The Complete Guide to Mergers and Acquisitions: Process Tools to Support M&A Integration at Every Level

With the 3 rd edition of The Complete Guide to Mergers Acquisitions , readers will be treated to Galpin and Herndons most recent insights and experience in the world of business transactions. No matter how large or small the acquisition you might be planning, public or private, reach for this valuable and practical guide first. If success is what youre after, then make the commitment to prepare yourself and your team; this book is the way to do it. JAN K. GRUDE, President and Chief Executive Officer, Pacific Blue Cross/Blue Shield Thank you, Herndon and Galpin, for a practical and thought–provoking guide for those who want to get better and smarter at effective MA integrations. Of the fourteen books in my MA library, their first book was the one I have most often referenced. Now this new and expanded version will take over the #1 spot. JACK PROUTY, President of the MA Leadership Council In a world where mergers and acquisitions almost never reach their publicly proclaimed synergies, The Complete Guide to Mergers Acquisitions is a step–by–step guide that takes an applied, practitioners approach to all aspects of MA from due diligence to integration planning and execution to change management. Galpin and Herndon, proven executives and thought leaders, provide critical insight for anyone responsible for organizational alignment, integration, and the ultimate recognition of synergies. MARK GASTA, Executive Vice President and Chief People Officer, Vail Resorts Management Company We used Galpin and Herndons book as a guide when we were shaping our MA process and toolkit. The book helped us create templates and structure the due diligence and integration processes that we have applied in several transactions. It presents a clear structure for organizing and conducting due diligence and integration that we used in training exercises with our diligence and management teams. Its concise and easy to follow, and it gave us a head start on implementing our MA strategy. MARSHALL TUCKER, Manager Business Development, Tampa Electric Company Galpin and Herndons third edition, updated with recent case examples, new tools and templates, and recent research findings, makes this required reading for anyone considering mergers and acquisitions. FERNANDO PAIZ, Former Chairman, Walmart Central America

