building global acquisition integration capabilities
TRANSCRIPT
The contents of these pages are copyright © 2010 Frost & Sullivan. All rights reserved.
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Building Global Acquisition Integration Capabilities
A three-page excerpt from our 17-page Best Practice Guidebook:
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The contents of these pages are copyright © 2010 Frost & Sullivan. All rights reserved.
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guidebook summary
Firm: Weir Group PLC
Industry: Engineering
Headquarters: Glasgow, United Kingdom
Geographic Footprint: Global
Ownership: Public
Revenue (2009): £1.4 billion ($2.1 billion USD)
Building Global Acquisition Integration Capabilities
Problem: Given the unpredictable location and frequency of its global M&A activities, Weir Group seeks a scalable integration process that uses regional resources to augment a small corporate team.
Solution: Weir develops a cross-regional, matrix-based process for acquisition integration that includes:
Part-time, region-specific integration teams•
Formal integration plans that span pre-announcement activity to •post-integration monitoring
Comprehensive training and support resources•
Business Results:600% increase in trained integration team members•Four successful acquisition integrations since 2005•
Resources Required: A dedicated acquisition leader in the corporate development team•1–2 months to develop processes, toolkit, and training program•6 months to deliver training to business divisions in key regions•
Applicability of Best Practice to Executive Functions:
Function Applicability
CEO/Leadership
Corporate Development
Best Practice Guidebook
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The contents of these pages are copyright © 2010 Frost & Sullivan. All rights reserved.
best practice guidebookgrowth team m e m b e r s h i p™
Source: Weir Group PLC; Growth Team Membership™ research.
Corporate Integration Team Regional Integration Teams
Weir pairs corporate and regional teams to meet capacity requirementsPost-Acquisition Integration Team Structure
Steering CommitteeRole and Responsibilities: strategic committee that sponsors the acquisition.The composition of the steering committee depends on the scale of the acquisition and may include: Head of Acquisition Integration, CEO, Deal Sponsor, the Managing Director of the relevant Weir division, and the CFO.
Corporate Support TeamRole and Responsibilities: support the Head of Acquisition Integration with:
Creation and distribution of corporate communications•Management of branding components•Performance of corporate service activities (e.g., company registration •and property management)Supervision of IT policies and development related to branding•Administration of target financials and risk reporting•
Integration TeamTime Requirements: spend approximately 50% of their time on integration activities, with more time required early in the first 100 daysRole and Responsibilities: a cross-functional team responsible for interacting with the acquired company, identifying gaps and synergies for the integration plan, and implementing integration activities during the first 100 days and beyond if necessary
Head of Acquisition IntegrationRole and Responsibilities:
Reviewing the integration plan•Approving communication strategy•Monitoring the integration reviews•Mobilizing the necessary resources for the integration•Coordinating updates with the Steering Committee•Training integration teams•Developing support materials for the integration teams•
Integration LeaderTime Requirements: full-time for the duration of the integrationRole and Responsibilities: local divisional executive responsible for:
Managing the integration•Monitoring the milestones in the action plan•Conducting team reviews•Mobilizing necessary regional resources for the integration•Examining the cultures and customs of the parent and acquired company•Coordinating updates with the corporate team•
Regional or division leaders nominate the Integration Leader, whose functional expertise reflects the primary value-drivers of the acquisition. (For example, if an acquisition involves the Oil & Gas division, then the Integration Leader would be the current Oil & Gas Leader for the region.)
The corporate team runs the integration process for all large-scale acquisitions (usually deals worth more than £50 million). Smaller deals are managed locally, with oversight by the corporate team.
business case for regional integration teams
During Weir’s annual strategy review, the executive and divisional leadership planned on significant M&A activity. Weir identified two options to manage this activity: 1) creating a full-time, corporate integration team or 2) creating part-time integration teams within the divisions by region. The cost and periodic nature of M&A activity ruled out option one. The regional teams were also a better fit with Weir’s decentralized business model. The Head of Acquisition Integration collaborated with the CEO to create the structure for the part-time integration teams and secure buy-in from the divisional leadership.
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The contents of these pages are copyright © 2010 Frost & Sullivan. All rights reserved.
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Source: Weir Group PLC; Growth Team Membership™ research.
key takeaway: Establish regional integration teams to support long-term corporate growth and M&A strategy
Weir creates integration teams based on its existing and desired global footprint
Region-Specific Integration Teams
Illustrative
determining the need for regional integration teams
The corporate team establishes region-specific integration teams based on priorities determined by the CEO, Division Leaders, and the Executive Board. This decision is based on:
Strategic plan for the division •Company growth strategy for •the regionDivisional presence in the •region especially location of key executive teamsAvailability of talent to draw •from for regional integration team
North America: Division B Integration Team
Europe: Division C Integration Team
North America: Division A Integration Team
Africa: Division A Integration Team
Europe: Division A Integration Team
Australia: Division A Integration Team
Europe: Division C Integration Team
Strategic growth options within region for products and services
Large pool of talent for regional integration team
Strong Division C management structure in Europe
benefits of regional integration teamsOptimizes resource management, since integration team members support M&A activity as a part-time responsibility, which avoids the need for a large and I. expensive corporate team Decreases the time it takes to mobilize the integration team and get them to the target’s locationII. Decreases preparation time for the integration team due to the local team’s knowledge of regional regulations, business environment, and cultureIII.
The contents of these pages are copyright © 2010 Frost & Sullivan. All rights reserved.
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