Unlock the Value of Digital Disruption

14th German M&A Conference M&A in the New – Unlock the Value of Digital Disruption

Munich, 15th November 2016 Guide Headline = 6,80 AGENDA

Guide Subline = 5,60

Upper Guide Content = 4,70 1 INTRODUCTION

2 MARKET OVERVIEW & CONTEXT

3 SUCCESS FACTORS FOR M&A IN THE NEW

FJORD CASE STUDY Vertical Center = 1,80 4

5 Q&A

Lower Guide Content = 8,70 © Accenture 2 Guide Headline = 6,80

Guide Subline = 5,60 INTRODUCTION

Upper Guide Content = 4,70

Sven Wahle Rainer Balensiefer Vertical Center = 1,80 . Managing Director, . Managing Director, Global M&A Group, Munich Accenture Digital and . Head of M&A in Germany, Accenture Interactive, Bonn Austria and Switzerland . More than 17 years in inter- . More than 19 years in inter- national strategy consulting national strategy consulting experience

Lower Guide Content = 8,70 © Accenture 3 Accenture has a dedicated global M&A practice and functional Strategy practices Guide Headline = 6,80 that support clients across the globe

Guide Subline = 5,60 ACCENTURE’S GLOBAL M&A PRACTICE

Upper Guide Content = 4,70

London Nordics Chicago Paris Munich 12 Tokyo Madrid New York Shanghai Global M&A Hubs Singapore Sidney São Paolo

Accenture’s M&A professionals have large-scale 150+ transformation experience and bring expertise across the Vertical Center = 1,80 Global M&A professionals whole investment life cycle.

Our M&A specialists are spread around the globe and with 2,000+ proven functional know-how, which is constantly leveraged Professionals in functions + in dedicated workstream support within large scale Carve-out regions projects, for example.

Accenture has worked on numerous large M&A deals 600+ across many industries, including the largest transactions Transactions in the in the chemicals, products, beverage, energy/utilities, last 5 years communication and high tech industries. Lower Guide Content = 8,70 © Accenture 4 Guide Headline = 6,80 AGENDA

Guide Subline = 5,60

Upper Guide Content = 4,70 1 INTRODUCTION

2 MARKET OVERVIEW & CONTEXT

3 SUCCESS FACTORS FOR M&A IN THE NEW

FJORD CASE STUDY Vertical Center = 1,80 4

5 Q&A

Lower Guide Content = 8,70 © Accenture 5 Digital disruption, driven by exponential growth in computing power, big data and Guide Headline = 6,80 combinatory innovations hits all industries resulting in increased M&A activity

Guide Subline = 5,60 DIGITAL DISRUPTION DRIVING M&A ACTIVITY

Upper Guide Content = 4,70 M&A Market – Global1 Deal Counts Digital / Innovation Key Insights

No. of Deals . Share on digital deals on total M&A deal number increased +5% 1.6% 1.6% since 2007 on average by +5% p.a. 1.4% 1.3% . Largest share of digital deals in Media & High Tech industries; 1.2% 1.2% 1.1% followed by Consumer Products, Telecomms. and Healthcare 1.0% 1.0% . Often, smaller and creative (“progressive”) companies set the Vertical Center = 1,80 tone of innovation in entire industries by developing new 724 773 technologies at high pace (e.g. Skype, Uber, Tesla, Airbnb) 541 558 527 550 566 443 452 . Larger corporates with standardized structures & processes cannot keep pace with this high speed of innovation

. To stay on top of innovation and ahead of competition large corporates need to partner / acquire progressive companies 2007 2008 2009 2010 2011 2012 2013 2014 2015 Number of Digital Deals Share of Digital Deals on Total Deal Number CAGR Digital Deal Number

Lower Guide Content = 8,70 Note: (1) M&A global deal numbers were analyzed for the key words "Digital“, "Innovation“ or “Innovative”; Source: Thomson Financial, Accenture Analysis © Accenture 6 Large corporates target progressive companies to improve their competitive Guide Headline = 6,80 position in a fast changing environment across industries