List of Exhibits xiii Foreword, by Jim Jeffries, cofounder and chairman, M&A Leadership Council xvii Preface xxiii The Authors xxix ONE Integration: Where Deal Value Is Realized 1 Buyer Beware! 2 Factors Contributing to Poor M&A Results 4 Deal Strategy—Then and Now 6 Strategic Deal Rationale: The Eight Cs 8 Serial Acquisitions as a Growth Strategy 9 Integrations Exist on a Continuum 10 Ten Key Recommendations for Maximizing Deal Value 15 Develop a Sustained M&A Capability 18 Be Sure to Avoid the Killer Phrases 19 Chapter Summary 21 Discussion Questions 23 Rapid Assessment Tool 23 TWO The Deal Flow Model: Pitfalls and Best Practices Throughout the M&A Process 25 The Deal Flow Model 27 Chapter Summary 53 Discussion Questions 54 Rapid Assessment Tool 54 THREE Integration Begins with Due Diligence 57 Due Diligence Should Prevent Surprises 58 Due Diligence Is an Iterative Process 63 Managing Due Diligence as a Rapid Results Project 65 Target or Partner Firm Participation in Due Diligence 67 Prioritize Synergies According toTheir Impacts on Deal Value 68 Due Diligence and Integration Strategy 70 Due Diligence and Integration Risk Factors 70 Due Diligence and Organizational Culture 73 Due Diligence and Human Resources 79 Due Diligence and Human Capital 83 Chapter Summary 84 Discussion Questions 85 Rapid Assessment Tool 86 FOUR Welcome to the Big Leagues of Change Management 89 OrganizationalDynamics Created by Mergers and Acquisitions 90 Seven Fundamentals of M&A Change Management 92 Chapter Summary 107 Discussion Questions 108 Rapid Assessment Tool 109 F I V E The Merger Integration Work Streams Model 111 The Merger IntegrationWork Streams Model 113 Deploying the Model 124 Chapter Summary 130 Discussion Questions 130 Rapid Assessment Tool 131 S I X Organizing, Involving, and Coordinating Integration Task Forces 133 Establishing the Integration Infrastructure 134 Staffing the Integration Project Team 141 Launching the Planning Process 142 Chapter Summary 164 Discussion Questions 165 Rapid Assessment Tool 166 SEVEN Waging the Communications Campaign 169 Great Ideas and GameWinners 188 M&A Communications: Lessons Learned 191 Chapter Summary 192 Discussion Questions 193 Rapid Assessment Tool 194 E I G H T Don’t Let Them Jump Ship: Retaining and Rerecruiting Your Key People 197 “Me” Issues Dominate 198 Examples of Effective Retention and Rerecruitment 199 Identifying Key Talent 201 UnderstandingWhat Motivates People 202 Developing and Executing a Retention and Rerecruitment Action Plan 206 Retention and Rerecruitment Options and Considerations 213 Chapter Summary 215 Discussion Questions 215 Rapid Assessment Tool 216 NINE Setting the Organization Cures Many Ills: Structure and Staffing Decisions 219 Common Problems 221 Ten Principles 225 Fair Processes 240 Staffing Process Models 242 Chapter Summary 253 Discussion Questions 254 Rapid Assessment Tool 255 TEN Tracking Success: Merger Measurement Systems 259 Integration Measures 262 Chapter Summary 290 Discussion Questions 291 Rapid Assessment Tool 292 ELEVEN “But They’re So Different”: Cultural Integration 295 The Impact of Culture on NewCo Performance 296 Operationalizing and Managing Cultural Integration 297 Discovering, Designing, and Delivering Cultural Integration 300 Answering Key Questions 304 Sticking to the Cultural Integration Implementation Plan 307 Continuously Manage NewCo Culture 308 Chapter Summary 309 Discussion Questions 310 Rapid Assessment Tool 311 TWELVE Human Capital Integration and the Human Resources Function 313 The “Making StrategyWork” Model 316 Case Studies in Human Capital–Related Integration 319 Chapter Summary 327 Discussion Questions 328 Rapid Assessment Tool 329 THIRTEEN Merger Repair 331 Clear Symptoms 336 Merger Repair Rapid Assessment 338 Two Tracks of Merger Repair 339 Chapter Summary 344 Discussion Questions 345 Rapid Assessment Tool 345 FOURTEEN Taking Your M&A Game to the Next Level 347 Are You Getting Better at M&A? 347 Failing to Protect Your Investment 348 Beware the “Not Invented Here” Syndrome 349 Don’t Fumble at theGoal Line 350 Enterprise–Level M&A Competency Model 351 How Does Your Integration Stack Up? 356 Does ItWork? 357 Chapter Summary 360 Discussion Questions 360 Rapid Assessment Tool 361 Resource A: Sample Task Force Charter 365 Resource B: Integration Planning Template 373 Resource C: Executive Summary—The State of M&A Integration Effectiveness Survey, 2014 393 References 417 Index 429

TIMOTHY GALPIN, PhD is a Clinical Professor of Management at Colorado State University teaching Strategy and Entrepreneurship. His consulting, research, and publishing are in the areas of Mergers and Acquisitions, Leading Sustainable Organizations, Leadership Effectiveness, and Entrepreneurship. Prior to his teaching, Tim gained over 20 years of experience as a management consultant and business manager working with boards and senior management around the world on strategic planning, strategy execution, merger and acquisition integration, divestitures, restructurings, human capital management, business productivity improvement, and organizational culture change. He still consults to firms on these topics. MARK HERNDON serves as president of MA Partners, where his practice includes MA integration strategy and management; building internal MA capabilities for corporate acquirers; due diligence; culture assessment and integration; and change management, communications, and leadership during periods of disruptive change. Previously, he was president of Parkwood Advisors and U.S. Region Leader for Merger and Acquisition Services with Watson Wyatt Worldwide. Mark also serves as chief knowledge officer for the MA Leadership Council and as a board director for various private companies and faith–based and charitable organizations. He has presented keynote addresses and concurrent sessions to nearly 400,000 people and is the author of a popular weekly newsletter, Merger Monday Insights , available at www.mapartners.net.