Five Skills Your M&A IMO Needs to Knock It Out of the Park

Monique Notch headshot
By Monique Notch
Senior Partner, M&A Partners
Aug 28, 2019

After several decades of being a Certified Program Manager, I was asked, “Shouldn’t I be able to move my project managers from the Project Management Office (PMO) over to the Integration Management Office (IMO) and have them run the acquisitions?”

My answer: “It depends!”

Initially, as a Vice President of an IMO, I applied the typical project management processes to the M&A lifecycle. After a couple strikes, I learned that using only the normal PM processes won’t help you run an acquisition the way best-practice acquirers should.  To be a power hitter, you need a different structure, approach, playbook and tools that are built specifically with integration as the focal point. So before losing a couple innings, put these five essentials in place to create your winning team.

 

  1. Respect the purpose of due diligence but insist on having an integration strategy framework and concept of operations as an additional outcome.

The main purpose of due diligence, as we all know, is to verify by intense, accelerated analysis that the target is a good investment, so corporate development can then finalize the financial model and get the transaction closed. A wise IMO leader will balance supporting corporate development’s needs with what the integration needs to hit a homerun on Day 1. To do so, the IMO leader needs to ensure that they have an integration strategy framework and concept of operations at the end of due diligence.

The integration strategy framework is an essential blueprint to align key executives, integration leaders and integration teams. It provides the directional guidance needed to preserve and leverage the “secret sauce” of the target and the plan to execute an integration that delivers the expected value from the deal.

It’s important to determine uniquenesses such as the buyer role, type of transaction, business model and deal type DNA / integration model. These factors will influence acquisition strategy, deal thesis value drivers, preliminary assumptions, integration guiding principles and the communication plan. The executive governing body will then determine the go-to-market strategy, budget and non-negotiables, one of the key outputs being the concept of operations

Business Triangles

In the initial stages of identifying a target company to acquire, the Finance and Corporate Development teams should form an initial hypothesis regarding what type, speed and degree of integration at the enterprise level, will create the most value using the “Concept of Operations” model.

Some IMOs begin their high-level planning in due diligence. But as organizations mature, understanding the concept of operations (sometimes referred to as integration models) not only provides the team with the vision to estimate more accurately, but more importantly avoids business interruption and value erosion.

  1. Become indispensable to the business leadership by using a value-driven approach through the entire M&A Lifecycle.

I started out building the M&A capability and applying more M&A integration best practices because the businesses that do, tend to outperform those that do not. Over time, I learned that to be an all-star player, you must also incorporate a value-driven M&A approach throughout the entire lifecycle.

The purpose of instilling a value-driven approach is to accelerate value creation. M&A Partners’ high-deal acquirers have noted numerously that delay, ambiguity and poor execution cause can value erosion.

During each phase of the lifecycle, the function teams were shown value-driven questions to address and keep in mind. The IMO should manage a value-driver dashboard tracking the leading and lagging indicators.

  1. Address cross-functional business processes upfront.

Cross-functional business processes have greater integration risk than functional processes. This is especially true if there is little to no documentation, and process steps within the organization are manual rather than automated.

Without early and regular attention to these cross-functional processes, deals fail to achieve their maximum value. Too often, businesses miss revenue targets or fall short of the strategic intent.

To be the all-star player, you must facilitate cross-functional workshops to ensure data, organization roles, processes and systems flowcharts are in place to create the future state business processes.

Cross-functional business processes vary by industry, but a couple of examples are Hire-to-Retire, Source-to-Pay, Order-to-Cash and Record-to-Report.

  1. Help the functions find the synergies.

The speed of due diligence, especially in competitive situations, is like a 90 MPH fastball. Not all functions have the ability and permission to attend workshops or confidential meetings. To really hit it out of the park in these scenarios, the IMO needs to help the functions identify synergies only the deal team could see coming.    

After due diligence concludes and the transaction closes, the IMO either manages or oversees the integration budget, even if it resides elsewhere. With a top-down view, they can see cross-functional trade-offs, as well as direct and indirect spend.

By having a joint discovery integration planning process after due diligence, for each function and cross-function, it is easier to identify the synergies. Then by tracking leading indicators (revenue or other activity progress) and lagging indicators (spend reduction) you can create positive outcomes with your synergies.

  1. Give your team members a baseline toolkit with process and system maps.

I am certain all of you will come to the game prepared, with bat and ball in hand. You have an integration plan; risk and issue logs; status reports; and the like. But in organizations where the business processes are not well documented, creating as-is business process and system maps is critical for speed and detailed planning.

Not only will these guide you to create the future state and refine your integration estimates, but they also enable you to see the differences in culture that will need to be addressed. If one team only sells hot dogs and the other only sells beverages, your customers will struggle as well as your employees. Keep the fans happy!

 

Get the training you need long before bases are loaded and you are up to bat. With so much riding on your performance, you need the right M&A consulting firm to coach your team into all-star players. M&A Partners can help you quickly assess any gaps in your current M&A approach and deliver the solutions, strategies and skills to ensure you knock it out of the park every time.

 

M&A Partners provides the major presenters for the M&A Leadership Council's The Art of M&A Program Management. Reserve your seat for the October 2019 event in San Diego to enhance your program management skills with the tools and techniques necessary for successful mergers, acquisitions, and divestitures. 

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