AdditionAl PrAise for Cross-Border Mergers

And ACquisitions

“Chinese companies are making record-high investments in overseas merg-ers and acquisitions (M&A), but most of them lack successful practices in those endeavors. This book describes the strategy formulation, transaction planning, execution, and post-merger integration. It provides practical and excellent guidance for cross-border M&A. This is an M&A reference tool worthy of in-depth and repeated reading. In particular, this book not only elaborates the impact of cultural differences in overseas M&A deal execu-tion and post-merger integration, but also provides practical and effective measures to cope with them, which is worthy of special attention and learn-ing by Chinese companies.”

Lijun Liu, M&A Director of State Owned Asset, China Minmetals Corporation

“The compilations of 10 contributors provide the holistic view of the art and science of integration with a continual focus on strategy alignment and drive for accretive value—remarkably overlooked and misunderstood by many IMO practitioners.”

Jonathan E. Bunce, Senior Director, M&A Integration, Intel

“The reader will find many decades of hands-on cross-cultural leadership synthetized in practical concepts. The authors splendidly combine a holistic depiction with great depth on the critical topics. A must-read if you play any relevant role in a cross-border M&A or PMI.”

Helio A. Castano, Vice President, Administration and Integration, Bar-S Foods

“Most recent books about M&A focus on the need to ensure that the inte-gration is based on the objectives and value drivers of the acquisition.  In this book Whitaker takes this approach a step further by applying a cross-border lens. The result is both a good read and a great reference book for the M&A practitioner.”

Pat Belotti, Director of Corporate Development Integration, DocuSign

“A rich database for everyone involved in cross-border M&As; in many cases a ‘must’ in today’s world with globally distributed value chains. The combination of both breadth and depth in one context will attract both professional managers and readers in search of knowledge in this area for the first time.”

Arne Karlsson, Departing Chairman and Former CEO, Ratos

“Given my role at an M&A software company, I have read a library of M&A books. Cross-Border Mergers and Acquisitions  easily rises to the must-read category for M&A practitioners at all levels. The material covers all topics comprehensively, makes complex situations easily understandable, and provides actionable advice to planning and executing global deals.”

Ari J. Salonen, PhD, President, Midaxo

“Cross-border mergers and acquisitions are among the very few strategic moves that can change the competitive position of a company almost over-night. This book provides a unique and comprehensive perspective on how cross-border M&As must be prepared, executed, and managed over the long run. It is a must-read for executives, consultants, and students inter-ested in the topic.”

Bernard Garrette, Professor of Strategy and MBA Associate Dean, HEC Paris

“Cross-Border Mergers and Acquisitions provides the reader with practical, experience-based execution guidance in a complex area that is fraught with many value-destroying pitfalls. It’s critical for M&A practitioners to under-stand the complexity and the cultural differences that are foundational to cross-border work. Without this understanding, value and synergy realiza-tion will be elusive.”  

 Janet Phillips, Senior Director, M&A Integration, Symantec, Inc.

“China’s cross-border M&A thrives in recent years as the result of great suc-cess in economic growth. Besides sustained enthusiasm of inbound invest-ments, capital-rich Chinese investors are increasingly interested in overseas valuable assets, not only in order to acquire natural resources or market entry but also to fulfill the capability gaps in technologies, management, and so on. I find that this book provides comprehensive and practical knowledge in cross-border M&A and believe that it could be helpful for those emerging Chinese players and their global counterparts.”

Yi Bao, CEO, Morgan Stanley Huaxin Securities, and Managing Director, Morgan Stanley  

Cross-Border Mergers and Acquisitions

Cross-Border Mergers and Acquisitions

Edited by

SCOTT C. WHITAKER

Cover image: © ImageFlow/Shutterstock Cover design: Wiley

Copyright © 2016 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Names: Whitaker, Scott C., 1963–Title: Cross-border mergers and acquisitions / Scott C. Whitaker.Description: Hoboken : Wiley, 2016. | Series: Wiley finance | Includes index.Identifiers: LCCN 2016002841| ISBN 978-1-119-04223-5 (hardback) | ISBN 978-1-119-22744-1 (ePDF) | ISBN 978-1-119-22745-8 (ePub) | ISBN 978-1-119-26845-1 (obook)Subjects: LCSH: Consolidation and merger of corporations. | BISAC: BUSINESS & ECONOMICS / Mergers & Acquisitions.Classification: LCC HG4028.M4 W485 2016 | DDC 658.1/62—dc23 LC record available at http://lccn.loc.gov/2016002841

Printed in the United States of America

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To our families, clients, and colleagues . . . and to Sheila for keeping us all on task

vii

Preface xiii

About the Author xvii

About the Contributors xix

PArt ONe

Cross-Border Strategy and Deal Planning

ChAPter 1Cross-Border Deal evolution and rationale 3Gilles Ourvoie

The Evolution of M&A and Cross-Border Deals 4Strategic Motives 23Factors Influencing Cross-Border Deals 28Chapter Checklist 42

