
   4. Researching 12,000 M&A transactions over a 20-year period, the National Bureau of Economic Research found that acquisitions in the USA led to losses of more than $200 billion for shareholders (2014).
   5. The most important criterion for integration success, according to 73% interviewed for The Complete Guide to Mergers & Acquisitions is leadership, yet 60% finds their companies’ leadership “very poor, poor or average” at making timely, effective decisions (Galpin & Herndon, 2014)
   6. According to the National Center for the Middle Market at Ohio State, 70% of companies that made an acquisition in the last 3 years had little to no previous experience.
2. Most acquirers do not realize their errors until it is too late. Those who fail at acquisitions usually do not realize it until about two years after their acquisition transaction has closed.
3. The majority of acquirers fail to meet their goals because key elements were missed, even when working with sharp attorneys and accountants (and often investment bankers) to create well-structured deals that appear to resolve all the gaps between the buyer and seller. That is why it is important for executives and others in key positions in the acquiring company to understand the M&A process and relevant issues for themselves.
4. The most successful mergers and acquisitions utilize a comprehensive approach and engage a well informed and prepared deal team consisting of internal and external members.
5. Most infrequent acquirers learn “how to do M&A” when they experience live transactions. Learning by doing does not provide an adequate understanding early enough of how M&A works and generally leads to costly errors and omissions.

The way to maximize succeeding in a deal is to master these processes well in advance. Company leaders need to be willing and take the time to learn and prepare themselves far ahead of the actual M&A transaction.

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Wednesday AM: M&A Foundations
(with Hagen Rogers)

On Day One, you will begin by learning how strategy and M&A mix. This includes:

• The five different types of M&A
• Building out and strengthening your internal & external M&A team
• Creating an Acquisition Guideline Statement
• Identifying and evaluating a target company
• Successful and creative ways to approach targets to build interest
• Which fumbles and landmines you should be watching for
• Hurdle rates and how M&A should be measured

Goal for the Morning: To learn which type of M&A would best position you for success, advance your competitive position, and maximize shareholder value.

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Wednesday PM: Due Diligence
(with Jeffrey Bengtson, Toby Stansell, Myron Radio, Jay Wynn)

You'll move into the heart of deal making and the due diligence best practices that are crucial to success.

• Financial due diligence
• Tax due diligence
• Human Resources due diligence
• Leadership and Cultural due diligence
• Commercial due diligence
• Information Technology (IT) due diligence
• Intellectual Property due diligence

Goal for the Afternoon: To provide a thorough understanding of due diligence best practices.

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Thursday AM: Valuation and Synergies
(with Hagen Rogers)

The primary focus of Day Two morning session is to teach you the methodologies involved in valuation and synergies.

• Intrinsic Valuation - Discounted cash flow approach fundamentals
• Conventional misunderstandings and mistakes made in valuation process
• Synergies Valuation methodologies
• Revisions to Valuation for acquisitions

Goal for the Day: Workshop using a case study, strengthen understanding of valuation and synergy best practices to mitigate risks and mistakes.

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Thursday PM: The Transaction Phase
(with Hagen Rogers, Diane Dix and Mark Knight)

You will participate in a realistic M&A simulation that will reveal the pressures and challenges of closing a transaction. You will experience firsthand the challenges of collaboration and communications between the various task groups.

• Best practices around key systems of making a deal during a typically tight exclusivity period
• Understanding transactional legal documents
• Planning and executing challenging negotiations with the seller and their counsel
• Deal design objectives
• Working out the terms of the deal

Goal for the Day: To recognize and appreciate all the processes and skills required to thoughtfully close an acquisition which is well-positioned for strategic success and favorable ROI after the close.

Lunch: Understanding the Herrmann Whole Brain Model with Ann Herrmann-Nehdi. The Herrmann Brain Dominance Instrument ® (HBDI®) allows you to become aware of your thinking preferences in order to use them better in your personal and professional life.

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Friday: The Integration Phase
(with Scott Whitaker)

The last day takes you through the most difficult and overlooked phase. Underperformance after the deal closes is very common and a key contributor to why M&A goals are not met.

• Defining the integration challenge
• Essentials of integration due diligence
• Essentials of integration governance
• Defining the integration strategy and objectives
• Communications and culture
• Mobilizing the Integration Management Office (IMO)
• Integration work plan overview
• Synergy program management

Goal for the Day: To provide the key drivers and tactics required to create a scalable and repeatable integration playbook and build internal expertise and support for future transactions. Navigate M&A people problems.

Lunch: C-suite panel discussion “Acquirer successes & fumbles – Stories from the deal table”

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