Guide Subline = 5,60 M&A IN THE NEW – SELECTED TRANSACTIONS NON-EXHAUSTIVE Upper Guide Content = 4,70

Automotive Industrial Equipment Finance & Banking Consumer Goods Comms & High Tech

Network banking agent Ride sharing Taxi Cloud Cyber Communication systems for app booking app Fitness app Vertical Center = 1,80 souring security service automobiles

Personal finance service Bauer Optimierungstechnik High definition maps for Communication systems for autonomous vehicles Manufacturing execution system Fitness app automobiles Asset management software

Camstar Car charging incl. stations and Airconditioning / mobile app ventilation control software Robot asset advisor Fitness app Diet mgmt. app Online dating platform Lower Guide Content = 8,70 © Accenture 7 Guide Headline = 6,80 AGENDA

Guide Subline = 5,60

Upper Guide Content = 4,70 1 INTRODUCTION

2 MARKET OVERVIEW & CONTEXT

3 SUCCESS FACTORS FOR M&A IN THE NEW

FJORD CASE STUDY Vertical Center = 1,80 4

5 Q&A

Lower Guide Content = 8,70 © Accenture 8 Guide Headline = 6,80

Guide Subline = 5,60 SUCCESS FACTORS OVERVIEW

Upper Guide Content = 4,70

1 Acquire and invest into progressive companies – or be disrupted

2 Go for agile deal making – or lose the battle for valuable targets

Vertical Center = 1,80

3 Enable tailored integration – or miss the value

Lower Guide Content = 8,70 Source: Accenture Analysis © Accenture 9 The only chance for larger corporates to keep pace with digital disruption and stay Guide Headline = 6,80 ahead of competition are dedicated M&A activities for progressive acquisitions

Guide Subline = 5,60 1 ACQUIRE AND INVEST INTO PROGRESSIVE COMPANIES – OR BE DISRUPTED

Upper Guide Content = 4,70 Observations of M&A with Progressive Companies Key Insights

. 85% of corporates see the existing need to acquire 15% progressive companies with innovative skills and Existing need to acquire innovative knowledge, skills technology expertise to stay competitive & technology to keep pace 85% with digital disruption . 96% of companies say that investments in progressive companies are a central part of their corporate strategy A central part of corporate 4% Vertical Center = 1,80 strategy are acquisitions . 86% of executives realize that specific capabilities and and investments in progressive companies standardized processes are required for successful 96% acquisitions with progressive companies

14% Existing need to standardize researching process as well as evaluating and acquiring 86% progressive companies

Agree Disagree Lower Guide Content = 8,70 Source: Accenture Executive Survey (n=242) © Accenture 10 M&A strategies’ objectives for acquiring progressive companies are significantly Guide Headline = 6,80 different from traditional deal rationales

Guide Subline = 5,60 2 GO FOR AGILE DEAL MAKING – OR LOOSE THE BATTLE FOR VALUABLE TARGETS (1/3)

Upper Guide Content = 4,70 M&A Objectives to Go for Progressive Companies Key Insights

. Investments in progressive companies mainly target development of new products / enhancement of Creating 69% existing products and services new products & services . Transforming the own corporate culture towards more Enhancing 64% existing products & services innovation is seen as a main objective, while traditional M&A focusses on economies of scale or market share Vertical Center = 1,80 Entering new markets 62% . Take Away: In order to realize the full value of such objectives, corporates need to act with high agility and Transforming with deep technology expertise in the background company culture 59% towards more innovation

Realizing cost synergies 46%

% of respondents ranking objective among top 3 Lower Guide Content = 8,70 Source: Accenture Executive Survey (n=242) © Accenture 11 The identification of valuable targets confronts large corporates with challenges; Guide Headline = 6,80 new approaches of target identification are required

Guide Subline = 5,60 2 GO FOR AGILE DEAL MAKING – OR LOOSE THE BATTLE FOR VALUABLE TARGETS (2/3)

