Case Name: Unity Bank- Realizing value from an M&A integration 2.
The primary question of the case is:
Unity Bank has acquired Delta to realize its dream of becoming the World No 1 provider of share registry services. The primary problem is “How to successfully integrate Unity Bank and Delta within the specified timeframe and simultaneously achieve the Target savings?” The secondary question of the case is:
The integration posed multiple challenges but it was critical to infuse the integration without affecting the existing business processes of both companies. 3.
Describe the acquirer company/department
Unity bank was founded in South Africa in 1982 and employed around 8000 people worldwide and had market capitalization of approximately $2 billion -
Provider of global shareholder and employee management services -
Manages 60 million shareholder accounts for over 10000 corporations across 12 countries on 5 continents -
Unity bank provided full range of transfer agency services including share registry administration etc
Unity bank envisioned to become the World no 1 provider of share registry services 3)
The bank had a professional workforce
The staff were given incentives and provided innovative projects -
IT services of Unity bank were robust and effective.
Few providers of global shareholder and employee management services -
Large customer base
Provided full range of transfer agency services
Ability to manage most complex and largest corporate actions -
Professionalism of staff members and nature of their expertise -
Ability to attract talented operations and IT professionals and retain them over a long term -
Offered professional but family oriented work culture
Strong IT infrastructure providing sizable entry barrier and economies of scale -
Robust enterprise system BLAIR providing great franchise value
Small player in United States with only 5 % of the market share -
BLAIR platform was outdated and the cost of maintenance and scalability would be high in the long run -
Inability to attract clients with large shareholder bases. -
Limited brand recognition
Describe the acquired company/department
Delta Operates solely in United States.
It offers a full range of transfer agency and employee plan administration services to over 15 companies in the Dow Jones industrial average -
Delta has 1300 clients and provided services to 19 million shareholders
Delta had several owners
Delta had multiple IT platforms
Market leader in United States
Strong client portfolio with large shareholder bases
Strong brand recognition in United States
Multiple IT systems
Low revenue realization from IT systems
Low degree of consolidation in IT systems
Describe the industry situation
Customers: Spanning all corporate entities across the world but the integration mainly targets the United States corporate space. -
Traditional Competitors: Other transfer agencies operating in the marketplace -
New market entrants: The entry barrier is high therefore threat from new entrants low. The company has created a competitive edge through IT
Opportunities: Efficient IT integration can reduce cost hence improve the bottom line. Effective IT resource management could streamline the operations and also provide enormous cost benefits. New business offering can lead to increase in revenue. IPO’s offer new business opportunities. -
Threats: Failure to integrate Delta successfully would hamper cost cutting and affect Unity’s competitiveness. The clients of Delta could be lost and fundamental aim of the acquisition would not be realized.
How to successfully integrate Unity Bank and Delta...
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