Page 44 - SONEPAR 2021 - AcquisitionBook

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7.2 MONITOR THE INTEGRATION AND COMPANY PERFORMANCE
The goal of an acquisition is to create added value for the GROUP. After CLOSING, regional and local management shall closely monitor the acquired company’s performance to make sure that the transaction and integration processes do not distract Key Managers from delivering the expected plan.
7.2.1
DEDICATED HQ FOLLOW-UP FOR SIGNIFICANT ACQUISITIONS
PHASE 7: INTEGRATION & FOLLOW-UP
Monitor the integration and company performance
Above a given threshold, the financial performance and integration plan status will also be monitored by the HQ. Such thresholds are as follows:
➜ above €50 million in Sales for a stand-alone acquisition (even if back-office is shared);
➜ above €100 million in Sales for an integrated acquisition.
If needed, the ACQUISITION SHEET shall be updated to include the new assumptions regarding synergies and a more detailed view of the one-off costs (relocation costs, severance costs, IT migration costs....).
During the 3 years after CLOSING, countries will exchange information regarding the performance with the HQ Controlling team and HQ M&A team using the acquisition follow-up template (Appendix 19). This tool enables to compare the annual financial results of the acquired company with the projections made in the ACQUISITION SHEET to assess the performance and the return on capital in a consistent way. The analysis is focused on key ratios and some restatements are allowed to make it comparable (such as IFRS-16 retreatment, franchise fees, etc.). A first follow-up must be done using the first available forecast.
Above such thresholds, the final version of the integration plan must be presented to M&A Director 3 months after the CLOSING using the template available in Appendix 18.
7.2.2 INTERNAL CONTROL REQUIREMENTS
As soon as the acquisition is closed, the new company must be introduced to GROUP’s Internal Control standards from either the local Internal Control coordinator or from the HQ Internal Control team (if there is no local coordinator).
7.2.3 POST-INTEGRATIONAUDIT
Once the integration is fully completed (usually after one or two years), HQ Internal Audit may perform an audit (advisory engagement) aiming at:
➜ highlighting best practices of the audited entity with regards to the integration;
A first self-assessment will have to be performed on the GROUP tool within the first year with a dedicated set of control points. A list of minimum internal control requirements (Appendix 20) can be used to help local management identity priority areas.
➜ providing recommendations on potential improvements to both the entity and the HQ M&A team to capitalize for future integration process (learning curve).
TO KEEP IN MIND
➜ Integration must be anticipated and prepared based on the DUE DILIGENCE findings.
➜ First moments after CLOSING are key and require strong coordination, under the supervision of the Integration Leader.
➜ The roadmap of the integration process must be prepared with the new company. All GROUP requirements must be anticipated and integrated.
➜ Integration shall not be limited to business, financial and commercial matters: HR, legal, compliance, insurance, IT and cybersecurity are equally important items.
➜ Follow up of all acquisitions made is key to ensure financial performance and return on investment. Significant acquisitions will be specifically monitored by HQ.
42 SONEPAR - ACQUISITION MANUAL - 2021 - FOR INTERNAL USE ONLY
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