Upper Guide Content = 4,70 Screening of Progressive Companies Key Insights

. For most companies alternative screening approaches like startup networks, through VC funds or accelerators 74% are essential to find most valuable targets 61% 56% Approach . Still, over 50% of corporates identify progressive Start-up VC fund Start-up targets opportunistically, without a structured approach Network (Own / accelerators Screening Cooperation) (Own / Cooperation) Vertical Center = 1,80 . Around 70% consider the identification of relevant % of respondents ranking among top 3 methods technologies and the fast changing universe of potential targets as key challenges in target screening Identification of 69% relevant technologies . Take Away: To win the race for successful progressive Fast universe of 67% companies, take quick and well informed decisions Challenges changing companies Link between strategy 64% and search criteria

% of respondents ranking among top 3 challenges Lower Guide Content = 8,70 Source: Accenture Executive Survey (n=242) © Accenture 12 Due Diligence processes in acquisitions of progressive companies are Guide Headline = 6,80 technology focused and require specific capabilities to succeed

Guide Subline = 5,60 2 GO FOR AGILE DEAL MAKING – OR LOOSE THE BATTLE FOR VALUABLE TARGETS (3/3)

Upper Guide Content = 4,70 Due Diligence of Progressive Companies Key Insights

. Key focus areas in Due Diligence is Technology; even Technology 56% before Financial Performance Focus Financial Performance 53% Areas Innovation / . The main challenge is seen in the high expectations on R&D pipeline 49% transaction speed; then new technology assessment

Demanding . Deal teams with deep technology expertise and 71% Vertical Center = 1,80 transaction speed assessment skills for target screening & due diligence Assessment of Challenges new technologies 69% help corporates significantly in closing valuable deals Fair valuation / 62% high prices . Competitive Advantage: Accelerating transaction speed (<6 months from contact to closing) by Valuation skills & establishing a dedicated organization and processes methodologies 72% Assessment of Capabilities new technologies 63% Availability of dedicated financing 62% % of respondents ranking objective among top 3 Lower Guide Content = 8,70 Source: Accenture Executive Survey (n=242) © Accenture 13 Maintaining the innovative power of a target is key to leverage full value Guide Headline = 6,80 potentials – a tailored integration approach is required

Guide Subline = 5,60 3 ENABLE TAILORED INTEGRATION – OR MISS THE VALUE

Upper Guide Content = 4,70 Integration of Progressive Companies Key Insights

. Main success factor is the integration of the acquired technology and maintenance of the innovative culture while assimilating it into the own corporate culture 71% Integration 62% 57% Success . A customized approach and sensible level of Technology, Maintaining Assimilation integration is key for leveraging the full value potential product / service the innovative into own corp. of investments into progressive companies integration culture culture Vertical Center = 1,80 % of respondents ranking among top 3 success factors . Take Away: Next to classic financial incentives, the existing culture and work style of the target should be

Full Integration 49% 55% maintained to keep people motivated and inspired

Integration Partial Integration 30% Level 34% No Integration 21% 11% Front Office Back Office % of respondents Lower Guide Content = 8,70 Source: Accenture Executive Survey ((n=242)n=242) © Accenture 14 Large corporates change their traditional way of PMI to maintain flexibility and Guide Headline = 6,80 pace of an acquired progressive companies

Guide Subline = 5,60 3 ENABLE TAILORED INTEGRATION – OR MISS THE VALUE EXAMPLES Upper Guide Content = 4,70 Daimler Accenture

Daimler Group concentrates acquired companies under the mobility Accenture traditionally used the common operating model in managing service subsidiary, managing them with a different operating model acquired companies, but with Fjord, the digital design firm, we continued from its auto manufacturing operating model using its original operating model

Vertical Center = 1,80 Mercedes Daimler Daimler Benz Financial ・・・・・・Buses Cars Services

Mobility service

Design/digital Ride sharing app Taxi booking app marketing

Lower Guide Content = 8,70 Source: Accenture Executive Survey (n=xxx) © Accenture 15 Guide Headline = 6,80 AGENDA

