Strategic M&A Alliance Process

© 2017 STI Confidential - For investor discussion purposes only www.cognizant.com

Copyright © 2014 Cognizant

June 2017

Strategic M&A Alliance Process

Overview of Services & Best Practices

© 2017 STI For client discussion purposes only

© 2017 STI Confidential - For investor discussion purposes only© 2017 STI For client discussion purposes only

Strategic Technology Institute

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Advisory Services

ResearchAnalysisStrategy

M&A Support

Intellectual Property Development & Licensing

Public Policy

PublicationsSpeakers Bureau

Program Management

Founded in 1985, the Strategic Technology Institute (STI) is a network of independent consultants that provides executive-level management advisory services focused on corporate strategies, often facilitated by technology innovation

STI is also a virtual ‘think tank’ that investigates the business and public policy issues raised by science and engineering

Aligning technology roadmaps to corporate strategy, STI has the following lines of business:• Advisory Services• Public Policy• IP Development & Licensing• Program Management

Note -- Over the years, STI was also formerly known as Strategic Systems, Inc. and Strategic Technologies, both of San Francisco. City of Oakland license #2249782.

© 2017 STI Confidential - For investor discussion purposes only© 2017 STI For client discussion purposes only3

STI Problem Space

Corporate strategies, often facilitated by technology innovation, at the intersection of the Media & Entertainment (M&E), Information Technology (IT) and Communications industries

Example

Multi-platform distribution of digital media assets by secure IT-based supply chain systems, creates new business opportunities for digital engagement and higher-quality metrics for media, telecommunications, computer, consumer electronics, retail, and services companies

STI’s services are especially significant to companies when they are:

• Transforming from traditional departmental to "content-centric" models of business, • Considering (or have done) M&A activity, either acquiring

entities to be integrated or rationalizing a group of companies that need to be integrated, or• Evaluating adjacent markets but need additional technical

depth and operational expertise to assess opportunities and plan for success in a business environment that has increased risks, and• Lack the staff and/or bandwidth to handle the tasks internally


Definition and Scope of Strategic Alliances“Strategic alliance” implies an association between two or more partners designed to achieve the objectives of the partners

• Proactive steps to minimize the reliance on a firm's internal capabilities to achieve sustained competitiveness and expansion

• Joining of forces and resources for a specified or indefinite period of time to achieve a common objective

• Management of an agreement between parties to work jointly on a project(s) that is designed to achieve a strategic objective (which can be offensive or defensive in nature)

• Long-term commitment between two or more organizations for the purpose of achieving specific business objectives by maximizing the effectiveness of each participant's resources

• Kyosei, an approach, implying mutually rewarding coexistence

”Strategic" is built on a vision of the environment in the future:

• Resulting in a significant shift in the business outcomes,

• Having an impact on more than one function or business, and

• Resulting in a long-term relationship (otherwise the effort is not justified)


Forms of Alliances• Long-term supplier contract

• Joint marketing agreement

• License/franchise

• Joint development agreement

• Non-equity cooperative venture

• Joint venture

• Equity investment/ merger / acquisition


Reasons for Alliances• Defensive Ø Partner to ward off common enemies Ø Reduce the differentiation advantages of competitors

• Offensive / optimization Ø Vendor / supplier relationship for cost or scale efficiencies Ø Share responsibilities and information equally or in relation

to relative strengths

• Cost-sharing Ø Share costs of R&D when certain technology investments

are too capital-intensive for one firm alone Ø Partner to achieve certain goals when limited cash

(internally or via public markets) does not allow acquisitions Ø Some projects are too large for anyone organization to manage

• Expand beyond current business Ø Get around internal barriers to development -resistance,

resources, and risk Ø Grow markets and/or enter new markets


Alliance Impacts Given the effort involved in arranging strategic alliances, a strategic alliance should be significant enough to have an impact on the following:

• Core competencies

• Product/ technology positioning

• Revenue stream

• Market share

• Relationship with customers and suppliers for the long-term


Selection Criteria & Considerations • Would a partnering relationship be a better alternative than internal

development? Elements for comparing partnering with internal development include costs, benefits, risks, speed of execution, etc.

• Can you exploit the partner's organization, skills, and competencies, while protecting what should be protected in your own organization?

• Have you clearly identified a technology transfer receptor team?

• IF there is a conscious decision to transfer a core competence, have you considered the consequences of surrendering control on this, and planed to replenish core competencies?

