Transcript Document
It’s a New World Prepare to Acquire, Merge, Divest in an Ever Changing Environment.
An Experience Eleven Times in Fifteen Years!
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Air Distribution Technologies, Inc., is a leading provider of innovative air distribution and ventilation solutions for residential and non residential buildings as well as air movement and control solutions for industrial and infrastructure applications. With the addition of manufacturing in China, the Middle East, and India in recent years, the group has leveraged its global brands and increased presence overseas.
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Jeri Bethune, CTP Assistant Treasurer Air Distribution Technologies, Inc.
Jeri Bethune is the Assistant Treasurer for Air Distribution Technologies, Inc., a Richardson, Texas based heating, ventilation, and air conditioning components manufacturer with operations worldwide. Jeri has spent 20 years working for companies in the manufacturing business as an Accounting Manager, Cash Manager, and Treasurer for a smaller company, and most currently Assistant Treasurer for an estimated billion dollar company in 2013. She earned her CTP in 1998, has served in several roles on the Dallas AFP Board including President, as well as Chairperson for TEXPO in 2007 .
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Alexander Lara JPMorgan Chase Treasury Services
Alexander Lara is a fifteen year veteran of International Banking. He is Executive Director and Senior Global Trade Sales Officer for JPMorgan Chase Treasury Services based in Houston, Texas. His responsibilities include coverage for the Louisiana and SE Texas markets as well as Mexico. Alex’s international background includes specialties in Global Trade and Trade Finance, Foreign Exchange, Treasury and Global Cash Management and Global Liquidity Management. Alex has served on the Executive Committee for JPMorgan Mexico and is currently involved with several Large Corporate clients in Latin America and Asia. He has been in International Banking and the payments business since 1989 and also worked with clients at Bank of America in their Foreign Currency Services and Global Payment Services divisions. Alex has an MBA in International Business from U.S. International University in San Diego and received his Bachelor of Science degree in Business from the Universidad Internacional in Mexico City. He is fluent in English and Spanish and has a strong working knowledge of Portuguese. Alex was awarded the Permanent Certified Cash Manager in 1996 and is also a practicing CTP. 4
Who Moved MY Cheese?
U. S. Brass Eljer Plumbingware Eljer Industries Zurn Industries U. S. Industries Venture Capital Group Divested Selkirk Corporation sold to Acquired by Eljer Plumbingware Merged into Eljer Industries Acquired by Zurn Industries Acquired by U.S. Industries Acquired by Venture Capital Group Selkirk Corporation Tomkins Industries ** Tomkins Industries acquired by Tomkins Building Products divested by Tomkins Bulding Products sold to Tomkins Building Products Onex Corporation Tomkins Industries Canadian Pension Plan Investment Board Name change to Air Distribution Technologies, Inc.
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G00D MERGERS AND BAD
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Challenges of a New Partner
Acqusition
HeatFab IAQ Koch Filter
Challenges
Difficult Owner Engineers Mom & Pop 7
And Some Just Don’t Make It!
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Biggest 12 Mergers in History
• • • • • • • • • • • • AOL Time Warner Pfizer & Warner-Lambert Exxon Mobil Citicorp & Travelers Group Nations Bank and Bank of America AT&T Broadband/Comcast JPMorgan Chase and Bank One Corp Proctor & Gamble/Gillette Quest & US West GTE & Bell Atlantic AT&T TCI SBC Ameritech 4/30/2020 Air Distribution Technologies, Inc.
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What If Mergers?
3M and Goodyear Honeywell, Imasco, and Home Oil Polygram Records, Warner Brothers, and Keebler Denison Mines, Alliance and Metal Mining Grey Poupon and Dockers Air Distribution Technologies, Inc.
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What If?
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Or, this Merger?
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What Happens First,
Gossip?
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4/30/2020 Research Team Begins Air Distribution Technologies, Inc.
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• • • • • • • • • • • • • • • • • • • • • History of the Company Corporate Organization Products Sold Broad Markets Customers Marketing Strategies Competition Operations Inventories Suppliers Properties Financial Statements Tax Matters Accounting Controls Environmental Matters Regulatory Matters Material Agreements Employee Relations Affiliate Transactions Reorganization Matters
Collect Data
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• • • • • • • • • • •
Must Have Confidentiality Agreements
Corporate Records Intellectual Property Material Agreements Personnel and Employee Benefits Rights and Permits Litigation and Disputes General Financial Information Cash and Investments Accounts Receivable Purchased and Developed Software Product Expenses 4/30/2020 Air Distribution Technologies, Inc.
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Really Favorable?
Fully Funded Pension Plans
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Treasury’s Strategic Role
• • • • • • Working with Credit Rating Agencies Locate Favorable Financing Consider Portfolio Restructure Consolidation of Banking Structures Web Based Systems vs. Legacy Systems Cross Functional Integration Air Distribution Technologies, Inc.
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Investigation Team Assigned Expect the Need of a Detailed Due Diligence Checklist.
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Investigative Team
A comprehensive checklist yielding absolute certainty is likely unobtainable. The business judgment required to interpret due diligence information inevitably uncovers areas of uncertainty. However, fundamental due diligence investigation practices should mitigate risk and at least identify critical assumptions, key risks, and areas of uncertainty to assess them as manageable or deem them to not be manageable.
Once complete, the investigation team must apply experienced business judgment against due diligence information to assist the acquirer with business decision making.
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Data Rooms
• • •
Home Grown (Files and Spreadsheets) SharePoint Site Software
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Announcing the Sale!