Guide Subline = 5,60

Upper Guide Content = 4,70 1 INTRODUCTION

2 MARKET OVERVIEW & CONTEXT

3 SUCCESS FACTORS FOR M&A IN THE NEW

FJORD CASE STUDY Vertical Center = 1,80 4

5 Q&A

Lower Guide Content = 8,70 © Accenture 16 ACCENTURE INTERACTIVE & FJORD

ACQUISITION & INTEGRATION PERSPECTIVE

NOVEMBER 15TH 2016 BACKGROUND OF OUR ACQUISITIONS IN DIGITAL-RELATED SERVICES

18 DIGITAL-RELATED SERVICES ARE DRIVING A BIG PART OF ACCENTURE’S GROWTH

CMT FS PRD HPS RES

Accenture Digital Footprint FY15

• 7b$+ revenues and 35%+ growth in digital-related services

4,000+ clients in >49 countries 36,000+ Digital professionals

32 Accenture Interactive design studios, R&D offices and Centers of Excellence

1,000+ developed mobile applications for 400+ clients in the past 3 years •

19 ACCENTURE INTERACTIVE HAS PLAYED A VERY IMPORTANT ROLE IN OUR SUCCESS IN DIGITAL

EXPERIENCE

MARKETING

CONTENT ACCENTURE COMMERCE INTERACTIVE

CONNECTED MOBILE APP DEVELOPMENT PRODUCTS BIG DATA, DATA MGMT. & ACCENTURE & DEVICES; ANALYTICS DIGITAL IOT SERVICES

STRATEGY CONSULTING TECHNOLOGY OPERATIONS

20 … AND WE HAVE BEEN MAKING WAVES IN OUR INDUSTRY AND CHANGING THE GAME A BIT

FORRESTER DIGITAL EXPERIENCE SERVICE PROVIDERS, Q4 2015

Ad Age Datacenter produced Advertising Age’s 72nd annual Agency Report. Ad Age published the complete Agency Report 2016 online May 1, 2016.The report, which includes rankings based on U.S. and worldwide revenue, is available online to subscribers at the Ad Age Datacenter. It is also available in the May 2, 2016 print edition. TARGETED ACQUISITIONS PLAY A KEY ROLE IN OUR DIGITAL CAPABILITY DEVELOPMENT

2008 Origin Digital 2005 Maxamine (now 2002 Media Audits Accenture 2011 2013 Acquity Group Edge (part of Digital CAS (now June 2015 July 2015 December 2015 July 2016 Consulting Media Diagnostic) Accenture Fjord Brightstep Chaotic Moon boomerang mobgen Management) CAS)

2004 2007 2010 2012 February 2015 July 2015August 2015 April 2016 July 2016 Milton Merl & Digiplug Cadence Quest avVenta Reactive PacificLinkAD. Dialeto IMJ Group dgroup Associates (now Worldwide Mediasenz Accenture (part of Customer Media Insight) Management) Mogenesis Memetrics (now Accenture Digital Optimization) 22 ACCENTURE HAS STRONG CORPORATE VALUES THAT SHAPE OUR CULTURE AND CHARACTER

STEWARDSHIP

INTEGRITY BEST PEOPLE

Core Values RESPECT FOR ONE GLOBAL THE INDIVIDUAL NETWORK

CLIENT VALUE CREATION 23 SO ACCENTURE DECIDED TO BUY A DESIGN COMPANY (FJORD) … WHY? WHAT‘S GOING ON IN DIGITAL?

1 THE DIGITIZATION OF EVERYTHING 2 LIQUID EXPECTATIONS 3 CREATIVE DESTRUCTION 4 LIVING SERVICES

OK, SO HOW DOES ALL THIS RELATE TO DESIGN?

26 THE DIGITITZATION OF EVERYTHING

“THE PACE OF CHANGE WILL NEVER AGAIN BE AS SLOW AS IT IS TODAY" MATHEW BISHOP THE ECONOMIST’S INNOVATION FORUM 2015 CUSTOMER EXPECTATIONS ARE LIQUID AND TRANSCEND TRADITIONAL BOUNDARIES

DIRECT COMPETITORS

EXPERIENTIAL COMPETITORS

PERCEPTUAL COMPETITORS

Services that change customer expectations – and raise them for yours CREATIVE DESTRUCTION (OF THE PRIVILEGE OF LEGACY)

