scott.slater@metavante.com 612.922.9990 Investment Technology Services Merger and Acquisition Due Diligence J. Scott Slater, Managing Director, Metavante Wealth Management Consulting Practice scott.slater@metavante.com 612.922.9990

M&A Objectives Business strategy first “Triumph of hope over experience” Most acquisitions fail (60-70%, depending on the study) Study: 89% of acquired businesses lose market share M&A is one of many strategies Build-Buy-Partner 50 years ago: focus on organic growth Today: M&A is the preferred growth vehicle

M&A Objectives So why are you seeking acquisitions? Enter business you are not in Broaden geographic footprint Scale to drive productivity and efficiency Defensive: competitive preemption

Successful M&A Disciplines Characteristics of successful acquirers: Clearly defined acquisition strategy Disciplined acquisition mechanics Tightly defined target criteria Due diligence discipline Ability to integrate acquisitions Planning Move quickly

Successful M&A Disciplines Pre-Due Diligence: Acquisition Targets: Define what you want You do the looking – not just the bankers! “Synergy”: Seek related businesses Define what you bring to the table Stay disciplined: Set and stick to financial hurdles: be willing to walk Expect the unexpected: don’t overestimate what you can achieve

Successful M&A Disciplines Do the Due Diligence: Financial Dig: read the footnotes! Private equity approach Evaluate management – and your retention plans Assess cultural fit

Successful M&A Disciplines Operations Operations: Can you take out cost? Should you? Assess correlated businesses How will you integrate the acquisition? Objective evaluation of operating performance Controls Key performance measures Regulatory and audit reviews

Successful M&A Disciplines Technology Should more often than not be a deal killer Conduct a tough assessment: Age of systems Mainframe vs. Server ASP / In-house licensed software / Outsource Past IT Commitment: consistent investment? Regulatory and Compliance technology components

Successful M&A Disciplines Post-merger Integration Planning Integration team representing all key functions Move rapidly to change processes Make leadership decisions as quickly as possible Eliminate as much fear and uncertainty as possible

Successful M&A Disciplines Remember – strategy first! M&A is only one means of achieving growth Develop strong disciplines Targets Objective hurdles Review process – with the ability to walk away Assess management, operations and technology too Execute the implementation plan