Standardizing M&A Process
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I believe there is great benefit to standardization with the knowledge that the templates and processes need to be reviewed and possibly tweaked with each acquisition. Having standards allows you to get started more quickly vs re-inventing the wheel with every single transaction. Additionally, standardization ensures that all the knowledge does not reside with one or two key individuals who may or may not be around for the next acquisition.
I’m a big believer in standardization with all projects. All projects (M&A included) are different and will require nuanced approaches. However just like a builder shows up to a job with a standard tool kit, as change practitioners we should have a standard toolkit at our disposal. It’s then up to us to decide which tools to use and what small tweaks to make depending on the job; or perhaps we may discover we need to add a new tool. But having the playbook saves a lot of time as opposed to starting from scratch with each engagement.
An industry agnostic framework or guiding principles for reference will be an ideal starting point. As we delve down deeper into specific nature of acquisition, would be helpful to have these guiding principles with deeper details on specific Industry type / org type / nature of transaction / guidelines for specific functions etc. I believe there is enough and more M&A activity that has taken place to be able to create these guiding principles at various different levels. Having said that, change is the only constant and every new transaction provides new learnings that will continue to evolve these guidelines.
I have used what I have learned in this course along with the experience from my company’s recent acquisition to create a framework. But as you stated there are unique challenges and opportunities with each M&A that need to be considered and addressed accordingly. For example, in our recent acquisition our goal was to extend our offerings, for that reason the target company was largely left unchanged and a focus on allowing the employees of the small target company to select which HR benefits they would adopt kept positive momentum. If we purchase a competitor likely the HR issues may be more complex if there is a need to merge positions and reorganize one or both companies.
We have a tailored M&A playbook, that outlines the key parameters, practices & process steps – this helps everybody to ramp up a project quickly (time is usually of the essence), and it also incorporates our company-specific regulations that people might not be aware of esp. if they are “first timers”. But true that every project is unique so you need to be flexible and adjust accordingly, especially if you are on the buy-side.
Collecting and transferring lessons learned from previous projects is also important, so that you don’t start from scratch every time.
Best practice in my opinion is a minimum standard that can be tailored and incorporates previous learnings.We’ve determined that we have 4 or 5 standard deal types which allows us to develop some standard integration templated playbooks to pull from. The detailed activities of each integration may vary but the playbooks give our resources a place to start and also serve as good ways to “rehearse” integrations when one is not in-flight.
Having competent staff/managers is the most critical. A standard process checklist is good to ensure all ground issues are covered adequately. Having skilled staff prevent resources being wasted on irrelevant points/issues that so happen to be in the checklist but not relevant to the specific case.
I believe companies should start from a standardised playbook that could be adjusted on the fly to comply with unique circumstances.
There should be a generalized M&A playbook with some options (small, medium, large deals), but should then be tailored based on deal rationale (e.g. product, technology, revenue, commercial). If there were no playbook or general guidance in effect, every BU/function would always be reinventing the wheel on every deal, and would not be able to build improved expertise on subsequent deals.
I do not believe you can standardize the M & A process. Each merger/acquisition is different and brings it’s own unique requirements and challenges. What should be standardize is your upfront due diligence process. Your approach to acquisition should be the same however your execution plan should be personalized based on the transaction.
Having playbooks and frameworks is great; however maybe there can be more standardized approach to ask the right questions or identify the right risks during the integration process?
Thank you for sharing your view. I like very much how you summarised it.
Indeed it all starts with assumptions, with involving different stakeholders (Strategy, Marketing, Operations, HR and so on), different time-pace, and jurisdictions…
The beauty is to balance between the standard approach and individual aspects of each M&A.
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