M&A Support

The goal of any M & A transaction is to achieve the strategic and financial goals set with appropriate success. In reality these successes often are not accomplished! ProGemma has established his mission to show you as an M & A market participant and helps to realize the change and achieve the potential benefits together with you.

We cooperate with Corporate Finance Mittelstandsberatung GmbH.

Introduction

The reality

Two years after the M&A-Integration accomplished, 53% of all transactions failed to meet their promise made at the time of the M & A announcement. 50% of all transactions actually destroy company values, 33% can not add any value.
Source: The Success of Acquisitions: Evidence from Divestitures, Steven N. Kaplan and Michael S. Weisbach in the journal of finance.

 

The challenges

  • Roles, tasks and responsibilities are not clearly defined
  • There is a discrepancy between planned and achieved goals (Plan vs. Actuals)
  • There are deficiencies in communication with internal and external shareholders
  • There are shortcomings in controlling and reporting to the shareholders

The goal: to increase efficiency and optimize results

  • Implement an Integrated Management Office (IMO) to keep all relevant data and facts always available and up dated
  • Controlling and reporting on the state of all projects up to the management
  • Tracking synergies and milestones of all projects
  • Identification and tracking of risks, tasks, milestones
  • Interdependencies of all projects are taken into account
  • Cost simulation and alignment with corporate strategy
  • Coordinated communication within the company

Objectivization by facts

  •  Increasing the speed in the implementation of integration processes
  • Faster realization of “quick wins”
  • High current consideration of all facts and figures in the management Dash board
  • Clear understanding of all parties involved in roles and responsibilities

Mergers and Acquisitions (target definition)

M & A projects have to create a company that is positioned after the project better in the market than the individual companies on its own, before the project.

Phase 1: Preparation (high-level planning)

In this phase, the company management defines its acquisition strategy, which can pursue various objectives such as:

  • Improve its competitive position by expanding business
  • Increase the market share in a particular segment
  • Access to new markets and financing opportunities
  • Development of synergies through value-added combinations of the resources and capabilities of their own company with those of acquisition candidates
  • Sustained increase in company value

This is followed by the ratings of the expected potential in the form of connect on the specific quantification of amounts of money. At first a  M & A project team is established, which is usually staffed with financial, tax, legal and strategy experts, to estimate and qualitatively possible synergy potentials of the takeover candidate.

The basis for this is a market analysis, which is conceptually directed to the search for suitable candidates (screening). Once a suitable candidate has been identified, a letter of intent (LOI) is completed. Subsequently, phase 2, namely, the transaction phase, begins.

ProGemma sees itself as part of this phase 1 in the role of strategy experts, which makes a rough and high measurable contribution to business view to the realization of synergies in the context of high-level planning.

Phase 2: Transaction (Detailed Planning)

In the context of the so-called “due diligence”, the vendor provides information that is intended to provide information on the value of the company to be acquired in the light of the strategic objectives (strategic fit).

There is an assessment of the chances and risks of a takeover with a view to the realization of synergy effects.
The data obtained will serve as a basis for the M & A project team as a basis for a more detailed analysis of the potential.

The project team carries out a detailed assessment, in which not only the assumptions for the strategic decision are checked, but information regarding the integration plan is already determined.

As a result, the M & A project team names specific amounts of money both for the synergies and for the costs of the M & A project.
The identified synergies and costs are included in the determination of a purchase price which, from the perspective of the acquiring company, represents a maximum value in the contractual negotiations with the seller.

After signing the contract and the antitrust review of the merger or acquisition the third phase, the integration phase starts.

ProGemma sees itself as part of this Phase 2 in the role of Business Due Diligence experts, which focuses in the context of, Detailed planning ‘on the following areas:

  • Commercial (Markt) DD
  • Operative DD
  • IT DD
  • HR DD

Implementation

Within the framework of the last phase 3, which is often called in the literature as post merger integration, it is necessary to go through some fundamental challenges that every company must solve on the path to a successful merger:

Instal an integration project

Our experience shows that post-merger integration can not be handled “by the way” by either the management or the operating units. Post Merger Integration requires a separate integration team and a strategically thought-out project management that leaves room for unplanned developments.

Instal a cross functional management team

A second core task in post-merger integration is the interlinking of the management organization. In our opinion, the development of a new budget and a medium-term plan play just as great a role as the interlinking of the planning and reporting processes. Both measures together provide the basis for systematically and numerically implementing of the synergies and the degree of achievement can be monitored.

Set up the management team

We recommend a selection process that cascades the entire company. At first the members of the new top management must be announced. The top management selects the executives on the next lower level of the hierarchy, until all levels are passed. It is therefore important to initiate a selection process, which is transparent and whose selection criteria may be classified as hard, but fair.

Align employee behavior

We consider the orientation of the employee behavior to the integration project as essential. Transparent and timely information creates awareness among the stakeholders of the organizational changes that arise in connection with the integration. Without this awareness, sustainable change is difficult to achieve. This is why it is important to inform about the objectives of the project at an early stage and to keep the employees continuously informed before and during the integration process.
Core task of communication is going to make the change process, the benefits and the new ways of working of all stakeholders transparent and to address questions and information in time.

Combine operational business activities

We advise you to optimally support operational management during the integration process by initiating a defined process which ensures the structural and personnel interlinking of the companies in the day-by-day business. Focusing on one’s own business is essential, which means, above all, to strengthen sales and communication to the customer in order to secure and expand the business.

Our M&A Support primarily focusses on the successful implementation of these recommendations (phase 3).

Tool (software) support

With the software we are using, we are happy to support you with a transparent cockpit system at all levels for all process participants.

Our consultants specialize in management software solutions from Triskell and Smartsheet. When integrating additional software solutions, we will gladly accompany you with prior consultation with our IT experts.