Fall 2014 issue of Horizons

As these examples show, big savings are anticipated with almost any merger and acquisition. However, such savings are far from certain, as many planned synergies often fail to be realized. The integration process is where most of the attention in a transaction must be focused. The following list of integration topics and activities draws upon the experience of RubinBrown’s Merger & Acquisition Services Group providing due diligence and post- acquisition integration services. It is not meant to be an exhaustive list of integration topics and activities and should be adapted for the specifics of each transaction. Plan for Integration ∙ Assemble a team and define decision makers. ∙ Agree upon an integration timeline and communication plan. ∙ Identify what assets are being acquired and what liabilities are being assumed. ∙ Understand what “Day 1” looks like, and address any anticipated challenges. Operations ∙ Create organizational charts for “Day 1” post-acquisition and “Day x” post- integration. ∙ Identify interim leadership and potential redundancies for overlapping business units. ∙ Ensure employee access to appropriate facilities. ∙ Modify signage and images as appropriate. ∙ Facilitate knowledge transfer, such as best practices, between the entities. Human Resources ∙ Understand differences in culture, and address any anticipated challenges. ∙ Identify / address employee retention issues. ∙ Ensure no gaps in employee payroll remittance.

markets, acquire new products, and realize back-end cost savings.

Analysts covering the industry have been positive on the consolidation, and everyone, including RubinBrown’s Gaming Services Group, is eagerly watching to see if the planned synergies are realized. For example: ∙ International organizations are looking to accelerate growth in the U.S., which has a relatively high level of recurring revenue. In Aristocrat’s acquisition of VGT, it is gaining exposure to the Class II Tribal Gaming market and increasing installed gaming machines to 28,400 in North America. The access to the North American market will not only boost Aristocrat’s revenues, but offers growth opportunities for VGT too. As Jamie Odell, CEO and Managing Director, said, “this combination also offers exciting growth opportunities for VGT by leveraging premium Aristocrat games and systems products, as well as national distribution opportunities for VGT’s Class II products.” ∙ In Scientific Games’ (SGI) acquisition of Bally Technologies, SGI diversified its slot offerings. In addition, SGI management is expecting cost savings of approximately $220 million a year ($33 million from cost of goods sold, $144 million from selling, general, and administrative costs and $43 million in annual savings from R&D). The annual cost savings will not be realized right away, though, as SGI expects to incur approximately $75 million in one-time integration expenses and another $40 million in capital investments during the integration of the two companies. ∙ In both GTECH’s acquisition of IGT and Scientific Games’ acquisition of Bally’s, the lottery companies obtained social gaming products – a potential new source of revenue. Additionally, it positions both companies to lead the way in the expansion of the online/internet gaming environment.

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