• Does the alliance fit with financial objectives?

• Can you avoid DEPENDENCE and work to become more self-sufficient?

• Will you emerge from the alliance more competitive than when it was entered?


Company / Environmental Conditions for Alliances • Since alliances must be supported at multiple levels within the partners, there must be

agreement within the organization regarding core competencies, core strategy, and critical success factors. Alliances must be seen as allowing the firm to concentrate on its core strengths

• Line organization objectives must be aligned with corporate objectives

• Senior managers at all participating companies must have a shared vision of how the partnership will function and understanding of how the partnership benefits each company, be personally committed to any alliance, and have open communication with counterparts

• Line managers need to see their interests in the alliance and be committed to it. Internal reward structures must be set appropriately and must not inhibit a partnering attitude

• R&D managers are judged on their ability to get the right products to market quickly, not to develop them internally unless that is required

• All levels in the organization are open to a partnering attitude


Insights & Best Practices• Strike an alliance at the core of the company's interests to

maintain top management and line interest, but, control of a firm's core activities is never shared

• Tie to corporate goals: At the outset, the alliance must be linked to the achievement of corporate objectives and strengthening of core competencies

• Agreements should be thorough, but also flexible. It is much more important for managers to work according to the spirit of the alliance, not the letter of the agreement

• Successful partnerships are those that replace "we vs. them" with "us against a common enemy," or, more broadly, with "in our respective interests.” Partnerships cannot succeed when one party tries to gain the upper hand

• Alliances must be viewed as "win-win", not "win-lose" situations. When a partnership works, the only losers are the lawyers

• Consider the exit path


Appendix

© 2017 STI Proprietary - For client discussion purposes only12

Blake WhiteFounder

•Alignment of technology roadmaps with business strategy•CTO and Tech Ops program management and organizational capability assessment•Digital Transformation strategies and program management•Digital media supply chain, including Media Asset Management (MAM) systems assessment•Cross channel/platform content monetization strategies•M&A due diligence and support•Technology product marketing, business development, licensing, and alliance strategies

Experience Summary

Representative Projects

Expertise

•Extensive career, holding senior positions at: Cognizant, PwC, Ascent Media, National TeleConsultants, Silicon Valley computer companies (HP, Apple, SGI), and 3 startups•Management consultant, with both Media & Entertainment and Silicon Valley technology development, integration and advisory experiences. Clients have included: ABC, BBC, Corus Entertainment, Dreamworks SKG, Discovery Latin America, Lucasfilm, MediaCorp Pte, Microsoft Studios, MTV Networks, Nominum, Panavision, Procter & Gamble, South African Broadcasting Corp, Turner, UCLA and Weather Channel •Global client and partnership experiences in: Canada, Mexico, UK, Germany, South Africa, Japan, South Korea, Australia, and Singapore•Extensive experience as a Thought Leader through industry presentations, journal articles, speaking engagements, and interviews. Author of The Technology Assessment Process: A Strategic Framework for Managing Innovation and several industry publications •BSIE, MBA and MLA degrees from NC State, Xavier, and Stanford.

Leadership Positions

Thought Leadership

Publications

• Decomposition and analysis of a major cable network’s linear and digital air chain workflows and systems for replacement and improvements with modern architectures and technologies,

• Future state design of an Asian media conglomerate’s “content-centric” infrastructure roadmap and organizational transition• Digital Transformation program plan and launch for leading global professional services firm• Project Planning for major broadcaster's R&D organization• Broadcast & Digital Media Technology Strategy for a global retail media company• Archive Management technology vendor recommendation and project implementation for a major US broadcast news organization• Content Security Assessment and Recommendations for a leading cable network• Application Portfolio Rationalization for a leading cable network• M&E Value Chain Analysis and product recommendations for a leading post production and broadcast solutions vendor• Cloud-based M&E Product Line Strategy for a US communications company• M&A Due Diligence and product capability investigation

© 2017 STI Confidential - For investor discussion purposes only www.cognizant.com

Copyright © 2014 Cognizant

ContactBlake WhiteFounder

Mobile: +1-415-519-5584Email: [email protected]: @BlakeLWhite1LinkedIn: linkedin.com/in/blakelwhiteWebsite: www.strategic-tech.org

© 2017 STI For client discussion purposes only

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Strategic M&A Alliance Process