The Smart Approach to Selecting a Fit-for-Purpose M&A Software Solution

The Smart Approach to Selecting a Fit-for-Purpose M&A Software Solution
Michael Murray headshot
By Michael Murray
M&A Software Services Practice Leader
Mar 15, 2020

Purpose-built M&A software can be a foundational component of a company's M&A capability. It can help streamline and simplify the repetitive tasks required during any deal and helps keep integration executives informed with key milestone reports and timely risk, action, issue, and decision (RAID) reporting. Along with a fit-for-purpose M&A Lifecycle Framework, M&A Playbook, education and skill-building, and critical enterprise capabilities such as governance, resources, budget and leadership, M&A software can help improve your team's competence so that M&A becomes a repeatable business process -- not a one-off initiative.

Our decades of practical experience on M&A projects have taught us a few important things about M&A software. First, M&A software is only valuable to the degree it makes you more effective and efficient at M&A. Second, there is no one "best" software package. What makes software "best" is when it does what you need it to do. And third, the software is a complete waste of money if you can't get your team to use it.

Don't miss this key point. Done well, M&A software can save your organization significant time, money and effort on your M&A projects and serve as the "single source of truth" to keep all due diligence and integration resources aligned and informed. It can eliminate routine tasks, freeing up Diligence Management Office and Integration Management Office resources to work on more important things, such as critical decision-making, risk mitigation, issue management, cross-functional coordination and value realization. But, to deliver that value, companies must first define their specific use case needs and objectives for M&A software, identify current gaps or limitations in their overall M&A process, playbook, resource model and skill set; then finally, they must carefully select the best-fit software for these requirements.

Most companies begin the process of software evaluation in the exact opposite order of what we believe is the best approach. For example, rather than conducting an internal assessment of existing process, playbook and skill set deficiencies, and defining who would be using the software and what it must accomplish well to be successfully adopted, most contact a software provider and request a demo. Software vendors, eager to please, typically deliver a 60-minute overview of the features and functionality. In the end, they provide pricing and try their best to answer your usage and other questions through their lens, which is "what do I need to do to close a sale?" The buyer typically then moves from one demo to the next, working hard to differentiate the various software solutions based on features, functionality, and price.

Unfortunately, this approach typically leaves most buyers frustrated and confused because all the top M&A software solutions out there today are good -- it's just that some are better at certain things than others -- and vendors typically are not in position or will not tell you which software package most optimally enable your company's specific M&A operations. If your requirements expose a feature-set deficiency, the vendor will have little choice to tell you about customization charges or that the "feature is on the development roadmap." In some cases, the vendor's "out of the box" approach could negatively impact your current effectiveness with your standard M&A operations--when this happens, your users are quite likely to resist using the software, impacting user adoption.

The trick is figuring out your company's requirements and then having the software vendors demonstrate how well their software meets those specific needs.

We learned a long time ago that organizations need to make their own M&A software decisions for their own reasons. That's why, at M&A Partners, our practice has been "software agnostic," meaning we use whichever software solution the acquiring organization chooses to use. We know them all, use them all, and, like children, love them all...but for their different attributes.

Over time, we have been increasingly asked to help acquirers make a "best-fit" M&A software selection decision for their respective organization's M&A requirements. These insights and experiences have been codified into what we now call "The Practitioner's Viewpoint™ for M&A Software Evaluation." The aim of this approach is not to "tell you what to buy," but to work together with your key leaders and M&A practitioners to more quickly and effectively arrive at not only the best vendor selection decision, but also, the best use-case, deployment model and implementation support plan to make whatever solution you choose, the "best" for your organization.

While a process like this would be quite common for general software selection, sourcing and implementation decisions, it is still relatively rare within the purpose-built M&A software market. Perhaps this explains a significant percentage of the implementation failures we see among first-time M&A software purchasers.


An M&A Practitioner's Approach

As your organization considers ways to standardize, accelerate and optimize M&A through purpose-built M&A software, consider these important software selection categories and decision criteria:

