December, 2002

Mergers & Acquisitions Checklist

C O N F I D E N T I A L | www.oliverwyman.com

Oliver Wyman perspective: Getting ready to merge

Merger preparation should start before a merger is announced.

The M&A process

Screen and identify potential candidates

Meet with potential candidates

Conduct due diligence

Negotiate terms and agree to merge

Announce the merger

Plan the integration

The getting ready process

Start here to maximize merger benefits ...

. . . and not here

Create your team Get them ready Develop a preliminary game plan

Oliver Wyman

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Create your team

Selecting key participants early helps to establish ownership and accountability for future success.
Most important participants

Establish overall approach Senior team Set merger objectives Make final decisions Integration project manager Lead day-to-day effort Manage teams

Individuals to manage corporate-wide issues Organizational redesign and HR issues Legal and regulatory Information technology Communications Facilities Desired attributes Credibility and leadership Interpersonal and analytical skills Strategic perspective Comfort with change

Individuals to lead functional integration teams Wholesale T&D Customer service Operations support Corporate support

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Get them ready

Training M&A participants can shorten the integration process and increase merger savings.

Training areas for all participants Legal and regulatory process Federal-level approvals, including Hart-Scott-Rodino State-level approvals Overall timetable Capturing merger benefits Potential revenue growth Potential cost savings Costs to achieve Integration planning Typical work plan and schedule Deliverables and integration update Team roles and responsibilities Day 1 Requirements Legal and regulatory Contractual Fiduciary and financial Internal and external communications Systems Human resources

Additional training for M&A leadership and management Working with senior management at the other company Decision making during the planning process Potential organizational models for merged companies Communicating to internal and external audiences

Additional training for due diligence and synergy teams Areas to investigate (by function) Information to collect Field visits and discussions Estimating potential savings and cost to achieve

Additional training for functional integration teams

Working with team members from the other company Most likely areas for revenue growth and cost savings Key metrics to review; relevant benchmarks Evaluation and decision-making criteria

Oliver Wyman

www.oliverwyman.com

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Develop a preliminary game plan

Evaluating current processes and systems early helps to raise critical issues.

Example: Customer services

Pre-merger evaluation
Low High

Function

Current cost competitiveness

Current performance

Scalability of processes and systems

Call center operations Meter reading

Do we have a viable platform for growth?

Billing

If not, should we invest in building one?

Payment processing Credit and collections

What assets and capabilities should we be seeking in a merger partner?

Oliver Wyman

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Who we are
We recently joined forces under the name Oliver Wyman, creating one of the worlds leading management consultancies.

The new Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation, and leadership development.

Oliver Wyman

www.oliverwyman.com

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What we do
Oliver Wymans Utilities Practice helps our clients create value by providing business strategy and operational improvement services to address the breadth of issues facing electric and gas utility companies.

Enterprise-Wide Strategy and Value Creation

Value-driven business design Mergers and acquisitions Regulatory support

Organizational Effectiveness
Organizational redesign Restaffing Alignment and redesign of corporate and support services

Performance Improvement
Benchmarking and performance management Process redesign and implementation Supply chain management

Wholesale Business Electric Generation & Gas Supply

Generation strategy Asset sales Power plant competitiveness Gas exploration and production Fuels strategy

Distribution and Retail Businesses

Wholesale Marketing and Trading

Bulk power alliances and entry strategy Bulk power marketing strategy Gas supply and transportation

Transmission
Separation of assets and operations Project planning and engineering Construction and maintenance Outsourcing and alliances Gas control

Distribution
Asset management and engineering Back office and support effectiveness Reliability and service restoration Work management and field force productivity

Customer Service
Meter-to-cash (Collections) strategy Call center optimization Meter reading and billing New service delivery

Retail Services
Marketing and pricing Branding strategy Profitability analysis Alliances, e.g., telecommunications, water

Oliver Wyman

www.oliverwyman.com

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