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Value From Structured M&A

Executives and managers tend to view M&A as a project and surprisingly few companies apply systematic methods, like project management, in their process. Systematic methods would be particularly beneficial during M&A integration. Managers’ approaches seem to change when companies have undertaken several M&A. What makes them change their way to work and what have they learned? Below are some points I have gathered based on the discussions I’ve had with my clients.

Structure

Systematic Approach

The most experienced leaders see the M&A case as a lifecycle of events. They think that systematic project management needs to be started as soon as the decision, of M&A as being the way to implement the company strategy, has been made. This means listing the top level phases (with key sub-phases), like transaction (due diligence, legal negotiations, integration planning), signing and announcement, Day One and integration.

Systematic approach brings many benefits and improves the overall success rate of your M&A process:

Structure

It is essential to structure all M&A information from the onset of the M&A case. This means writing down all activity phases.  During initial steps of transaction you may have only an outline of activities and tasks. But I recommend you to start with that. When the transaction phase continues through due diligence, target management meetings and legal negotiations, you and your colleagues will gather huge amount of valuable data and information. Using this data to structure the upcoming phases and tasks during the M&A the whole case becomes an evolutionary process. It improves while it proceeds. The best part is – you gain control of what is going on. The M&A becomes less chaotic and better manageable.

Speed

It is claimed that there is a clear correlation between speed of actions and M&A success! Owners expect focus on integration speed to capture the promised value increase and synergies. Fulfilling these expectations require speed in decision making and in actions. M&A being a combination of major and smaller issues, it is impossible to prioritize the decisions and activities without a systematic project management structure.

Resources

M&A teams often complain of shortage of time and resources. When you structure the M&A, it is easier to see the number of tasks, how long they are estimated to take to finish, how many people need to be involved, are there overlaps in tasks etc.  This enables allocation of qualification and resource needs.

Transparency

Transparency and data sharing improve speed of action. When people involved, for example, in the integration phase have immediate access to the workflow data of their colleagues there is a truly new way to improve the M&A work efficiency. A well-structured project data is a pre-requisite for data transparency. The information must be easily followed and understood, otherwise it becomes counteractive. Clear governance guidelines and user permission systems will help in this process.

Communication and Interdependencies

Information sharing and communication becomes much faster and easier with a good structure and clear responsibilities. Integration team leaders typically ask to share team goals, tasks and team results with other teams. In situations like this, where there are task interdependencies, access to the same data brings your M&A work to a totally new improved level.

Measurement

As speed is such an important element of the M&A success you need to have tools to track and measure the progress continuously, preferably real-time.  A systematic structure with clear responsibilities makes the tracking much faster. It is important to remember that you get what you measure. Try to focus the goal setting on value creating activities and giving detailed tasks to reach the goals you set. It is important to separate the short term wins and longer terms sustainable growth and operational stability bringing initiatives.

Savings

A systemized approach reduces hassle and insecurity in people. They know where the project is going, can better influence their own tasks and become more motivated.  This all improves speed and reduces unnecessary costs. Savings can be achieved through improved focus and efficiency.

Technology Solutions

One of the frustrations for the companies is the lack of proper tools to improve their complex M&A work. During the last years I have repetitively been asked by my clients, whether there are tools to manage the M&A project better. To overcome this problem many companies, where M&A is a strategic way to grow, have started to develop internally or with the help of external advisors their own M&A handbooks and governance guidelines. They’ve also started to developed their own tools, like Excel checklists, modifications of generic project management tools or SharePoint programs. However, these efforts have not brought in the needed efficiency.

A solution to this is a dedicated M&A management tool. You might ask if a dedicated tool is needed, why not just use a generic project management tool and modify it to the M&A needs? Well with a generic tool  you end up spending considerable amount of time in modifying it and trying to turn it into a solution that fits to your specific needs.  Thus they take time, focus and resources away from your core business. In an ongoing M&A case when things are already in motion or in a situation where you are just getting started with a case, you simply don’t have the time.  Since speed is a key element in M&A work, your  time should be used to more important things like leadership, change management and in areas that generate value for your M&A.

With Midaxo, we wanted to develop one solution that combines all the needed elements in an M&A situation: document management, communication and collaboration in addition to a project management system.  We also included a pre-made M&A structure and a Guide to assist you through the whole M&A process. For experienced M&A Managers, the Guide works as a checklist and allows them to take better advantage of their existing know-how. For first times with less M&A experience, it supports and helps through the phases and steps of M&A.

Project