This document discusses acquisition basics and how they apply to everyday business. It provides three ways for a business to grow: through new capabilities, brands, geographies; through new products or customers at 12-15% growth; or through price increases at 4-6% growth. However, 70% of acquisitions fail to create value due to inadequate planning, resources, communication, or misaligned incentives. The document outlines characteristics of successful acquirers, including having the right perspective, prioritization, planning, and process. It also discusses focusing efforts on integration post-close to prevent issues like delays in asset appraisals negatively impacting reported results.

1. ACQUISITION BASICS(AND HOW THEY APPLY TO YOUR EVERYDAY BUSINESS) September 21, 2010

2. Three Ways to Grow New capabilities, brands, vendor relationships, geographies Double in five years 20%-30% Each wedge requires increased aptitude 12%-15% New products, new customers, or both, growth through increased volumes 4%-6% Same products to same customers, growth through price increases

5. Insufficient resources

6. Weak or infrequent communication

7. Misaligned incentives

8. Buck-passing

9. Uneven commitment levels

10. Silent skepticismBy studying what great acquirers do, we can learn a good deal about how to manage general business

11. Characteristics of the Winners Perspective: an operational endeavor, driven by the commitment and engagement of the team Winners Prioritization: the whole company understands what to focus on, and a sense of urgency is ubiquitous Planning: every team member knows their role in the process, and no bridges are left to be crossed later Losers Process: a project plan is made and followed, and communications rhythms are deliberate and consistent

13. Broader understanding of problems and more creative solutions

16. Also focus around the edges working “on the business”

18. Don’t allow special initiatives to replace daily tasks

20. Team never reaches peak capacity

21. Attention to core business suffers

23. Other initiatives deliberately suspended

24. Team members rally to exert maximum effort

25. Aggressive timelines mitigate “limbo” for constituenciesLevel of Effort Time Day to day tasks Special initiatives Acquisition integration Close

27. Unpopular

28. Vital “Plans are useless, but planning is indispensible” -- Dwight Eisenhower Doing BroadlyContemplated

30. Physical asset appraisal outsourced

31. CAO allows project to slip, not completed until 5 quarters after close

32. Reported results showed D&A level 30% higher than guidanceWritten Milestones & Ownership Documented Deliverables & Accountability Communication Rhythms A buck-stopper to drive the process You knew this before I got here. Are you doing it this week? Will you do it next week?

33. So What Does it Mean For You? Should you consider acquisitions? My organization has the first two “wedges” down No Yes Get financing squared away Come to a natural stopping place on major projects Put the principles into practice Identify the strategic initiatives with the lowest cost/risk and greatest benefit Use the “four P’s” to guide implementation Yes I can tolerate some risk to drive growth No Use the “four P’s” to drive continual improvement in the core Be judicious in how hard you push the second wedge