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SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
MEET THE PRESENTER P R O F I L E
02
CEO and Founder
About Haim Srur In his advisory capacity, Haim brings over 25 years of
worldwide experience in executive human resource management, including:
• Leading and implementing more than 50 M&As, assets purchasing, re-badging, tens of due diligence, and establishing joint ventures and strategic alliances
• Extensive experience of leading and implementing organizational change, manage of rapid growth, from start-up to establish company and business & organizational turnaround
• Strategically manage human resources function that served organization of thousands of employees
• Bring Strategic consultancy abilities incorporated with vast practical experience
Before founding Srur strategic solutions – a consultancy firm, Haim served as Senior VP Human Resources for BAZAN Group (TASA: BAZAN), Alvarion (NASDAQ: ALVR), and TEVA Pharmaceuticals (NASDAQ: TEVA), Haim is a business administration doctoral (DBA) and holds an MA in Organizational Sociology and a BA in Psychology, both from Bar Ilan University, and he is a guest lecture in academic institutes in advanced programs.
HAIM SRUR
PRESENTATION AGENDA T O D A Y ’ S T O P I C S
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01. The M&A phenomena.
02. Why most of M&A fail?
03. The need for new PMI
model.
04. Determinates of PMI strategy.
05. M&A’s strategic rational.
06. Different type of M&A process
07. Integration strategy.
08. New PMI model
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
4
The model that I’m going to present here, was developed based on our own experience at above 50 M&A’s of d i f f e r e n t s i z e , i n d u s t r i e s a n d geographies.
Merger and Acquisitions
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
06
3 WAVES of M&A
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 07
Up to the 90’s, classical mergers of large
conglomerates, vertical mergers and raid style
acquisitions
1992-2005, large mega projects, mainly in
pharmaceutical, new form of merger of equals, mainly
European and Asian
2005-now, focusing on the post merger part, new type
of merges - backwards merger, technology
acquisition or “acq-hire”, “rebadging”
Operational integration Cultural integration
22%# 20%# 19%#
38%#
0%#
5%#
10%#
15%#
20%#
25%#
30%#
35%#
40%#
Significantly#Value#destroy#deals#(TRS#less#than#20%)#
Value#destroy#deals#(TRS#Less#than#0)#
Value#creaBng#deals#(TRS#greater#than#0)#
Significantly#value#creaBng#deals#(TRS#greater#than#20%)#
Failure rate
±50:50
Adopted from Accenture 2013 08
Why M&A fails?
Strategy related
Hidden factors
People factors
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 09
STRATEGIC FACTORS R e a s o n s
1
2
Poor Strategic fit
Failure to achieve economy of scale
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
010
PEOPLE FACTORS
1
2
4
5
3 6
Culture merging
Motivation
Exhausting organization
Departure from Key employees
Knowledge transfer
Communication
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
011
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 12
Rate of failure and acknowledging the distinctive types of mergers and acquisitions
led into the need for a
NEW PMI STRATEGY
PMI STRATEGY
Strategic rational
Integration strategy
Process’ type
PMI Model
M
P
O
C
T
R
P
C
O
+o +o E
B
S
P
C
High speed Synergy
Synergetic integration
Low speed integration
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 14
SRATEGIC RATIONAL
Strategy Rational Example
Overcapacity Eliminate capacity for market share and efficiency
Daimler-Chrysler Ceragon -Nera
Geographic Entering new geography or new business
Nestle TEVA Pharmaceutical
Product Extend product line Cisco Verint
R&D Buying innovation rather In house
Facebook Intucell
Convergence Betting on new emerging industry
Amobee - Kontera
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 16
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 18
Process’ type describe the way that the specific M&A took place.
It describes the friendliness – hostility spectrum of the specific deal
Contested purchase • Fits the first M&A wave
• Usually when strong and big company acquire smaller and weaker company
• Speed of the process is very important
• Full dissemination into the acquired company
• Culture assimilation
4 process types
Raid
Organizational Rescue Cooperation • Easy to integrate – not necessarily is
needed
• “ Gentle integration”
• The challenge is the tendency to fully absorb where preservation should be considered
• M&A is understanding that collaboration is better than competition
• High similarity that leads to redundancy
• Usually similar size and strengths which can lead to MOE – merger of equals
• The M&A is a result of former relationship maturation
• Could be equal size company or big company and start-up
• Completion of knowledge or technology
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 21
Integration strategy set the level of integration that is required for the success of specific
M&A.
It relates to 4 main pillars of the company: Business, Structure, Process and Culture
Structure • Identical
• Unrelated
• Related - complementary
• Related - supplementary
INTEGRATION STRATEGY
Business
Culture Processes
• Separation
• Integration
• Assimilation
• Acculturation
• Absorption into the acquirer?
• Best of bread - New structure for the entire company?
• Stand alone unit?
• “Opposite merger”?
• Core – Corporate separation
• Unified systems
• Global effectiveness – local responsiveness
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
New PMI approaches
Task oriented
People oriented
High speed Synergy
Low speed integration
Synergetic integration
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 24
High speed • Tangible • Processes
• Systems • What we do
• Business/technological goals • Unified origination goals
• Presentations
Low speed • Soft issues (trust, job security…)
• interfaces
• Structure, roles and responsibilities
• How we do
• Communicated plan
• “WIIFM” (what’s in it for me?)
• Collaborations
Two approaches
“High speed” usually implement where the critical or the main rational for the merger resides and “Low speed” should be implemented in the rest of the
organization. Both plans should be communicated a priory.
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions 25
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
HIGH and LOW SPEED
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“High speed” is mainly task oriented while “low speed” is mainly people
oriented
“High speed” is WHAT we do, while
“low speed” is HOW we do it
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
MAIN TAKES O u t o f t h i s p r e s e n t a t i o n
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M&A becomes a strategic mean for companies growth and development. The way companies merge and acquire has changed along the years. Based on our vast experience we learn that in order to success you must have at least:
Fit between strategic goal of merger and PMI strategy.
01
02
03
PMI manager or PMI team that has: integrative capabilities, process management methods, and execution approach.
Pre-define merger’s goals (and constantly monitored) – strategic, business, operational and organizational – before closing
SRUR STRATEGIC SOLUTIONS . STRATEGY ORGANIZATION AND PEOPLE © Copyright 2015 SRUR | All Rights Reserved | Powered by SRUR | Srur Strategic Solutions
DO’s and DON’T
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Communicate • Communicate what you know
but also what you don’t know yet
Trust • Trust is the lubricant of the
integration • Promise exactly what you
intend to fulfill
Accessibility • Most of managers tend to
d i s a p p e a r e d a f t e r t h e announcement – Be there!
Clarity • Create clear definition of
success and direction • Eliminate vagueness
“Why” factor • Sense making is a key. Help
e m p l o y e e s a n d s e n i o r executive to justify and reasoning.
Execute • There is lot of “noise” and
room for debates • Move forward – consider,
execute and communicate the reason.
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