FBA National ConferenceDarwin 2009

The Dyson Group Growth By Acquisition – Lessons Learnt

Annie Stevens - CFOEd Paton - Partner Michael Sewards - Director

Dyson’s Acquisition Story

today:

1. A short walk through Dyson’s acquisition history

2. An open communication strategy

3. Making Due Diligence work

4. Get to know what you are buying

5. Important issues affecting price

6. Transition

Annie Stevens

1. A short walk through Dyson’s acquisition history…

• Historically very informal approach- much by instinct

- but using solid industry knowledge and experience

• Recent years a more structured approach- use of planning, process and procedural tools

- some examples…

Target List: who, when, why, size

Project Plan: team, responsibilities, tasks, when by

DD Plan: more about that later

Annie Stevens

…some context

• Early 90’s→ Turnover approx $15M→ Buses = 70

• In 2009 (incl JV’s) → Turnover $115M → Buses = 480 → Employees = 950

• In 2009 (Dyson’s main trading entity) → Turnover $86M → Buses = 380 → Employees = 725

Annie Stevens

…some context

Annie Stevens

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C oy A C oy B C oy C C oy D C oy E C oy F New Depot C oy G C oy H C oy I

1990 1997 A ug-03 J an-04 A ug-04 Mar-06 J un-06 J ul-07 J ul-08 J ul-08

QTY B US E S QTY DE P OT QTY P E OP L E

…new phase

Annie Stevens

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C oy A C oy B C oy C C oy D C oy E C oy F New Depot C oy G C oy H C oy I

1990 1997 Aug-03 J an-04 Aug-04 Mar-06 J un-06 J ul-07 J ul-08 J ul-08

QTY B US E S QTY DE P OT QTY P E OP LE

2. An open communication strategy

• Keeping communication channels open between buyer and seller• Establishing one-on-one relationship with key player from vendor

side• Building collaboration with advisors (if they are involved)• Building relationships between buyer and seller teams (internal staff

and external advisors or family)• Being willing to listen and learn• Keep key decision makers informed along the way

e.g. Family Council

This strategy sets up a good basis for transition if the sale is successful

Annie Stevens

3. Due Diligence

• Imperative - a non-negotiable really • Build in this process early on and be comprehensive

- potentially can start straight away (e.g. a Purchase by Tender)- needs to cover Financial, Marketing, Operational & People

• Have realistic time frames • Be transparent • Document formally…..

• …. but integrate informal and collaborative approaches to get the job done effectively

Annie Stevens

4. Get to know what you are buying

• Are you buying the business (assets) or the company?

• Finding out exactly what you are getting and what you

are not getting in the potential sale…

…sounds fundamental but it affects price, terms, transition and integration

• Repercussions if you don’t!!

Annie Stevens

5. Important issues affecting price

• Valuation approach and getting it right (or at least close!!)

• Having the most accurate estimate of a company’s true worth gives a solid base to work from, before entering negotiations

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

- Warren Buffett

Annie Stevens

5. Important issues affecting price…

• Have market knowledge about price trends, multiples- but trends are not a benchmark!!

• Tax v. accounting issues - personal assets/shareholder loans

• Vendor expectations - too far along and maybe too far to back-peddle on important issues

• Discounts and whether they may/may not be relevant or be an expectation

• Communicate your ability to complete the deal

• Have your ‘walk-away’ price

Annie Stevens

6. Transition

An acquisition is not complete on settlement day! People side is critical

Face-to-face approach

Read & understand their culture; helps with integration approach

Identify the non-negotiables v. the not-so-criticals

Identify the culture symbols that will assist integration

Annie Stevens

6. Transition (cont.) Needs to be planned and communicated early and be two-way

Needs to be formal plan for pre and post acquisition

Aim for the process to be based on building trust and openness

Walk in as you will operate

Review and debrief after the dust has settled – how did we do & what does the future look like now

A successful integration adds to the bottom line

Annie Stevens

To sum up…

The themes that have worked for Dyson’s during their acquisition journeys have included:

Open communication Increased rigour with processes such as Due Diligence Understanding of critical external factors Staying close to the action Giving people issues top priority On-going review of performance

Annie Stevens

Questions……….

Ed Paton - Partner Michael Sewards - Director

Annie Stevens - CFO