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Merger Implementation Steps and Issues A concept document

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Merger Implementationsteps & issuesA concept document

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Page 1: Merger Implementation Steps+Issues

Merger ImplementationSteps and Issues

A concept document

Page 2: Merger Implementation Steps+Issues

This is a concepts document to assist in the planning and management of merger or acquisition implementation projects. Information in this document is based on our experience as management consultants and sources we consider reliable. There are no further warranties about accuracy or applicability. It contains neither legal nor financial advice. For that, consult appropriate professionals.

http://lpf.com [email protected] 2008

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Page 3: Merger Implementation Steps+Issues

Agenda:

Merger Implementation Assumptions

Four step implementation process:

Step 1: Management structure

Step 2: Inventory

Step 3: Plan the implementation

Step 4: Implement the plan

Conclusion

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Page 4: Merger Implementation Steps+Issues

Merger Implementation Assumptions

Objectives:

Minimize time & costs

Retain customers

Retain key employees

The merger will capture and integrate the best products and systems of both companies

The implementation will be staged rather than a “big bang”

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Page 5: Merger Implementation Steps+Issues

Four step implementation process:

A merger implementation process can be defined in four steps:

Inventory

Plan

Implement the Plan

StructureManagement structure, processes and tools

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Page 6: Merger Implementation Steps+Issues

Step 1: Management structure

Project is generally structured around lines of business with exceptions for facilities, such as networks, that are shared by multiple lines

Within a line of business, structured by major functions: business, systems and operations

A Project Management Office to provide process expertise, coordination, and communication at the project level and major lines of business

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Page 7: Merger Implementation Steps+Issues

Expand the structure as required

Staff members of the merging companies know the markets, products and systems

Consultants can provide additional:

PMO and project management resources and expertise

Merger implementation structures, guidelines and processes from initial planning to implementation

System integration and data transformation resources and expertise

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Page 8: Merger Implementation Steps+Issues

Step 2: Inventory

InventoryWhat organizations, products, systems etc. does each company have?

Plan

Implement the Plan

Structure

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Page 9: Merger Implementation Steps+Issues

Inventory products, systems, ops

The inventory process will move through a series of phases, each adding greater detail

Pre-close

Strategic

Tactical

Pre-close is constrained in terms of the data that can be exchanged –attorneys provide guidelines

Strategic level meetings between the companies specifically to exchange information. Becomes an iterative process of planning then inventory then more planning

Increasing levels of detail to support plans and implementation

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Page 10: Merger Implementation Steps+Issues

Inventory assumptions

There is great deal of information required for the merger integration:

Find it or develop it

Test and update as needed

Make it available in data bases for the project team and the planners

The planning process will be driven by the amount and quality of the information that is available to the lines of business, systems, and operations

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Page 11: Merger Implementation Steps+Issues

Pre-close: inventory major activities

Identify the available information about your company’s products, systems and operations

Define, build and begin to populate the data bases that will be used over the life of the merger project

Use public sources and sources approved by your attorneys to develop information about the other company

Prepare for strategic exchange of information immediately after the close

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Page 12: Merger Implementation Steps+Issues

Inventory information management

Develop one or more data bases to deal with and link the following data topics:

Organizational structure and product ownership

Products – a critical element of the planning process

Computer centers – where, what do they do, …

Operations centers – where, what do they do, …

Communication networks – connect, capacity, …

Data bases used – feed to and/or draw from …

Potential issues related to expansion or termination including civic, leases, utilities …

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Page 13: Merger Implementation Steps+Issues

Information management - issues

The first level of planning will be based on major products to be carried forward, integrated or terminated; product information is critical to the process

The same product name may be used by more that one business unit and by the two companies to refer to significantly different products; provide for multiple names for the same product and sufficient detail to differentiate products with the same name

Look at current demand and capacity as a baseline plus the other company plus growth to find opportunities for consolidation

Allow for different organizational structures for the ownership of products – changes will have to be coordinated

Test databases, particularly older ones, to assure actual data content maps to data documentation

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Page 14: Merger Implementation Steps+Issues

Step 3: Plan the implementation

Inventory

Plan

Implement the Plan

Line of business will nominate products; systems and operations will assess; all three will select which to carry forward and the sequence.

Structure

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Page 15: Merger Implementation Steps+Issues

The planning process

Line of business, systems and ops select productsbased on product benefits and system costs They select implementation sequence based on

market benefits and system costs The planning process will move through a series of

levels, each in greater detail

Initial Review

select majorand sequence

implemen-tation plan

Initial Review

select majorand sequence

Implemen-tation plan

Initial Review

select majorand sequence

Implemen-tation plan

Subsequent Reviews

select nextand sequence

implemen-tation plan

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Page 16: Merger Implementation Steps+Issues

Planning assumptions

The selection of products will drive the requirements for systems and operations

The planning process will be driven by the information from the inventory that is available to each line of business, systems, and operations

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Page 17: Merger Implementation Steps+Issues

Planning management - issues

The first level of planning will be based on major products to be carried forward, integrated or terminated; product and relative cost information is critical to the process

Subsequent planning will select additional products and respond to new information about products that have been selected

The same product name may be used by the two companies to refer to significantly different products; provide for multiple names for the same product and sufficient detail to differentiate products with the same name

Planning for products may force consideration of changes in the organization of one company or the other

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Page 18: Merger Implementation Steps+Issues

Step 4: Implement the plan

Inventory

Plan

Implement the Plan

Structure

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Page 19: Merger Implementation Steps+Issues

The implementation - assumptions

The implementation will be done in phases and will probably be structured geographically

The process will be driven by:

Time and resources available to make changes

Market impact of changes and their sequence

Systems impact of changes and their sequence

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Page 20: Merger Implementation Steps+Issues

Implementation issues

Change management is critical to deal with market factors, new information, unforeseen problems, lack of resources, etc.

Changes must be coordinated widely to manage expectations and to integrate elements as planned

All elements must be thoroughly tested; failures will be public

Delivery must meet market commitments

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Page 21: Merger Implementation Steps+Issues

Implementation issues

Change management is critical to deal with market factors, new information, unforeseen problems, lack of resources, etc.

Changes must be coordinated widely to manage expectations and to integrate elements as planned

All elements must be thoroughly tested; failures will be public

Delivery must meet market commitments

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Page 22: Merger Implementation Steps+Issues

Four step implementation process:

Structure will reduce the complexity of the merger implementation and provide greater control

Inventory

Plan

Implement the Plan

Structure

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Page 23: Merger Implementation Steps+Issues

Planning and processes must be built in

Objectives:

Minimize time & costs

Retain customers

Retain key employees

It is almost impossible to meet these objectives unless planning and processes are built in at the start of the project and then managed to completion.

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Page 24: Merger Implementation Steps+Issues

Lyon, Popanz & Forester

We work in the

white space of

organizations …

including merger

implementation

The white spaces of organizations occur on organization charts between internal departments,

in contractual ambiguity and regulatory complexity. They are places where

functional misunderstandings occur, communication falters, roles change, priorities conflict,

rewards are unclear, risks are unknown, and managers sometimes see threats to their careers

that outweigh the opportunities. We work in those white spaces to

define problems so they can be solved, design solutions so they can be implemented, and

structure implementation so it can be managed.

http://lpf.com [email protected]

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