Srur strategic solutions new pmi strategy

(New) PMI Strategy

The case of knowledge acquisition

SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions

MEET THE PRESENTER P R O F I L E

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CEO and Founder

About Haim Srur In his advisory capacity, Haim brings over 25 years of

worldwide experience in executive human resource management, including:

•  Leading and implementing more than 50 M&As, assets purchasing, re-badging, tens of due diligence, and establishing joint ventures and strategic alliances

•  Extensive experience of leading and implementing organizational change, manage of rapid growth, from start-up to establish company and business & organizational turnaround

•  Strategically manage human resources function that served organization of thousands of employees

•  Bring Strategic consultancy abilities incorporated with vast practical experience

Before founding Srur strategic solutions – a consultancy firm, Haim served as Senior VP Human Resources for BAZAN Group (TASA: BAZAN), Alvarion (NASDAQ: ALVR), and TEVA Pharmaceuticals (NASDAQ: TEVA), Haim is a business administration doctoral (DBA) and holds an MA in Organizational Sociology and a BA in Psychology, both from Bar Ilan University, and he is a guest lecture in academic institutes in advanced programs.

HAIM SRUR

PRESENTATION AGENDA T O D A Y ’ S T O P I C S

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01. The M&A phenomena.

02. Why most of M&A fail?

03. The need for new PMI

model.

04. Determinates of PMI strategy.

05. M&A’s strategic rational.

06. Different type of M&A process

07. Integration strategy.

08. New PMI model


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The model that I’m going to present here, was developed based on our own experience at above 50 M&A’s of d i f f e r e n t s i z e , i n d u s t r i e s a n d geographies.

M&A phenomena

Merger and Acquisitions


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3 WAVES of M&A

SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 07

Up to the 90’s, classical mergers of large

conglomerates, vertical mergers and raid style

acquisitions

1992-2005, large mega projects, mainly in

pharmaceutical, new form of merger of equals, mainly

European and Asian

2005-now, focusing on the post merger part, new type

of merges - backwards merger, technology

acquisition or “acq-hire”, “rebadging”

Operational integration Cultural integration

22%# 20%# 19%#

38%#

0%#

5%#

10%#

15%#

20%#

25%#

30%#

35%#

40%#

Significantly#Value#destroy#deals#(TRS#less#than#20%)#

Value#destroy#deals#(TRS#Less#than#0)#

Value#creaBng#deals#(TRS#greater#than#0)#

Significantly#value#creaBng#deals#(TRS#greater#than#20%)#

Failure rate

±50:50

Adopted from Accenture 2013 08

Why M&A fails?

Strategy related

Hidden factors

People factors


STRATEGIC FACTORS R e a s o n s

1

2

Poor Strategic fit

Failure to achieve economy of scale


010

PEOPLE FACTORS

1

2

4

5

3 6

Culture merging

Motivation

Exhausting organization

Departure from Key employees

Knowledge transfer

Communication


011


Rate of failure and acknowledging the distinctive types of mergers and acquisitions

led into the need for a

NEW PMI STRATEGY

PMI STRATEGY

PMI STRATEGY

Strategic rational

Integration strategy

Process’ type

PMI Model

M

P

O

C

T

R

P

C

O

+o +o E

B

S

P

C

High speed Synergy

Synergetic integration

Low speed integration


Strategic Rational For M&A

SRATEGIC RATIONAL

Strategy Rational Example

Overcapacity Eliminate capacity for market share and efficiency

Daimler-Chrysler Ceragon -Nera

Geographic Entering new geography or new business

Nestle TEVA Pharmaceutical

Product Extend product line Cisco Verint

R&D Buying innovation rather In house

Facebook Intucell

Convergence Betting on new emerging industry

Amobee - Kontera


Process’ type


Process’ type describe the way that the specific M&A took place.

It describes the friendliness – hostility spectrum of the specific deal

Contested purchase •  Fits the first M&A wave

•  Usually when strong and big company acquire smaller and weaker company

•  Speed of the process is very important

•  Full dissemination into the acquired company

•  Culture assimilation

4 process types

Raid

Organizational Rescue Cooperation •  Easy to integrate – not necessarily is

needed

•  “ Gentle integration”

•  The challenge is the tendency to fully absorb where preservation should be considered

•  M&A is understanding that collaboration is better than competition

•  High similarity that leads to redundancy

•  Usually similar size and strengths which can lead to MOE – merger of equals

•  The M&A is a result of former relationship maturation

•  Could be equal size company or big company and start-up

•  Completion of knowledge or technology


Integration strategy


Integration strategy set the level of integration that is required for the success of specific

M&A.

It relates to 4 main pillars of the company: Business, Structure, Process and Culture

Structure •  Identical

•  Unrelated

•  Related - complementary

•  Related - supplementary

INTEGRATION STRATEGY

Business

Culture Processes

•  Separation

•  Integration

•  Assimilation

•  Acculturation

•  Absorption into the acquirer?

•  Best of bread - New structure for the entire company?

•  Stand alone unit?

•  “Opposite merger”?

•  Core – Corporate separation

•  Unified systems

•  Global effectiveness – local responsiveness


New approach for PMI

New PMI approaches

Task oriented

People oriented

High speed Synergy

Low speed integration

Synergetic integration


High speed •  Tangible •  Processes

•  Systems •  What we do

•  Business/technological goals •  Unified origination goals

•  Presentations

Low speed •  Soft issues (trust, job security…)

•  interfaces

•  Structure, roles and responsibilities

•  How we do

•  Communicated plan

•  “WIIFM” (what’s in it for me?)

•  Collaborations

Two approaches

“High speed” usually implement where the critical or the main rational for the merger resides and “Low speed” should be implemented in the rest of the

organization. Both plans should be communicated a priory.



HIGH and LOW SPEED

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“High speed” is mainly task oriented while “low speed” is mainly people

oriented

“High speed” is WHAT we do, while

“low speed” is HOW we do it


MAIN TAKES O u t o f t h i s p r e s e n t a t i o n

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M&A becomes a strategic mean for companies growth and development. The way companies merge and acquire has changed along the years. Based on our vast experience we learn that in order to success you must have at least:

Fit between strategic goal of merger and PMI strategy.

01

02

03

PMI manager or PMI team that has: integrative capabilities, process management methods, and execution approach.

Pre-define merger’s goals (and constantly monitored) – strategic, business, operational and organizational – before closing


DO’s and DON’T

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Communicate •  Communicate what you know

but also what you don’t know yet

Trust •  Trust is the lubricant of the

integration •  Promise exactly what you

intend to fulfill

Accessibility •  Most of managers tend to

d i s a p p e a r e d a f t e r t h e announcement – Be there!

Clarity •  Create clear definition of

success and direction •  Eliminate vagueness

“Why” factor •  Sense making is a key. Help

e m p l o y e e s a n d s e n i o r executive to justify and reasoning.

Execute •  There is lot of “noise” and

room for debates •  Move forward – consider,

execute and communicate the reason.

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Srur strategic solutions new pmi strategy

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