MERGERS & ACQUISITIONS — How To Get It Right Amid COVID-19 Crisis
Being Agile and adjusting a corporate strategy is critical not only for robust company growth but also for post-crisis survival. One of the fastest ways to do it is through a Merger and Acquisition (M&A) deal. According to Thomson Reuters, Merger and Acquisition transactions grew exponentially during 2017 - 2019. Due to the current crisis, however, there was a sharp decline in M&A deals (McKinsey "Insights"), and short-term M&A activity will likely be very limited. Although it can be hard to do in the face of financial difficulties, McKinsey's research shows that companies that continue to invest during a downturn emerge as outperformers.
It is natural to assume that a Merger & Acquisition deal must have a positive impact on a corporate strategy to be deemed successful. Despite M&A's criticality and importance, 40% of executives report that half of their deals have not reached the expected value and profitability (Deloitte executive survey). The right integration is the key for a merger to deliver desired results, and gaps in the integration project management can lead straight to failure. During a crisis such as we are experiencing today when resources are scarce, there is even less room for an error. Let's take a look at specifics of project management in the M&A space and how to get it right during the COVID-19 crisis or any future crisis.
From a project management perspective, due diligence is the most critical phase of an M&A deal, as viewed by Kash Ahuja, an M&A Program Manager at Google. During this phase, both organizations are performing analysis that will reveal whether it's worth a merger. This phase entails a lot of stakeholder communication. There are several challenges specific to a due diligence phase. First, delays are a norm as stakeholders often do not deliver their feedback on time and rushing them is not always possible. In these circumstances, constant communication and fluid mindset are essential. Second, scope creep will happen as issues are appearing daily. When uncertainty is that high, planning for risk avoidance might not be possible, and it is recommended for a project team to acquire a constant solution mindset. What does that mean exactly? That means that the team should be thinking on their feet and constantly working through solutions as problems appear. Later in the article, we will touch base on how it can be arranged.
Another crucial phase for an M&A deal, according to Kash, is an integration phase. This phase is all about systems, processes, and culture. All these elements are important; however, the main objective of the M&A deal will help to identify those elements which deemed most critical. For example, for gaining access to a new market, it's crucial to retain front office (sales, marketing, engineering and product development) while back office will need to go through an integration. If talent was an objective of a merger, then cultural elements are incredibly critical. These cultural elements will get developed through packages for key employees and the right incentives to keep people productive and motivated.
In M&A Project Management, flexibility is a key as timeline and scope creep are typical and will always be happening. What is the best way to prepare for the unknown? To do that, Kash recommends a two-step process. The process starts with planning: include as many stakeholders as possible in a planning meeting while maintaining control to avoid information leaks. The second step to prepare for the unknown is execution: put together an expert team that is available to advise when something goes wrong. As mentioned, due to a high uncertainly, unpredictable things will happen daily, and a cross-functional expert team must be ready to assist with offering the right advice promptly. Overall, in Merger and Acquisition, appropriate project management focus should be given to two things: issue resolution and daily communication of changes.
As readers have already sensed, M&A space is a highly stressful and fast-paced environment. How can one make sure nothing gets overlooked when circumstances are so fluid? A holistic approach to rely on would be extremely convenient to have.
Kash emphasizes that a PMP certification gave him exactly that: a comprehensive framework to think of a project and a structured way to communicate his project to all stakeholders. One M&A deal seems to be stressful enough, so how do we manage multiple projects as part of an M&A project portfolio? To increase the success of an M&A portfolio, we need first to understand and define the value for every deal. Moreover, project managers should understand what success looks like and identify metrics that will lead towards it. One performance indicator is never enough. Using several performance metrics, on the other hand, will guide a project management team successfully. Finally, tracking is essential; committing to quarterly checkpoints to analyze key results vs. developed metrics for every deal will prove valuable. Due to uncertainty, multiple timelines and scope changes, and criticality, a Discipline Agile (DA) framework is an excellent fit for M&A portfolio management. Applying DA principles to M&A projects will further increase their success rate. Do you have experience in M&A project management? If so, please share lessons learned or feel free to post questions in the comments field below. Alternately, you may also reach out to me at [email protected] with your questions.
—Olga Minikh
0 Comments