SILICON VALLEY MEETS THE OLD CORPORATE WORLD ...NOT ONLY AT THE BATTELFRONT OF IDEAS AND SERVICES, BUT INCREASINGLY AS A CULTURAL TRANSFORMER IN AN ERA OF LIQUID CUSTOMER EXPECTATIONS THE BATTLEGROUND IS EXPERIENCE

The success metric is delight Living services are complicated: simplification is hard We start with the user We turn dreams into reality

AT FJORD, WE PUT DESIGN AT THE HEART

30 A LITTLE BIT ABOUT FJORD… ŠKODA LEADING DIGITAL TRANSFORMATION SINCE 2014

From global digitalisation strategy to delivering new products and services into market, Fjord is turning a mass market car producer into a customer-centric data-driven, service organisation

32 ŠKODA

What we did and delivered

A people-centric strategic vision, roadmap and architecture evolving Škoda‘s digital eco-system. From responsive web platforms to a new customer profile and portal experience through to online sales advisor tools that match customer needs to product recommendations. In addition establishing an innovation lab tasked with creating pilot products and services to validate opportunities for Škoda’s future mobility offering. Outcomes

“Over the last two years, Fjord has been a key innovation and digital collaborator to Skoda – helping us to significantly grow our business platforms, while successfully bringing in fresh ideas and initiatives across our markets and moving us closer to our goal of becoming a digital leader in our field” Michael Lamm, Global Head of Digital TAG HEUER

WATCH OUT

With 155 years of luxury mechanical watchmaking experience, TAG Heuer faced a seismic threat to its business: the ascendancy of the luxury smartwatch. The watchmaker needed a partner who could craft a smart watch interface and omnichannel ecosystem and whose vision—and willingness to push the boundaries of convention— complemented the company’s legacy.

34 TAG HEUER What we did and delivered We built the world’s first luxury Android smartwatch, and 10K the entire ecosystem surrounding it. Picture a completely custom version of Android Wear, designed to perfectly align with the bold TAG Heuer hardware, along Sold out of the initial 10,000 watches with a robust complement of micro applications. We also delivered a fully responsive web product exploration and (at $1,500 each) immediately, with an additional 100,000 purchase experience showcasing the bold design; a on back order. groundbreaking and innovative platform for delivering additional functionality through connected watch faces (overcoming the limitations of iOS-paired watches); and a fully responsive web solution and Android companion application for administration and support, setting the foundation for an entirely new and deeply personalized customer engagement channel. Outcomes

This was TAG Heuer’s most successful launch ever, and the company sold out of its initial 10,000 watches (at $1,500 each) immediately, with an additional 100,000 on back order. Not only that, but TAG was the first non-tech company to enter the connected smartwatch market, and the Android Wear team at Google acknowledged that it is the best product 4GB released on their platform to date. Of onboard storage for apps and media

35 COMMERZBANK BRINGING DESIGN WITHIN

With digital customer experience redefining competitiveness in the banking industry, we brought design thinking in-house to create true customer- centred thinking, and a faster and better pipeline for digital services.

36 Commerzbank

What we did

This project followed our belief in installing a design culture within our clients’ businesses.

We provided the client with an experienced team, manned with an incredibly detailed plan to a create an in- house resource, Neugelb, which would push design as a discipline into the boardroom and then back into every facet of the bank’s customer experience and internal culture. Outcomes

Neugelb is today up and running, and has already had an impact on one of the bank’s core strategic priorities – the huge task of aligning the customer experience across the bank - and they will shortly be delivering a new app to assist their multi-channel banking strategy.

Neugelb are also working on a project with HR, which will align the internal and external systems, bringing the same experience that customers have online, into the branches.

