acquisition of ehro
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8/8/2019 Acquisition of eHRO
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Acquisition of eHRO
by
ACS (a Xerox Company)
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Contents
Companies Introduction
Need of Acquisition
Target Search
Target Evaluation Negotiation Details
Type of Deal and Deal Structuring
Legal Aspects
Organization's Integration Planning Challenges Seen (Acquisition, Post Acquisition)
Benefits Hoped to be Reaped
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News
May 25, 2010: Affiliated Computer Services
(ACS), a Xerox Company (NYSE: XRX),
announced a definitive agreement to acquireExcellerateHRO, LLP (EHRO) from Hewlett-
Packard Company. The transaction is expected
to close following the conclusion of the
customary closing conditions.
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ACS, a Xerox Company
Provides InformationTechnology, Business ProcessOutsourcing (BPO) and Human Resources (HR/Benefits)services
ACS is based in Dallas, Texas
Current CEO is Lynn Blodgett
Operates in 100 countries, generating over $6 billion annually
As of September 2009, ACS employs approximately 74,000people
On September 28, 2009, Xerox Corporation announced plansto acquire ACS in a $6.4 billion transaction - The deal closedon February 8, 2010
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ExcellerateHRO
ExcellerateHRO is the HR Services business of HP.
Offers a flexible portfolio of solutions to mid-size and
large organizations around the world. More than 20 years ofHR/benefits expertise and 45
years ofTechnology and business process
outsourcing (BPO) experience.
400 clients in the United States, Canada, EMEA(Europe, Middle East and Africa) and Latin America
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Need of Acquisition
Value Addition (1+1 = 3 for clients)
Geographical expansion
Market Consolidation Mid and Small size client capturing
Technological expertise and expansion
Market Strategic Move (to show clients we arenot moving out of HR business after
Acquisition done by Xerox)
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Target Search
ACS was actively looking for a partner
ACS had a definite budget allocated for an
Acquisition ACS was looking for a partner who was strong
in the verticals (Pension Administration)where ACS did not have an edge
HP had put eHRO up for sale
Must Have points were identified by ACS
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Target Evaluation
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Target Evaluation
Annual Revenue Generated
Liabilities on Target company
Annual Penalties Payout
Synergies That Could be Generated
Cost Reduction Measures leveraging ACSsBusiness
Integrating Operations Integrating Technology
HPs Evaluation of Towers Perrin
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Due Diligence
A legal structure review, including tax liabilities, employeedisagreements, class action suits and other pending litigation.
A review of ownership and capitalization structure.
A general breakdown of the customer base, with a more
detailed analysis required to make an effective assessment. A review of intellectual property rights, including trademarks,
patents, and other areas of unique and intrinsic value.
Outstanding liens that are guaranteed by the company and/orits owners.
Technology evaluation that includes development tools,cycles, processes, and personnel.
Financial statement review for the prior three to five years,including the minutes of board meetings.
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Type of Deal and Integration Planning
All Cash Deal Neither ACS is now listed nor
is eHRO
Structural Integration: eHRO merged in ACS(not Xerox directly)
Functional Integration: eHRO merged with
HCMS vertical of ACS
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Legal Aspects
US company regulatory bodies showed some
objection to such a consolidation, due to
industry attaining monopolistic behavior
Minor delays in merging the European
branches directly to US ACS
No other Legal issues were reported apart from
these
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Challenges Seen
Xerox Acquired ACS while ACS was in negotiations
with eHRO
Resolved by taking again a buy-in from executive
management of Xerox
Other big players in HR services were in bidding list
Resolved as eHRO also saw a natural synergy with ACS
HR and ITeS Cultural Mismatch Is currently being worked upon. Steps like carving out adifferent HR vertical (HRSS) in ACS are taken
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ACS-eHRO: A Perfect Fit
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Benefits Hoped to be Reaped
Growth: The two companies strong marketpresence, go-to-market flexibility, fit-for-purpose,size, scale and scope are the foundation for
unmatched global competitive advantage andenterprise growth.
Stability: The acquisition will deliver long-termstability for clients of both ACS and EHRO
Expertise:No other provider can match thecombined companies deep domain expertise, globalsize and scope; and long-term market commitment
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Benefits Hoped to be Reaped (Cont..)
Innovation: The acquisition will accelerate anddeliver an unprecedented level of product and serviceinnovation for clients
Service:We have the flexibility to allow clients tochoose either a co-source or outsource servicedelivery model without disruption or change intechnology as well as to off-shore, on-shore or near-shore.
Execution: The scale of the combined companieswill generate better efficiency and execution; de-riskimplementations and produce an outstanding serviceexperience for our clients.
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Thank You
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