3. Agenda Introduction Size-up and Strategic Fit Value created by the acquisition Main challenges First 90 days Then 100 days Organization Structure Risks Strategy of new Pegasus Conclusion
8. How will Call-Up’s acquisition and absorption create value for Pegasus? Evaluation and size-up competence Highly successful & lean operations Identification expertise Opportunity driven culture Integration knowledge & experience Enhance market share as well as break into new markets Achieve cost synergies (lower unit costs) Addition of talent management & highly skilled employees Elimination of a competitor Attain additional infrastructure (call centres)
16. First 90 Days prior to complete takeover Executive Decisions “Due Diligence” Create shared sense of vision Hire an outside Consultant and set up “Go Team” Substantive Actions Develop stakeholder communications: Employee & Customers Development of Strategic, Integration and Operational Plans HR Decisions: Executive and Staff; Incentive packages for key employees Main Enablers and Resistance Sources Identification of human flywheels Identification of sources of resistance
17. First 100 Days after complete takeover Operations Focus on current customers Rationalization of service lines and resources Focus on key clients in Call-up Finances Lower Overhead cost Decrease unprofitable accounts Reduce accounts receivable policy at Call-Up HR Changes Increase bandwidth of supervisors of Call-Up Homogenized compensation package Loyalty transfers of key employees to Pegasus Massey’s advisory role Realignment of leadership Address Regional VP concern
18. Organizational structure Advisor Lionel Massey Advisor Paula Massey President and CEO Allan Small Vice President HR Lloyd James Vice President Operations Mary Pratt Vice President Projects and Acquisitions Michel Lemaire Vice President Sales and Marketing – Technology Anwar Mahdi Vice President Sales and Marketing – General Sheila Hancock Vice President IT Charles Wong Vice President Finance James Salter Call-Up Operations Pegasus Operations Regional Manager Markham Colin Bower Regional Manager Newmarket (to be announced) Regional Manager Hamilton Kent Jones Regional Manager Dartmouth Ernie Gallo Regional Manager Halifax Centre Joe Richards Regional Manager Moncton Centre Corinne May Regional Manager Moncton North (to be announced)
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20. Strategy for the new Pegasus “Our mission is to expand our customer base through continued excellent customer service and through a pricing strategy that maximizes our profit margins.”
(core competency)Flat and efficient organisation structure.. Strong sense of Teamwork & learningHigh Quality skilled technical employeesRelatively low level of employee engagement Little standardization of operating practices Low employee engagement Strong Financials & Cost Management
Increase scale & service range of operations (enhance market share and revenue)Taking over the competence and value set of the executive team in call up
Degree of integration
Engagement of Employees: Encourage team work and knowledge sharing, including best practices sharing Loyalty transfers: Incentive packages for key employeesReduction of supervisory and management staff relative to hourly employees in acquired call centers Lower OH: Restructuring organization to decentralize functional staff in IT and Human resources onto the operating locationsProvide the Masseys with appropriate consulting/advisory roles within area of expertiseEliminate duplicate positions and provide appropriate severance packages for senior employees
So we will now move on to talk about the key risks associated with the acquisition and what actions can be taken to mitigate these risksOne key risk is a drop in employee morale and erosion of positive working culture due to poor cultural fit. This could be amplified by employee concern over job security and unequal compensation. The best way to mitigate these risks is to carry out an assessment of the similarities and differences between the cultures in the two companies and formulate specific integrative plans accordingly, as well as initiating communication with Call-Up’s employees as soon as possible.Another significant risk is that Call-Up’s rivals can exploitation of the transition phase at Call-Up as it attempts to negotiate contracts with its current customers at higher rates with little improvement in efficiency and service levels. An mitigating action in response to this would be to reassure key clients of their immediate plans and proceed quickly with operational improvementsAnother potential pitfall is the loss of business momentum at Pegasus itself as key staff lose focus during the time of acquisition. Pegasus can reduce the risk of this happening by hiring an external consultant to support the Chief Operating Officer as she spearheads the integration process so she remains in control of existing operations.The final major risk is that profitability will fall in the longer term.In order to prevent this we suggest the early transfer of Pegasus’ operating practices and replication of hiring and training policy in the newly acquired units.
