M&A and privatisations in Poland : key success factors of cross-border acquisitions into the Polish market

LIST OF FIGURES    XVII
LIST OF TABLES    XIX
TERMS OF REFERENCE    XXI

1. INTRODUCTION    1
1.1. THE POLISH CHALLENGE: ACQUISITIONS INTO POLAND'S PRIVATISING INDUSTRIES 1
1.2. DEFINITION OF TERMS    3
1.2.1. Central and Eastern Europe (CEE)    3
1.2.2. Mergers and Acquisitions    4
1.2.3. Privatisation    4
1.2.4. Key success factors     4

1.3. STRUCTURE OF THE DISSERTATION  5

2. METHODOLOGY 9

2.1.    RESEARCH BACKGROUND AND RATTONALE FOR THE SELECTED TOPIC  9

2.2.    RESEARCHOBJECTlVES 10

2.3.    DATA GATHERING METHOD  10

2.3.1. Secondary research 10
2.3.1.1. General approach 10
2.3.1.2. Limitations 1 1
2.3.2. Primary Research 12
2.3.2.1. Data gathenng instrument l2
2.3.2.2. Sampling plan  14
2.3.2.2.1. Target population  14
2.3.2.2.2. Sampling method 14
2.3.2.3. Data collection 15
2.3.2.4. Limitations 16

3. FRAMEWORK CONDITIONS FOR ACQUISITIONS IN POLAND 17

3.1.    POLITICAL AND ECONOMIC BACKGROUND OF POLAND  17
3.1.1. Poland's political environment 17
3.1.2. Poland's economic environment within Central and Eastern Europe  21
3.1 2.1. Economic situation at the end of the 1980s 21
3.1.2.2. Economic development dunng the 1990s, current economic situation
and outlook 25
3.1.2.3. Foreign direct investments (FDI) 31

3.2. LEGAL PRIVATISATION ENVIRONMENT IN POLAND     35

3.2.1. Small privatisation    38
3.2.2. Mass privatisation programme     38
3.2.3. Capital (indirect) privatisation    39
3.2.3.1. Trade sale (public tender) and pnvatisation advisor    39
3.2.3.2. Public offering (IPO)    41
3.2.4. Direct privatisation    42
3.2.5. Liquidation (bankruptcy)    43
3.2.6. Reprivatisation / Restitution    43
3.2.7. Privatisation progress and expected revenues    44

4.    ACQUISITION STRATEGIES IN POLAND  45

4.1.    MARKET ENTRY STRATEGIES  45

4.2.    STRATEGIC ACQUISITION PROCESS  48

4.3.    VALUE CREATION POTENTIAES—SOURCES OF ACQUISITION SUCCESS 49

4.4.    PRE-ACQUISITIONPHASE 50

4.4.1. Strategic objective: the right reason    50
4.4.1.1. Strategic positioning and globalisation    50
4.4.1.2. Market entry objectives     52
4.4.1.3. Obstacles to market entry    54
4.4.1.4. Conclusion: key success factors    55
4.4.2. Search and screening process: the right information    56
4.4.2.1. Project organisation 56
4.4.2.2. Information sources and the role of advisors 56
4.4.2.3. Development of a target requirement profile 57
4.4.2.4. Analysis of competitive environment 59
4.4.2.5. Analysis of the potential Polish target 61
4.4.2.5.1. Typical weaknesses of Polish companies    61
4.4.2.5.2. Typical strengths of Polish companies     62
4.4.2.5.3. Preliminary integration plan     63
4.4.2.6. Conclusion: key success factors    63
4.4.3. Valuation: the "right" price    64
4.4.3.1. Value of assets (Book Value/ Adjusted Book Value)     68
4.4.3.2. Discounted Cash Flow valuation (DCF)    69
4.4.3.3. Multiples and comparable transactions     72
4.4.3.4. Conclusion: key success factors     73

4.5. THE DEAL - THE RIGHT EXECUTION 74

4.5.1. Expectations of parties involved     75
4.5.2. Tender procedure    77
4.5.2.1. Inforrnation Memorandum    77
4.5.2.2. Key elements of a bidding proposal     77
4.5.2.2.1. Evaluation criteria    77
4.5.2.2.2 Price-method package        78
4.5.3. Due diligence    83
4.5.4. Negotiations     84
4.5.5.        Documentation, signing and closing    85
4.5.6.    Conclusion: key successfactors    85

4.6. POST ACQUISITION INTEGRATION - THE RIGHT IMPLEMENTATION            86

4.6.1. Integration approaches            86
4.6.2. Speed of integration             88
4.6.3. Strategic and operative integration: turnaround-management    89
4.6.3.1. Managing strategy            89
4.6.3.2. Managing operational factors            90
4.6.3.3. Managing cultural differences        91
4.6.4. Conclusion: key successfactors            95

5. PRIMARYRESEARCHRESULTS:KEYSUCCESSFACTORS            97

5.1. GENERAL RESULTS            97

5.1.1. Findings and interpretations            97
5.1.2. Conclusions    101

5.2. STRATEGIC OBJECTIVE: THE RIGHT REASON    103

5.2.1. Findings and interpretations    103
5.2.2. Conclusions    105

5.3. SEARCH AND SCREENING PROCESS: THE RIGHT INFORMATION     105

5.3.1. Findings and interpretations    105
5.3.2. Conclusions    110

5.4. VALUATION: THE "RIGHT" PRICE    111

5.4.1. Findings and interpretations    111
5.4.2. Conclusions    114

5.5. THE DEAL—THE RIGHT EXECUTION     115

5.5.1. Findings and interpretations    115
5.5.2. Conclusions    119

5.6. POST-ACQUISITION INTEGRATION: THE RIGHT IMPLEMENTATION     121

5.6.1. Findings and interpretations    121
5.6.2. Conclusions    124

5.7. USE OF ADVISORS     126

5.7.1. Findings and interpretations    126
5.7.2. Conclusions    127

6. CONCLUSIONS AND RECOMMENDATIONS    129

7. PROSPECTS    135

BIBLIOGRAPHY    229