ChAPter 2Cross-Border M&A Strategy and Deal Planning essentials 45Michael Holm

M&A Strategy Overview 45Components of Cross-Border M&A Strategy 50Responsibilities and Accountability in the Organization 53Target Company Criteria 56Prepare and Plan for a Cross-Border Deal 59Chapter Checklist 63

ChAPter 3Legal, Financial, Social, and Political Interdependencies with Cross-Border Integration 65Andrew Scola

Introduction 65Legal Impact 68

Contents

Financial Impact 78Social Impact 81Political Implications 82Managing External Risks and Issues 84Chapter Checklist 85

ChAPter 4trends and Leading Practices in Global M&A 87Thomas Kessler

Global Transaction Trends in the Post–Financial Crisis World 88

The M&A Life Cycle 89Developing a Succinct Cross-Border Transaction Strategy 92Matching M&A Strategy with Transaction Reality 98Selecting the Right Candidate 102Planning Cross-Border Due Diligence 105Defining Successful Options and Strategies for Mitigating

Execution Risk in Cross-Border M&A Transactions 107Chapter Checklist 110

ChAPter 5Cross-Border M&A: region- and Country-Specific trends and Deal Planning tips 111Michael Holm

Introduction 111Some Useful Cross-Border Insights and Tips 118Understanding Corporate versus Country Cultures

When Doing Cross-Border M&A Deals 120Chapter Checklist 123

PArt twO

Cross-Border Culture and Leadership Alignment

ChAPter 6Leading during Cross-Border M&A 127Scott Whitaker

Why Leadership Is So Critical during M&A 128Leadership Responsibilities of Acquiring Companies 129Leadership Responsibilities of Target Companies 131

viii Contents

Contents ix

Leadership Responsibilities of the Integration Management Office 133

Symptoms of A Leadership Void and How to Address Them 134

Leadership Leading Practices 136Chapter Checklist 137

ChAPter 7the role of Culture in Cross-Border M&A 139Christophe Van Gampelaere

Understanding Cultural Management 139Cultural Awareness 141Strategy and Culture 149Implementation 156Chapter Checklist 164

ChAPter 8Managing National reactions and Sovereignty Issues 167Gilles Ourvoie

The Ambivalent Relation between Cross-Border M&A and National Interest 168

Inward Cross-Border Deals: Key Restrictions 174International Differences and Similarities 189How to Deal with Sensitive Cross-Border Transactions 190Conclusion 196Chapter Checklist 198

PArt three

Cross-Border Integration, Planning, and execution

ChAPter 9Managing Pre–PMI Due Diligence 203Eitan Grosbard

Introduction 204Traditional Due Diligence 206Integrated Due Diligence—360-Degree Due Diligence 219Conducting the Due Diligence Process 224Chapter Checklist 228

ChAPter 10ramping Up an Integration Management Office and Day One in Cross-Border Deals 229Stefan Hofmeyer

The Impact of an Integration Management Office on Cross-Border Integration 229

Understanding the Integration Management Office 232Establishing and Executing the Integration

Management Office 237Day One: Starting the Integrate and Analyze Phases 247Chapter Checklist 250

ChAPter 11Integration Decision Making and Process Strategy in Cross-Border Deals 251Stefan Hofmeyer

Preparation and Localization of Decision Making 251Primary Decision-Making Tools, Approaches, and

Leading Practices 257Leading Practices for Global Integration Process Change 263Kaizen-Based Leading Practices 266Catching the Wave of Change 268Chapter Checklist 270

ChAPter 12Post-Merger Integration Process, Methodologies, and tools 273Thomas Kessler

The M&A Life Cycle 274Strategic Selection 275Integration Due Diligence 279Pre-Signing 281Post-Signing 283Post-Closing 293Chapter Checklist 298

ChAPter 13Managing Post-Merger Integration Globally 299Eitan Grosbard

Introduction 300Due Diligence 305Relate 306

x Contents

Analyze 316Integrate 318Chapter Checklist 319

ChAPter 14Country-Specific trends and tips for Integration Planning 321Christophe Van Gampelaere

Opening 321A Cultural Overview of the Most Active M&A Regions 323Anglo-Saxon Regions 324Asian Countries 328European Countries and Regions 334Summary 337Chapter Checklist 338

ChAPter 15M&A and Post-Merger Integration Considerations for China and Japan 339Robert Ping Yu, Masaki Yamamoto, and Makoto Ideno

Overview of M&A Trends in China 339Issues and Approaches for Inbound M&A in China 343Issues and Approaches for Outbound M&A from China 353Chapter Checklist for Part 1: China 356Overview of M&A and Post-Merger Integration in Japan 357Issues and Approaches for Outbound M&A and

Post-Merger Integration from Japan 358Issues and Approaches for Inbound M&A and

Post-Merger Integration in Japan 361Chapter Checklist for Part 2: Japan 365

ChAPter 16Cross-Border Synergy Program Management 367Michael Holm

Introduction 367Defining and Validating Synergies 371Structuring Synergy Programs 376Critical Actions to Capture Synergies 378Post-Closing Due Diligence 384Chapter Checklist 388

Contents xi