Maximising value after the acquisition
When a corporation evaluates a potential M&A target, its main focus traditionally tends to be pre-deal and numbers-related. This helps ensure the corporation makes good choices and pays the right price for the target. Yet studies have reported that more than 60% of transactions erode shareholder value. The problem often arises from poorly conceived and executed postdeal integration, a major concern of executives as reported in the 2005 PwC Deal Survey.
The signing of a deal is not the end. It is really the beginning of the real work to realise value from the acquisition. In fact, to maximise value, preparation for integration should commence during the pre-acquisition phase. There is too often a disconnect between the business development team which evaluated and sealed the deal and the business managers who subsequently inherit the acquired entities. These managers are usually not involved early in the process and may not have the necessary experience or capacity to manage the integration.
Meeting Your Needs
PwC’s Deal Advisory and Due Diligence teams know the deal, the target and its management. By leveraging this knowledge, our Post-Deal Integration Services specialists are in an ideal position to quickly assist you with the integration process. Focusing on the success factors of integration, there are four main areas of services that will help you achieve the benefits from the transaction, i.e. earnings growth, cash flow improvements, operational efficiency and risks mitigation.
Major operations-oriented tasks need to be undertaken during the due diligence phase to maximise value and minimise risks of the transaction. PwC can assist by:
On deal closing, the acquirer needs to plan critical tasks to ensure operations continuity (Day One readiness) of target after closing. PwC has advised clients on:
- Reviewing operations (e.g. information technology and human resource due diligence) of target
- Elaborating on and/or reviewing synergies, including business plan operational assumptions
- Defining operational carve-out plans (with continuity from transition phase) mitigation.
A sequence of planned actions and adjustments of key functions are necessary to take control of the target. PwC can assist in:
- Transition planning including definition of urgent actions, quick wins and operational risks mitigation plans
- Transition Service Agreements and other carve-out issues to be addressed
Once operations are stabilised, the potential value in the combination of companies should be unlocked rapidly. PwC can assist through:
- Executing and monitoring transition planning, urgent actions and quick wins
- Reporting optimisation to track major financial performance
- Enhancing the treasury function to ensure cash flow visibility and effectiveness
PwC has also developed specific methodologies and tools to ensure a controlled and value-driven integration. These include Accelerated Transition Framework, Project Office Management Tool and Synergy Tracker.
- Business plan initiatives execution
- Performance improvement of support functions (e.g. finance, IT and logistics)
Leading Beauty Salon Chain
- Unlocking Deal Value Through Management of Synergies Initiatives
PwC was engaged by the client, who acquired two companies in the same business, to help manage synergistic initiatives from definition to execution to unlock value from the deal. This included the definition and selection of valuedriven initiatives, animation of workshops with identified and involved resources, synergies calculation/monitoring and communication.
Leading Testing and Certification Company
- Preparation of Integration
PwC helped a German group acquire a Singapore-based company and facilitated a smooth integration after completing financial due diligence and closing the deal. Our priorities were on three major areas of the post-deal process:
We coordinated with the various units in the acquired company and provided a central point of information to the client. As a result, we were able to focus and minimise the client’s resources required in managing the merger. They were thus able to quickly launch their integration initiatives as a result of our findings and guidance.
- Human resources: Key people identification
- Costs: Understanding of profitability for specific businesses
- Tax: Transfer pricing risks