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1、Christopher Humphry,Market Entry Strategy&Target Search&Selection,M&A MasterClass19th&20th March 2001,Contents,Introduction and backgroundMarket entry strategyTop Rose Case StudyTarget search and selectionMerrill Lynch Case study,Introduction&Background,Market entry strategy and target search and se
2、lection are concerned with strategic questions on how to effectively grow or reorganise the business,Where should we invest?What scale should we consider and when?How can we divest?,Market Entry Strategy,Target Search&Selection,Commercial Due Diligence,Strategic Valuation,Securing the Deal,Integrati
3、on or Merger,Whom should we buy?How good a fit will they be?Who else might be interested?,CGE&Ys legacy organisations bring 15 years experience in pre-deal M&A services to the table,Market Entry Strategy,Target Search&Selection,Commercial Due Diligence,Strategic Valuation,Securing the Deal,Integrati
4、on or Merger,Pre-Deal,Deal&Post Deal,Gemini,SchroedersMerrill LynchRandstadtABN AmroUnited Biscuits,Ernst&Young,Rhone-PoulencLloydsAbbey LifeEKO Nobelxxxxxx,Consequently,in building our new M&A service offering we have built a strong pre-deal focus,Criteria developmentPre-screening&pre-selectionProf
5、iling of candidatesChoice/PreferenceFirst Contacts,Target Search&Selection,Commercial Due Diligence,Market entry strategy,Strategic Valuation,Post Merger Integration,De-Merger and Separation,Underpinned by effective Change and Programme Management,Strategy reviewMake vs.buyBusiness case developmentO
6、ption analysis,Target analysisMarket dynamicsTarget position and trendsProcess reviewFit analyses,Synergy quantificationBusiness evaluationIntegration requirementsNPV,EVA,CFROI etc.,Integration blueprintingExecutive alignment&selectionOrganisation designTransition planningProgramme design and set-up
7、Risk managementOrganisation mobilisation,De-merger blueprintingExecutive alignment&selectionOrganisation designTransition planningProgramme design and set-upRisk managementOrganisation mobilisation,Focus of this presentation,Top Rose Project,Market Entry Strategy,Randstadt,a leading temporary servic
8、es firm,hired CGE&Y to investigate growth opportunities in the high-end segment of the market,Teams Objectives:Examine the feasibility of a high-end professional services businessArticulate the vision for the businessIdentify critical success factors for building the businessOutline strategic option
9、s and organising conceptDevelop financial scenariosOutline a high-level implementation plan,Our approach leveraged external and internal analyses to identify the optimal opportunities for the client,CapabilitiesCase studies,Entry StrategiesMarketsProductsSegments,Market size and growthCustomer prefe
10、rencesGapsBenefits Case,CompetitionAlliances/acquisitions candidatesEntry strategy,“Which markets.with what offers.entered how.at what cost,Quick WinsRequired:SystemsOrganisationMeasuresProcesses,Select MarketsSeries of options,Achieving competitive advantage,Offer development and sizing,Align Visio
11、n,Short-list opportunities,Agreed entry strategies,Implementation planning,Opportunity identification,Detailed in-market research,August-September,September-November,Nov-Dec,Internal Focus:,Market Focus:,Focus and level of detail:,Macro,Micro,Each phase produced analyses that enabled the client to m
12、ake decisions to move forward,Executive alignment re:expansion strategy,e.g.:Scope and timingOffensive vs.defensiveAgreed country screening criteriaSet of prioritised hypotheses:ProductsServicesDistributionUnderstanding/synthesis of:Lessons learned to date in-countryPrevious researchList of exportab
13、le core competencies and gaps:Corporate-levelAcquisitionsIn-countryShort-list of prioritised countries:Phasing calendar,NovemberDecember,SeptemberNovember,AugustSeptember,Agree Business Goals/Capabilities/Opportunities,Identify Offers and Market Entry Strategies,Agree Entry Strategies and Build Impl
14、ementation Plans,Case studies:New market entrants alternate strategiesBy country:Competitive scan“White spaces”Options:products,servicesRequired capabilities and gapsPotential entry options:AcquisitionsOrganic build alliancesPreliminary market-entry partner candidates.Cross-market opportunities:Cent
15、ral utilitiesTop-level benefits caseAgreement:markets,offers,entry strategies,Detailed business case by countryAgree screening criteria:Acquisition candidatesPotential partnersShort-list(cut 1)acquisition/partner candidatesValue propositions/countryImplementation plans:InfrastructureOrganisationMark
