1. Managing the Merger & Retaining People-Based Economic Value Patrick Donohue National Lead Partner Human Capital M&A Services Deloitte & Touche

2. Priorities and Strategies in Managing a Merger Speed and Simplicity Minimize Disruption Strategic Fit Optimal Cost

3. Priorities and Strategies in Managing a Merger 2. Speed and Simplicity 1. Minimize Disruption 4. Strategic Fit 3. Optimal Cost 1. Optimal Cost 2. Strategic Fit 3. Speed and Simplicity 4. Minimize Disruption Day One On Going Operations

4. Infrastructure Strategy Alternatives  Absorb Bringing the target into the new parent –Advantages: The “Obvious Choice”, simple and direct, demands little executive time –Disadvantages: “Conquering Army” approach, reduced value on key assets and people in the acquired company, great strain on parent company resources  Design A New Infrastructure –Advantages: Optimal strategic fit and cost structure. –Disadvantages: May be more disruptive during transition and add time and complexity to the launch of the new organization.  “Clone & Go”  Duplicating the infrastructure of the target –Advantages: It works, its quick, and can minimize disruption. Can be an effective temporary strategy. –Disadvantages: The adopted model likely to be a poor fit for a smaller, younger organization.

5. Especially During a Merger Pay Alone Will Not Keep People Fair Market Compensation Trust The Job Career & Growth Opportunity Wealth Accumulation Total Rewards Strategy

6. Retention of People-Based Economic Value Starts with the Business Case of the Merger  Capitalize on Economies of Scale – Reduce overhead – Eliminate redundancies – Access markets  Leverage Core Business – Forward integration – Backward integration – Acquire substitute product – Grab market share  Transfer Skills/Technologies – Acquire distribution channel – Make a bet on new technology – Invest in new product line

7. Start With the Business Case (continued) Capitalize on Economies of Scale Leverage Core Business Transfer Skills/Technologies Degree of IntellectualExtent of Capital TransferRetention Effort ModerateFocused HighBroad Very HighExtensive

8. Where is the Intellectual Capital? Leadership Expertise Culture Human Capital Structural Capital Customer Capital Process Efficiency Database/Knowledge Base Network/Alliances Key Accounts Brand Equity Group Head Key Technical Contributor Human Resource Director Process Owner/Case Manager CIO/IT Professional VP, Business Development Account Manager Marketing Manager Sales Rep AssetsSample Retention Targets