Brief overview of the Merger and Acquisition process with a focus on the M&A as a Project.

1. OVERVIEW OF THE MERGER AND
ACQUISITION
February 2014

2. A requirement that the board of directors of a
company act in the best interests of shareholders if
the company is to be sold. The rule originated as
the result of a court case involving the sale of
Revlon Inc. in 1985.
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The “Revlon Rule”

3. • Project. A temporary endeavor undertaken to create a
unique product, service, or result
• Project Life Cycle. The series of phases that a project
passes through from its initiation to its closure
• Project Management. The application of knowledge, skills,
tools, and techniques to project activities to meet the
project requirements
• Project Management System. The aggregation of the
processes, tools, techniques, methodologies, resources,
and procedures to manage a project
• EMA from Deven Software is in this market space.
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The M & A as a Project

4. The Project Triple Constraint
Scope
Quality
Prioritize Competing Demands

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Impact of a Variable
over the Life of a Project

6. • Issue - Distinguished from a Risk in that it is a current or
existing event that, if not addressed, may impact direction,
schedule, quality, or cost
• Risk – An uncertain future event or condition that, if it
occurs, has a positive (opportunity) or negative (threat)
effect on one or more project objectives
– Opportunities are exploited and threats are mitigated, avoided,
transferred, or accepted
– Risks are evaluated primarily by impact and probability
• Assumption – Something considered to be true, real, or
certain for planning purposes without proof or
demonstration.
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Project Issues, Risks, and Assumptions

7. • Although they are often uttered in the same breath and
used as though they were synonymous, the terms
merger and acquisition mean slightly different things
• A purchase deal is a merger when both CEOs agree that
joining together is in the best interest of both of their
companies
• When one company takes over another and clearly
established itself as the new owner, the purchase is
called an acquisition.
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What is a Merger & Acquisition

8. • Horizontal Integration - Two companies that are in direct
competition and share the same product lines and markets
• Vertical Integration - A customer and company or a supplier and
company
• Forward Integration - Activities are expanded to include control of
the direct distribution of its products
• Backward Integration - A form of vertical integration that involves
the purchase of suppliers
• Market-extension Integration - Two companies that sell the same
products in different markets
• Product-extension Integration - Two companies selling different but
related products in the same market
• Conglomeration - Two companies that have no common business
areas.
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Types of Mergers

9. • Synergy is the magic force that allows for enhanced
efficiencies of the new business
• Synergy takes the form of revenue enhancement and
cost savings
• By merging, the companies hope to benefit from the
following:
– Staff reductions
– Economies of scale
– Acquiring new technology
– Improved market reach and industry
• However, synergy is sometimes hard to realize
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Synergies

10. After you successfully acquire a company, you have to
integrate it into your operations. Some considerations for
successfully combining an acquired company with a parent
company include the following:
• Product mix
• Operations
• Personnel: Personnel decisions are sensitive issues, so
handle them with compassion.
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How to Integrate an Acquisition

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The M & A Project Life Cycle

12. • Minimum Requirements
– Ensuring survival by improving economics –
Rationalize costs; capture scale economics
– Growing existing business – Build market leading
positions in existing business lines
• Stretch Goals
– Build a new business model – Leveraging existing
capabilities to change the way you do business
– New industry model – Use the merged company to
redefine the industry or define new opportunities.
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Financial Targets – Measuring Success

13. Thank You
• Frank Granito –
fgranito@devensoft.com
• Nick Perdikis –
nperdikis@devensoft.com