Expect change even though Executives may say: “We don’t Anticipate any Changes” “This is a merger of equals” “We plan to take the best of both worlds” Air Distribution Technologies, Inc.
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100 Day Plan
• Create an action plan for your first 100 days after business change • • • • • Define a Leader and Key Stakeholders Setup a clear and define chart with goals, task owners, and completion dates Schedule set dates for regular meetings and do not postpone.
Stay the course (on topic) during meetings.
Strategic Segments – Treasury – Finance – Legal 4/30/2020 – IT - HR - Tax - Operations Air Distribution Technologies, Inc.
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• • • • • • • • • • • • Review Existing Bank Accounts Ensure Payroll Funds Available Payroll Arrears or Current?
Who will authorize payments?
Fraud prevention tools in place?
Brief team on treasury policy Discuss • Funding requirements • Cash Reporting • Forecasting requirements Merchant Services requirements Foreign exchange needs Travel Card needs Lockbox Use and Electronic Payments Security Administrators
Day One
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100 Day Plan Sample
SAMPLE 100-Day High Impact Plan To replace with your own 100 day plan, simply double click on the cell and write your own text. To change the "DAY ONE" simply put in your start date. The rest of the dates will automatically update.
Instructions: If you would like to use this template, enter any day in the DAY ONE cell.
Plan Leader:
Name of Your Project: ZNY Acquisition 100 Day Plan DAY ONE: DAY 100: 8/12/2010 11/20/2010 Date: Action
8/12/2010 Start of 100-day plan 8/12/2010 8/12/2010 8/12/2010 8/12/2010
High Impact Strategy #1:
8/12/2010
High Impact Strategy #2:
8/12/2010
Action: Strategy Number Person Responsibl e Date Completed Comments 2
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100 Day Task List Description – For Treasury Team Document all treasury policies: processes, policies/procedures, funding limits, liquidity, ,warranties, bonds, foreign exchange, hedging) Identify all financial regulatory bodies affected by the deal Notify relevant regulators of all significant changes to the business Define and agree the timetable for producing regulatory reports in New Co.
Issue guidance notes and timetables to New Co. on the production of all regulatory reports Identify all bank accounts held by both businesses and all subsidiaries subject to the deal Identify any other financial suppliers in both businesses and all subsidiaries subject to the deal Obtain list of all overdraft limits Review all banking services and identify where / why change needs to be made / consolidated Transfer the balance from any bank accounts and close which are no longer required Obtain manual checks and insure they are available for go live Advise the banks of change of ownership / company name Determine and agree if any new bank accounts are to be established Ensure that bank accounts are set up to reflect new holding companies Determine and agree any changes that need to be made to bank mandates / signatories Receive Board approval for changes to bank mandates / signatories.
Complete bank mandate forms for new signatories as appropriate Provide banks with mandate forms and required documentation for new signatories.
Inform Pensions authorities of transfer of ownership / name and new corporate structure Inform Customs and Excise of transfer of ownership / name and new corporate structure Ascertain which treasury agreements are to be triggered on Day 1 and agree no issues Ascertain if there will be any deterioration in credit ratings or creditworthiness for both businesses due to the deal Identify all loans which exist in both businesses and subsidiaries subject to the deal (inc Interest payments, penalty clauses, maturities etc) Identify all loans which will need to be re-paid upon compelition Determine and agree how to repay loans which need to be repaid on completion Agree amounts to be transferred.
Transfer funds and complete loan repayments Evaluate vendor financing agreements and make amendments are required Ascertain cash requirements for New Co. in months 1 - 3.
Determine the flow of funds between New Co. and banks / financial institutions on Day 1 Ensure smooth process for Day 1 cash flows - adequate limits on banking systems and cleared funds Ensure that processes are in place for reporting daily/weekly cash balances, cash management and set off purposes Identify all agreed capital investments for both businesses Identify and evaluate all proposed capital investments for both businesses Ascertain financing requirements for proposed capital investments over the next 12 months
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Working Capital Proforma
Action Plans to Manage Debtor Balances and DSO Plan (include Region if applicable) Brief Summary of Plan Consolidate Collection Process Consolidate Collection Process - Senior Accountant hire; Collection function and reporting moved to Accounting Manager; retirement of current part time collector.
Reduce AR Processing Time Conversion to email and fax of all customer invoices to eliminate days from delivery of invoices for payment.
Total Trade Creditors 0.0
0.0
0.0
(2.3) (2.9) (3.1) Who is Accountable Kirk Grigsby Kirk Grigsby (2.8) (2.2) 0 28.6
33.0
36.9
35.6
Days Purchases Outstanding 0 0 Action Plans to Manage Creditor Balances and DPO Plan (include Region if applicable) Summary of Plan Who is Accountable Improve DPO February 2010 substantially all vendors moved to 40 day terms.
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Divestiture – Stranded Costs
The sale is not the end of the divestment process. Companies need to carefully consider the impact of separating the asset on the remaining organization and make appropriate preparations. This should include thoroughly assessing stranded costs, understanding the one-time costs of separation, business continuity, unwinding tax structures and transaction closing mechanisms.
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Your Bank Partners
• Let your banks help you • Engage them early in any plan or process • Prepare for independent financial strength • Keep your banks informed • Set up regularly scheduled calls with cash management banks • Prepare bank documents promptly, accurately, and complete • Share your information. Your bank is a partner, not an adversary.
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“ Be the change that you wish to see in the world.”
―
Mahatma Gandhi
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