by Tom Allen
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The traditional approach to running an M&A process is destined for the archives of a museum – think piecing together a number of non-dedicated tools – such as Excel spreadsheets, Word documents, PowerPoints and paper files – plus re-inventing the wheel for each deal.
In today’s world of deal making, technology is enhancing M&A processes and set to become the new normal.
Already, hundreds of world-leading organizations – such as Philips, HP, Nokia, Verizon and Daimler – are using digital tools to revolutionize their M&A process – specifically, a Smart M&A Platform.
Smart M&A is characterized by an improved way of working, enabled by technology – a Smart M&A Platform. With a Smart M&A Platform information becomes centralized and deal management becomes easier. Goals, intent, decisions, issues and risks are better communicated. Deal teams work collaboratively and in real-time. Information and best practices are shared with ease. Relevant information is easily found anytime, anywhere. Advanced dashboards and analytics empower teams to spend less time reporting and more time working on the things that matter most.
A Smart M&A Platform is characterized by ease of use – which simplifies the user experience across what is typically a complicated process. A Smart M&A Platform does not require in-house experts or an intensive training period. While there will, of course, be a learning curve associated with making the transition from an “Analogue” way of working to M&A Software, the intuitiveness of a Smart M&A Platform means a deal team can automate and digitize their M&A process from the get-go.
The Case for Using Technology In M&A
Engaging disparate internal and external stakeholders: M&A deals typically involve multiple stakeholders – think lawyers, accountants, consultants, investment banks, etc. It is therefore essential for an M&A team to have a solution which enables them to grant permissions at a granular level across stakeholders in respect of activities, documents, schedules, issues, etc.
Siloed working chokes deal progress: A Smart M&A Platform bridges the inadequate handovers that still exist with the siloed approach to deal execution – for instance, issues uncovered during M&A due diligence can be seamlessly pushed to the deal integration phase with a few clicks.
Information all in one place: A Smart M&A platform provides an end-to-end solution for project management across the entire deal-lifecycle – from the evaluation of M&A pipeline targets, to due diligence and integration. Given this end-to-end functionality, deals flowing through a Smart M&A Platform accumulate voluminous quantities of information and analysis insights, etc. across all deal phases, which is of great value for subsequent deal activity.
Playbooks come alive when made digital: A deal Playbook – a roadmap to executing the transaction from beginning to end – becomes infinitely more powerful when loaded into a Smart M&A Platform and digitized. Tasks can be assigned to individuals and dependencies linked – all in real-time and in full-visibility of a deal team. Additionally, digital Playbooks constantly improve over time – for instance, they allow a deal team to accumulate M&A best practices, document templates and add new tasks (e.g. based on issues uncovered), etc. Playbooks also ensure a deal team works objectively – with strategy and risk mitigation made central to the decision-making process (a key element in avoiding deal fever).
Security is currency: Adding a wrong recipient to an email has happened to all of us – a Smart M&A Platform ensures this will never happen again! The world of M&A relies on security to maintain accord. What many M&A leaders do not realize is that the Analogue approach to managing data security across the M&A process simply doesn’t cut it. Not even close. Unfortunately, despite the fact that security is usually considered to be a top priority in M&A, the measures taken by many organizations aren’t reflective of the risks incurred across a typical deal. A Smart M&A Platform puts deal security at the forefront of the deal process.
The core features of a Smart M&A Platform drive deal efficiency across a number of key areas:
Dashboards – the advanced dashboard reporting functionality provided by a Smart M&A Platform enables a deal team to easily leverage voluminous amounts of deal data by creating a variety of user-friendly dashboard reports – therefore helping drive quick and considered decision making across an organization through automated reporting.
Stage-gated Pipelines – the M&A deal lifecycle should be split into clear stages, mainly to increase control across a deal and to reduce risks by allowing for the introduction of defined-deal phases (Stage-gates). A Smart M&A Platform enables custom Stage-gates to be set up in minutes.
Collaboration & Document Management – M&A projects typically generate 1000s of working documents – such as Excel, Word and PowerPoint files, system downloads, emails and notes, etc. With the speed at which a deal team must work, managing documents in the secure, structured and easily accessible way provided by a Smart M&A Platform is essential.
Project Management – the Analogue approach to project managing M&A is plagued by a number of problems – including (i) no centralized source of truth/reference (ii) a lot of information sharing that relies on phone conversations, emails, hallway conversations and (iii) insecurely shared files. To counter these problems, a Smart M&A platform provides an end-to-end solution to project managing deals and related corporate development projects – enabling a team to significantly reduce the heavy admin burden typically associated with M&A and drive efficiency across a deal.
Reporting – if an organization lacks proper reporting processes for M&A it risks encountering problems such as (i) information bottlenecks (ii) siloed information (iii) slow decision making (iv) key decision makers not being informed of progress. Reporting through a Smart M&A platform with M&A Analytics enables an audience to easily understand the latest deal developments at varying degrees of detail, understand open issues/risks and discuss corrective actions and next steps.
Issue/Risk Management – given the stakes involved with M&A it is essential that a deal team devotes due consideration to issue and risk management. Within a Smart M&A Platform, risks can be managed proactively via importing a best practice playbook, such as a due diligence checklist or post-merger integration plan template, with a few clicks. To deal with issues quickly and effectively, a deal team can use the Issues Log – helping to ensure issues are managed in the right way, in real-time and do not derail a deal.
Financial Tracking – financial tracking is central to the realization (or capturing) of synergies during the post-merger integration phase of a deal. Synergies may be tracked on two different bases – depending on the nature of the synergy in question. Strategic synergies may be centered around holistic areas such as culture and corporate structure, etc. or high-level initiatives. Operational synergies, on the other hand, are those associated with cost savings, revenue enhancements or other financial metrics. Regardless of the nature of synergies, they should be tracked within a Smart M&A Platform.
A.I. Automation / Automated Working – for particularly large-scale deals, the volume of information can be so burdensome that some documents may be given no more than a cursory glance (meaning that a significant issue may go uncovered). To increase efficiency, reduce costs and lessen the risk of key issues not being flagged, organizations are increasingly incorporating the A.I technology offered by a Smart M&A Platform into their M&A knowledge work.
The true victors in M&A will be those who apply digital technologies to their own processes, giving them a competitive advantage from strategy to playbook, for both digital and traditional deals. Digital is the only tool at their disposal that can deliver within the accelerated time frame today’s rapid business pace demands. Accenture
The benefits of using Technology to manage the M&A process are numerous and include:
Real-time Working –enables team/workstream leads, etc. to check the pulse of M&A deal flow at any given moment, see where attention is required/where improvements need to be made and work more collaboratively.
Single Source of Truth – through M&A analytics, deal teams can spend less time re-working data and documents because they have the confidence that the data/document to hand is the most relevant and up-to-date version.
Velocity of Information Flow – in order for information to add value to a deal there are two critical steps that need to take place. First, information needs to be shared – typically by an individual. Second, the shared information needs to be easily accessible by all other members of a deal team. Increasing the velocity of information flow via a Smart M&A Platform empowers a team to make faster and more informed decisions and thus increase the speed of deal execution.
Value Creation through Operational Efficiency – a Smart M&A Platform enables a deal team to place less reliance on manual tasks and low-value add work – therefore shifting the emphasis to strategic & value add areas of a deal. Additionally, a Smart M&A Platform helps provide a team with greater insight into the deal life-cycle - e.g. helping them to notice nuances of a deal, which may go unnoticed under the Analogue way of working.