372 ATLANTA • AUSTIN • BERLIN • CHICAGO • DALLAS • HELSINKI • HONG KONG • ISTANBUL • LONDON • LOS ANGELES • MADRID • MELBOURNE • MILAN • NEW YORK • PARIS • SAN FRANCISCO • SÃO PAULO • SEATTLE • STOCKHOLM • SYDNEY • TORONTO • ZURICH • DUBAI AT FJORD, INNOVATION NEVER SLEEPS 22 850 300 Studios Experts Clients Europe, North America, The best talent Worldwide South America and APAC in the world

38 IN SUMMARY, FJORD HAS BEEN ONE OF ACCENTURE‘S MOST SUCCESSFUL ACQUISITIONS

SO, DID WE JUST FIND THE PERFECT TARGET? OR WHAT, BEYOND THE ACQUISITION, WHAT HAS HAPPENED AFTERWARDS? STUDIES SHOW THAT 50% TO 80% OF M&AS FAIL

AND CULTURAL INTEGRATION IS THE SINGLE MOST IMPORTATNT FACTOR OF SUCCESS OR FAILURE

40 SIX ELEMENTS OF A SUCCESSFUL INTEGRATION OF NEW ACQUISITIONS PEOPLE & CULTURE

PROCESSES & TECHNOLOGY JOINT VISION

SUCCESSFUL M&As OFFICES & BRAND WAY OF WORKING

CLIENTS / GO-2-MARKET 41 THIS IS HOW FJORD TENDS TO WORK THIS IS HOW ACCENTURE TENDS TO WORK WE WENT ABOUT THE ACQUISITION WITH THE SAME CORE BELIEFS AS WE DO IN PROJECTS FOR OUR CLIENTS

Start with PEOPLE and not with the PROCESSES and TECHNOLOGY

44 A UNIFIED VISION Create a shared belief system. Flip tension and differences into positivitiy.

PROTECTING AND CELEBRATING WHAT IS SPECIAL Recognize strengths. Recognize what to combine, what to keep distinct. MAKE EVERYBODY CO-ARCHITECTS OF THE NEW You can‘t indoctrinate culture top-down. Change management is overrated if people are not fundamentally on-board.

GO ON A JOURNEY TOGETHER, DO LOTS OF THINGS TOGETHER Come together productively as two teams, two cultures that respect each other but produce a combined output. 45 DISTINCT & CONNECTED BRAND Fjord brand has a unique positioning as leader in Service Design and Design Services around the globe. The Fjord brand is strong, distinct, and meaningful for our existing and new talent, as well as our clients and partners.

Consequently we have continued Fjord brand distinctively, and connected it with Accenture Interactive, the leader for CX services.

Both support eachother, without diluting the clear positioning. COMMON CLIENTS & GO-2-MARKET APPROACH SELECTED ASG CLIENTS We both have our clear brand positioning and go-to-market approaches. Yet, we consequently align our client activities, nourish and develop our target clients and potentials together and leverage synergies in our marketing activities. We prioritize business development activities according to our joint vision and goals, reflecting business as well as innovation potentials with our clients. We consequently align our services portfolio to address the real needs of our clients leveraging our full, enriched skill portfolio. 47 CREATIVE STUDIOS & SPACES ENABLE OUR WAY OF WORKING As we enter an era of liquid expectations the battleground is experience. We’re having to constantly adapt how we work. We put people’s needs at the heart of our work. Our service design work is people-centric, creative, agile, and permanently evolving. We connect and develop ideas. This requires different office and workshop spaces, with all creative infrastructure, and a studio-based way of working. ONE GLOBAL FIRM – CORE VALUES AND PROCESSES

Accenture is “One Global Network”. This common foundation is established via our corporate vales and core processes. We share the same values, and are supported by same systems and processes, e.g. in finance, compliance, technology. With or despite our distinct capabilities in our five businesses, we act as one global firm, in the best interest of value creation for our clients. Guide Headline = 6,80 AGENDA

Guide Subline = 5,60

Upper Guide Content = 4,70 1 INTRODUCTION

2 MARKET OVERVIEW & CONTEXT

3 SUCCESS FACTORS FOR M&A IN THE NEW

FJORD CASE STUDY Vertical Center = 1,80 4

5 Q&A

Guide Subline = 5,60 Sven Wahle Rainer Balensiefer

Upper Guide Content = 4,70 Accenture Accenture Mobile +49 175 576 8709 Mobile +49 175 576 4646 [email protected] [email protected]

Vertical Center = 1,80