16、etingNegotiations,Output:,Our approach involved developing criteria for evaluating the market opportunity of Top Rose in each of the five largest temporary services markets,Market sizeGrowth prospectsCompetitive intensityCultural factorsEase of entry,AmbitionSizeGrowth rateCritical massCosts and ris
17、ks,TestAcquireGrow,Selection of highest opportunity countries and LOBs,Market entry screening criteria,Scoring,prioritisation and trade-offs,Preferred market entry strategy,The market entry strategy decision is a function of several key factors,Ambition/size,How big you want to be in what timescale
18、describes the growth required to succeedIf this growth far exceeds the market growth,then you are probably more likely to succeed if you can buy some market share up-front.,Market size and growth,How large is the market?How fast is the market growing?A slow growing or mature market makes building up
19、 a presence more difficult,and thus indicates acquisition as the preferred route.,Ease of entry,How competitive is the existing market?Number and concentration of playersWhat are the hard entry barriers(capital)?What are the soft entry barriers(eg.existing demand side customers tied into competitors
20、)Are there strong regulatory barriers,Test,make or buy?,These conditions vary by LOB and by country,and different strategies may be appropriate at different times,Culture,How used are local firms to a flexible employment cultureHow important are local cultural factors such as language,people,company
21、 contacts/networks,education to building up a business?If very important,then acquiring a local company may be a more successful way to enter the market.,Acquisition scores as the preferred entry strategy in most cases,Country,Line of Business,Market Size,Growth,Current Capabilities,Competitive Inte
22、nsity,Culture,Germany,France,NL,UK,Preferred Market Entry Action,IT,Large,High,Low,High,Local,Tech,Large,High,Low,Medium,Local,F&A,Small,Low,Low,Medium,Local,GM,Small,Low,Low,Medium,Local,IT,Large,High,Low,High,Local,Tech,Medium,High,Low,Med-High,Local,F&A,Small,Low,Low,Medium,Local,GM,n/a,n/a,n/a,n
23、/a,n/a,IT,Medium,Medium,Med-High,Med-High,International,Tech,Medium,Medium,Med-High,Med-High,International,F&A,Small,Low,Med-High,Med-High,International,GM,Small,Low,Med-High,Med-High,International,IT,Large,High,Low,High,International,Tech,Large,High,Low,High,International,F&A,Medium,Medium,Low,High
24、,International,GM,Medium,Medium,Low,High,International,Acquire,Acquire,Acquire,Test/Acquire,Acquire,Acquire,Test/Acquire,-,Grow autonomously,Grow autonomously,Acquire,Acquire,Acquire,Acquire,Acquire,Acquire,Priority,Priority,Priority,Priority,Priority,Priority,Priority,Target Search&Selection,Strate
25、gic Rationale,Seeking dramatic growth overseas,Merrill Lynch tasked CGE&Y with a framework for identifying a UK acquisition target,Facing an increasingly domestic US market,the bank was seeking dramatic growth through overseas expansionGrowth through acquisitions to stave any takeover threats was a
26、key element of the clients strategy,however favourable market conditions had driven up stock prices and hence market capMerrill Lynch and CGE&Y had agreed that the UK held sufficient opportunity for market growth through acquisition,CGE&Y Engagement,CGE&Y developed an objective screening process tha
27、t allowed the team to narrow down a“long list”of candidates quickly and recommend targetsCGE&Y reviewed the available companies in the most profitable areas of the value chain and developed a criteria and approach for screeningCGE&Y deliverable was provide the client with a short-list of companies t
28、o target,Target search and selection was the pivotal stage post in the project roadmap,1.Conduct Analysis,2.Recommend Market Entry Strategy,3.Screen Acquisition Candidates,4.Build Economic Model,5.Plan Implementation,a.Market Size and Growth,b.Competition,c.Distribution Channels,d.Legal and Regulato
29、ry,e.Customer Feedback,f.Comparing US and UK Markets,g.Segmentation,a.Build vs.Buy vs.Ally options,b.Financial Impact,a.Fund Management,b.Distribution,c.Administration,a.Assumptions and drivers,a.Implementation Challenges,b.Value propositions,Project Roadmap,We used a 4 screen process for identifyin
30、g a core set of acquisition candidates in the fund management segment of our search&selection,Screen 1,Screen 2,Screen 3,Screen 4,Top 25 Asset Managers and Top 25 Life Assures,Relevant AUM 1bnRatio Relevant AUM/Total AUM 40%Ease of Acquisition level 1,Pensions focus:Product mixAdmin.capabilitiesTarg
