Archive for August 18th, 2009


German M&A specialist on complex projects

Tuesday 18 August, 2009

I caught Kai Lucks presentation on the complexity of M&A @ the Alliance of Merger & Acquisition Advisors summer conference.  Kai was in charge of mergers & acquistions for Siemens AG for many years & is now the president of the German Federal M&A Association & CEO of the Merger Management Institute.  He declined my offer to post his presentation, so I’ll summarize:

Siemens invested 32B Euros in acquiring companies in energy/environment, health systems, & automation/control of industrial/public infrastructure over the last 10 years.

With the acquisitions of Dade Behring, Bayer Diagnostics, & DPC, Siemens created a world-leading medical diagnostics company.

Siemens has a structured/phased integration process:

  1. preparation/id key positions
  2. set goals
  3. integrate/transfer to line management
  4. benchmarking

Mechanical & control design will converge in the next 10 years.

Integration success is measured in 3 dimensions:

  1. customer financials
  2. milestones
  3. attrition rates

The acquisition of the Danish firm Bonus wind power offered superproportional growth by expanding to international markets.

M&A performance is the key challenge-big M&A performance is even weaker.

Siemens’ closed loop approach works like this:

  • strategic planning makes the business case in the preparatory phase
  • deal details & integration preparation are worked out during the transaction phase
  • contract management & implementation/controlling are installed in the implementation phase
  • business management transfers know-how back to strategic planning

Professional management can strongly improve results.

Knowledge/experience management of 12 drivers based on volume, complexity, & restructuring, is key to success:

  1. Sales volume-own unit
  2. sales volume-candidate
  3. own employees
  4. candidate employees
  5. countries
  6. locations
  7. businesses
  8. value chain
  9. improvement
  10. manufacturing heads reduction
  11. locations reduction
  12. cultural change

There are 4 M&A project types:

  1. acquisition only
  2. cost cutting
  3. complementary technology
  4. integrated acquisition/re-engineering

Acquisitions of Sylvania lamps, Westinghouse power generation systems, & Huntsville automotive components provided different examples of experience management.

Utilities & power generation are in opposite phases of the merger endgame (opening, scale, focus, balance/alliance).

In 2007:

  • Europe bought $35.8B in America
  • America bought $27B in Europe
  • Asia bought $9.6B in America
  • America bought $5B in Asia
  • Europe bought $.5B in Asia

My take:  it’s a shame Dr. Lucks chose not to allow his presentation to be published because he puts together some of the best presentations I’ve seen.  In some ways they are typically German, i.e. very structured & organized, but in many ways that’s a very good thing.