M&A Integration: Lessons From the Front
Brady Mickelsen, White & Case
ACC Israel Presentation
May 2012
Disclaimers
 I call them like I see them.
 One size does not fit all.
 Objects may be closer than they appear.
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Executive Summary
 What makes integration difficult?
 What lessons can we learn from the failures of others?
 Integration is about performance
 Integration is about planning
 Integration is about people
 What is the role of lawyers (inside & outside) in the integration
process
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What makes integration difficult?
 It’s daunting
 Combining employees, products, services, operations, systems, cultures and
processes--practically overnight
 Most company marriages end as “failures”
 You usually don’t get a dress rehearsal
 It’s “soft”
 Valuation analytics are viewed as being “objective,” while integration is (wrongly?)
viewed as having only “subjective” metrics
 Easier to rationalize shortcomings
 Harder to assign blame
 It’s often not a priority
 Vicious cycle: 1) Execs don’t see integration as “critical”; 2) Execs underinvest
(compensation, executive attention, etc.), 3) Talent/focus is directed elsewhere, 4)
Integration efforts are “half-baked”, 5) Execs don’t see integration as “critical.”
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What can we learn from the mistakes of others?
 Integration is about performance
 Integration is about planning
 Integration is about people
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Integration is about PERFORMANCE
 Every deal has a strategic agenda and the entire acquisition process,
including integration planning, should be designed to achieve those strategic
goals.
 In other words . . .
 Maintain business momentum: remember that profits > process.
 Monitor and measure post-closing performance—and make it personal,
which will make integration a priority.
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Integration is about PLANNING
 A wish is not a strategy
 Companies don’t integrate themselves; it’s integration not improvisation
 Executive endorsement and cross-functional integration teams are critical
 For serial acquirers, standardization improves execution AND innovation
 Be decisive & disciplined
 Assess, evaluate & choose (“best of the best”, etc.)
 Start early
 Integration planning should begin no later than diligence
 Some buyers appoint integration leads before they make an offer
 Be prepared to articulate integration plans at announcement
 Forces internal infrastructure to be ready to handle integration
 Internal messaging reassures employees of both companies
 External messaging reassures customers, suppliers, etc.
 Over-communicate!
 Begin to execute on integration plans at closing
 Watch “gun-jumping” and other regulatory restrictions
 Articulate and follow a timetable
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Integration is about PEOPLE
 People are often the key to whether an acquisition is a “success”
 Critical that the Buyer wins the hearts and minds of employees (new and old)
 “If people are not united around a common vision, and they don’t
understand their individual roles, responsibilities, measurement systems
and reward systems, the confusion that results can be both
demoralizing and inefficient.” John Lanier—GE Capital
 Translate strategic goals into the “What about me?” mindset
 Provide information & access (e.g., town halls, FAQs, site visits, etc.)
 Don’t ignore culture
 Culture clash can lead to an entire spectrum of problems
 From polite paralysis (best-case) to trench warfare (worst-case)
 Case study: HP/Compaq
 Importance of speed and certainty cannot be understated
 Gives clarity, which removes distractions and inefficiencies
 Reinforces vision, which improves morale and execution
 Deters ‘poaching’ and reduces time spent on LinkedIn
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What is the role of lawyers in the integration process?
 In-house Counsel
 Legal integration vs. operational integration
 Gatekeeper
 Enforcer
 Lone voice of reason in a world gone mad….
 Outside Counsel
 Diligence
 Legal compliance
 Antitrust
 Employment
 Tax planning & implementation
 Jurisdiction-specific guidance (beware of the stand-alone advice!)
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Worldwide. For Our Clients.
White & Case LLP
3000 El Camino Real
5 Palo Alto Square, 9th Floor
Palo Alto, CA 94306
United States
Tel: + 1 650 213 0300
Fax: + 1 650 213 8158
www.whitecase.com
Brady Mickelsen
Partner, Silicon Valley
Tel: +1 650 213 0300
Email: bmickelsen@whitecase.com
Brady Mickelsen is a member of the Mergers and Acquisitions (M&A)
practice for the Americas. He has substantial experience advising
public and private clients in M&A, initial public offerings, venture
capital and private equity investments, public filings under federal
securities laws and compliance with Sarbanes-Oxley, NYSE and
NASDAQ requirements and other corporate governance matters.
Prior to joining the Firm, Mr. Mickelsen was responsible for more than
60 acquisitions and strategic investments with an aggregate value of
over US$40 billion during his tenure as Vice President and Associate
General Counsel at Oracle Corporation, including Oracle's recent
acquisitions of BEA Systems and Sun Microsystems. His experience
driving M&A activity, coupled with his technology background,
provides a unique perspective on deal-making for both US and global
clients.
In this presentation, White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP,
a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.