0 Mergers & Acquisitions No One Said It Was Easy - But You Can Do It Better 4200 Montrose, Suite 590  Houston, TX (713) Phone  (713) Fax - assoc.com IDENTIFYINVESTIGATEIMPLEMENTINTEGRATE

1 BENEFITS OF THE W J MURRAY & ASSOCIATES’ PROCESS Fewer False Starts Shorter Cycle Times Acquisitions That Fit The Playbook Fewer People Spinning Their Wheels An Organization To Accomplish the Acquisition Proven Partner Search Techniques Tested Techniques For Valuing Companies Successful Approaches To Acquisition Candidates Proven Due Diligence Techniques Effective Integration Techniques Avoid The Pitfalls LEADING TO : SUCCESSFUL ACQUISITIONS IDENTIFYINVESTIGATEIMPLEMENTINTEGRATE NO ONE SAID IT WAS EASY - BUT YOU CAN DO IT BETTER

2 Enterprise Strategy *The Vision *The Goals *The Playbook Acquisition Process Execution Team - APET Alternatives *Internal Development *Partnering *Joint Ventures How Does The Acquisition Fit The Playbook? The Screening Criteria Engage the Search Vehicle Complete Initial Screen Anticipate External Opportunities Complete Business Evaluation Discuss with Management Gain Consensus On The Short List APET Game Plan Company Contact Business Analysis Management Review Letter of Intent Due Diligence Purchase Agreement Goals Gain Consensus On Implementing The Assimilation Plan Obtain Commitment To Execute The Business Plan NO ONE SAID IT WAS EASY - BUT YOU CAN DO IT BETTER IDENTIFYINVESTIGATEIMPLEMENTINTEGRATE

3 IDENTIFY WHAT TO DO Confirm The Enterprise Strategy The Business The Vision The Value Proposition The Competitors The Goals The Critical Success Factors Demonstrate How The Acquisition Supports The Critical Success Factors And Goals Strategic Alliance Versus Joint Venture Select The Acquisition Process Execution Team (APET) Gain Consensus That Acquiring Is Superior To Internal Development Or Partnering Agree On The Screening Criteria WHO DOES IT Senior Managers APET OUTPUTS Acquisition Criteria Expected Benefits Decision On Strategic Alliance Or Joint Venture Purchase Price Range Reconfirmation Of The Enterprise Strategy Internal Commitment And Consensus To Acquisition Acquisition Process Execution Team

4 WHY ACQUIRE VERSUS INTERNALLY DEVELOP OR PARTNER DOES NOT FAVOR ACQUISITION FAVORS ACQUISITION IS THE PURPOSE TO ACQUIRE ACQUIRE A ACQUIRE KEY PEOPLE PEOPLE PROCESS CORE, HIGHLY STRATEGIC HAVE TIME & LIMITED WINDOW DEGREES OF FREEDOM OF OPPORTUNITY ACQUISITION ACTIVITY HIGH LOW IN THE MARKET ACQUISITION NONE CONSIDERABLE EXPERIENCE NUMBER OF FEW MANY ALTERNATIVES IDENTIFY

5 SAMPLE INITIAL SCREENING CRITERIA IDENTIFY

6 WHAT TO DO Engage The Search Engine * Board Members * Business Network * Law Firm * Accounting Firm * Investment Bankers * Senior Executives * Banks * Customers & Suppliers Compete Initial Screens Anticipate New Opportunities Gain Consensus On Short List Complete Second Phase Screen Discuss Evaluation With Management WHO DOES IT Senior Managers APET Senior Managers & APET OUTPUTS Criteria For Ranking Alternatives Consensus On Top Candidates Advantages/disadvantages Associated With Targets Range Of Acquisition Costs Reaffirmation Of Purpose /Goals Commitment To Continue INVESTIGATE

7 SAMPLE SECOND-PHASE SCREENING CRITERIA INVESTIGATE

8 WHAT TO DO Develop The Game Plan Identify Resources Make The Contact Complete Pre-Due Diligence Analysis Review With Management Sign A Letter Of Intent Complete The Due Diligence Complete The Negotiations Sign The Purchase Agreement WHO DOES IT APET Senior Management APET Senior Management & APET Senior Management APET Senior Management OUTPUT Purchase Agreement * Purchase Price * Terms & Conditions Consensus On Integration Check List IMPLEMENT

9 WHAT TO DO Develop & Execute The Business Plan * Value proposition * Goals * Budgets * Metrics/scorecard * Time-line-for implementation * Task-force responsibilities/ accountability Develop & Implement An Assimilation Plan * Functional Integration Manufacturing/production Sales/marketing Engineering R&D Purchasing * Human Resource Personnel policies Salary administration * Financial Integration: Accounting, Tax * Communication plan Message Timing Responsibilities * Pre- and Post- Acquisition Customer/ Employee Survey * Measure Progress: The Scorecard WHO DOES IT APET OUTPUT Integrated Company * Direction * Commitment * Budgets * Key issues identified * Roles and Responsibilities for key issues INTEGRATE

10 INTEGRATION CHECK LIST ASSETS Plant, Property & Equipment Inventory Personnel IT Capital Structure ACTIVITIES Business Relationship Production Processes Accounting Practices Decision Making Process Supply Chain Customer Service Purchasing HR Processes * Pension Plans * Performance Appraisal * Labor Relations * Recruiting Pricing STANDARDS Regulatory * Environmental * Safety * Health * Tax * Licensing INTEGRATE