Consumer Strategies Report October 19 2004/Trade Event

With the fanfare that the business of mergers and acquisition gets, you'd never know that once the transaction is complete, integration has to occur. For CEOs, this is where the headaches are. But for consultants, this is the pot of gold at the end of the rainbow. Post-Merger Management (PMM), or Post-Merger Integration (PMI), is huge.

The established order of things is that bankers sell the deal, lawyers close it. Hundreds of billions of dollars in value are at stake, but incidentally, since value is "a prophecy into the future" (1) and therefore negotiable between buyer and seller (2), the fact that integration after the deal is seldom considered is incredible, but not totally unbelievable. After all, prior to consultants entering the M&A market, mergers had the perception of being too complex and distracting to engage in regularly or on a large scale.

Much of the discussion at the Conference Board's 2004 Post Merger Integration Conference hosted at the Westin NY @ Times Sq on June 15 focused on these intangibles of the deal, including the organization's culture and the effects on customers. There was an emphasis on taking advantage of any such financial event to make changes that are critical to getting rid of the bad stuff and putting a new corporate identity in place. After reviewing all the top consulting firms (3) with a dedicated practice to merger integration, they all offer the same exact advice.

When HP bought Compaq, they started planning how to integrate both companies with their vast product portfolio, client lists, and conflicting employee cultures an entire year prior to the board giving the transaction a green light! Since then, they've been slowly evolving from a consumer products firm into a consulting firm. For example, they're partnering with other firms to give them free advice along with their technology. The advice works with their tech to create mostly new revenue streams and eager new partners. Ultimately, clients get more than advice; they get a partner to invest with them. And since HP is so large, a failed venture or two wouldn't cause too much damage. It's how HP has benefited from their merger - they've learned to throw their weight around. And they're showing an entire CG sector how to do it, too. (In the defense of CG guys, retailers have been launching private labels at a furious pace, forcing CG to also blur the lines of what they do.)

After hearing their presentation at the Westin (and subsequent Forrester Consumer Forum), I wouldn't be surprised if they surpassed IBM or Dell as the premier technology company.

At the Rodnick discussion hosted at the Harvard Club by CEO Clubs on September 22, the emphasis was on negotiation: "The first one who mentions money is always the loser". A truly dynamic speaker at 75, Dick Rodnick reinforced a lot of what you know and was one of those type of guys that told you like it is - he easily made you trust his judgment. Overall, I give both events 5 pluses for an outstanding learning experience and terrific networking opportunities.

2 according to "legendary" dealmarker Dick Rodnick, founder and Chief Executive Officer of RSM EquiCo, a leading global investment banking firm specializing in mergers, acquisitions, divestitures and corporate finance for middle-market companies.

Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2004. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.

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