31、et marketDistributionFund manager performance,Transportability:Local fund capabilityPhysical distributionLegislative knowledge,Cultural fitPotential purchase priceDue diligence:Financial analysisAdmin systemsEase of acquisition level 2,Acquisition Candidates,18 Candidates,The imperative is to elimin
32、ate as many candidates in screen 1 as possible,Key:Why rejected,Rejects(34),1a)Relevant assets 1bn1b)“40%rule”1c)Acquisition ease,c PDFMb Barclaysc Hermesb MGAMc Lazardb Goldman Sachsc Baringc Fidelityc LGTc HSBCc Gartmore,c Jupiterc Kleinwort Bensonb Commercial Unionb Prudentialb Royal and Sunc Abb
33、ey Lifeb General Accidentb Clerical Medicalc Irish Lifeb Scottish Amicablec Threadneedle,b Scottish Mutualb Norwich Unionb Britannia IMb Co-Op Insuranceb Royal Londona Scottish Lifea Prolifica United Assurancea Britannic Assurancec Colonialc Sun Lifec Amvesco,Note:Market capitalisation and other fin
34、ancial data was used as supporting data,but not as a screen,We found a multi-step approach was critical to developing an objective screening process,Multi-step screening processIt is critical to develop an objective screening process:Candidate list put forth by clients often are emotionally and poli
35、tically motivated.Need to eliminate as many candidates upfront as possible as subsequent screens require extensive research and analysisThe“aquirability”of a company based on ownership structure,etc.is a screen 1 criteria and can be used to narrow down the“long list”quickly:Other“practical”criteria
36、such as assets or size of salesforce also help to reduce the pool to manageable size.Must ensure that the criteria used differentiate between candidatesWeighing of criteria helps reflect criteria with greater or less importance.,However,no screening process is water-tight,so we built in“common sense
37、”checks that re-assessed rejected candidates.,The value CGE&Y delivered resulted in major acquisition and client satisfaction,CGE&Ys rigorous,informed search&select policy allowed the bank to make a confident value adding acquisition decisionThe ultimate acquisition created one of the largest asset
38、management groups in the world,“This acquisition represents a quantum leap towards our goal of becoming a global leader in the asset management business,one of the most attractive segments of the financial services industry!”Merrill Lynch,Chairman&CEO,CGE&Y market entry strategy and target search&se
39、lection team,Financial ServicesFrances Mann,David BarrettChristopher Humphry,Telecom Media NetworksVal Spriet,Life ScienceLindsey Armstrong,xxx,xxx,Please do not hesitate to call Angus Knowles-Cutler or any of the team.,Appendix,Key findings of the study,Key Content Findings:,Growth rates difficult
40、to project forwardLegal regulations environment key driver and constraintSignificant fragmentation in the competitive frame,Key Process Findings:,Summary of Findings,Build/acquire/ally entry strategies to produce highest revenues and profits,Number of acquisition targets is smallAcquirability is a m
41、ajor de-selectorThere is“no silver bullet”acquisition that delivers all capabilities requiredIFA networks are not worth buying,Model drivers:Number of customers,AUM,and productivity of sales people,Value proposition of“Integration”is unique in very fragmented competitive frame,Size market by AUMComp
42、are stage of market evolution using US market as a benchmarkThere are three core building blocks for setting up a strategyA roadmap of products and AUM is a valuable tool.,Eliminate different options,using generic value chain and build/acquire/ally options,Use 3-4 step screening process to:Objectify
43、 candidate selectionGet to short-list quickly,Clients need to drive“own”acquisition candidate modeling,We designed a three phase project enabling the team to narrow down options as quickly as possible,Identify alternative entry strategies and align management team,Inventory of experiences and compet
44、encies,Recommend short-list of expansion countries,Identify product and service offering opportunities,Build detailed business case,Create short-list alliances/acquisitions,Refine offers and entry strategies,Build implementation plans,Perform detailed analyses of offer opportunities by market and region,Draft entry strategies,Scan alliance and acquisition candidates,Prepare benefits cases,Short list countries and product opportunitiesAgree scope of entry strategies,Which Country(ies)Which offersWhich alliance/partner acquisition candidates,Agree which markets/acquisitions/alliance partners,