  • Vendor, Platform and Technology. Your organization's CISO, IT leaders and sourcing team will be among the first to specify key requirements including architecture, access/security, usability and administration, among others. While some organizations have identified 40-50 specific evaluation criteria in this important category, here are a few mission-critical aspects you absolutely must get right.
    • Architecture -- Deployment model (exclusively SaaS or server based); data storage provider; operating / load speed; and of course, the underlying platform code and source technologies used.
    • Access / Security -- Access control levels, roles and to what level (e.g. down to specific document level control?); Single sign-on support / capability; ISO certified; API support and functionality among others.
    • Administration -- Be sure to include items such as vendor viability; effectiveness of customer support in terms of help desk, additional online training or direct turn-key user support; as well as future development road map and change audit trails, etc.
    • Usability -- Quality and effectiveness of the user interface experience; ease of deploying your customized M&A lifecycle, playbook artifacts, integration plan of record for various deal types and educational modules to ensure consistent, repeatable success across multiple global regions, function teams and deal-types.
  • M&A Lifecycle Support. Because M&A encompasses so many different users, skill sets and requirements as a deal progresses through the end-to-end M&A lifecycle, your vendor selection process must be able to address what the principal and secondary use cases are.
    • ​​​​​If your primary use-case is for corporate development, strategy and targeting -- how does each vendor manage all pipeline opportunities and deal stages; how does each vendor best accomplish capture and reporting of key TargetCo data, dashboard, rating and rankings to support prioritizing deal pursuit decisions; and, what about standard data intake for all TargetCo possibilities?
    • If your primary use-case is due diligence and transaction management -- how effectively does each vendor capture and manage diligence request lists and responses; what about due diligence team member "read-ins" and non-disclosure agreements (if used); what about capturing diligence summary data, TSA schedules, closing checklists and providing secure data access to integration teams at the appropriate point via data export or API?
    • If your primary use-case is integration and integration management -- how well does each solution support multi-deal volume; conduct integration plan of record import / export during development sprints; and enable automated and configurable reporting, especially on those items considered to be deal-thesis objectives or value-drivers?
  • Overall Practitioner Effectiveness. Not surprisingly, this is often the single most important evaluation category, yet the most frequently omitted. For this reason, most acquirers should consider 8-10 important elements and up to 50-75 questions in this evaluation category to gather the full insights regarding which M&A software package will best support their specific practices. Perhaps this wouldn't be as much of a problem if true M&A practitioners had developed each platform's initial functional specifications and code. The problem can be summarized as follows: does each respective software solution allow you to operate due diligence or integration program management as a true M&A practitioner typically would do it? Or, does it contort common practices and conventions so that it is somewhat possible to do it within the software solution?

    For now, let's just consider three key categories that get to the heart of integration effectiveness:

    • Workplan Management. How many levels of work-breakdown structure (WBS) does the solution provide? Can users easily set and sort by multiple different priority "flags" such as Day 1, Key Value Driver, TSA requirement, etc.
    • RAID Management. How effectively does each solution recognize the different properties and requirements between risks, issues, action items and decisions needed? How easily is data in these fields flagged, sorted, reported, assigned, tracked, managed and archived? How easy -- and how visibly clear is it -- for functional leads and cross-functional resources to see their respective assignments, take action and interact with others working the same issue?
    • Reporting and Statusing. How effectively does each solution enable the automation of weekly workstream status reports, as well as periodic SteerCo or Board level report-outs? How self-enabled are users to define and create their own reports vs sustained reliance on the vendor or a dedicated administrator? What degree of super-user or dedicated administrator is required to effectively operate the report functionality?

Depending upon how you answer these questions and dozens of others, two or three software solutions will typically stand out and you'll be ready for the next steps -- structured vendor demonstrations and internal M&A practitioner feedback.

Even with the most well-reasoned and analytical selection process, your chosen software solution will still be a complete waste of money if you can't get your M&A team to use it. Based on your complete list of requirements in the three evaluation components (Vendor, Platform and Technology; Full M&A Lifecycle Support; and Practitioner Effectiveness) vendors are now asked to demonstrate how their respective solution specifically accomplishes what you need it to do -- the way you want to do it. Continued collaboration and feedback are critically important during this phase of selection. For example, during the software vendor assessment process used by one highly experienced acquirer, a global cross-section of internal M&A practitioners from each phase of M&A operations (Strategy & Targeting; Due Diligence and Transaction Management; and Integration) were asked to participate in live, structured vendor demonstrations then take a comprehensive survey of preferences, observations and inputs. Based on this objective data, the top three contenders were force ranked on approximately 30 questions and criteria. This data was then presented during an M&A team selection meeting along with qualitative feedback based on additional hands-on trial or "sandbox" experience with each finalist solution, ultimately enabling the company to confirm their best-fit solution.

We'll address best practices for post-selection software deployment and implementation in a forthcoming blog article. In closing, one final question....Why should your organization go through such a robust process for M&A software selection? Because unless a vendor's software solution works for YOUR M&A process and YOUR M&A practitioners -- it won't work!

Michael Murray leads the M&A Software Services Practice for M&A Partners, where he routinely evaluates all major M&A software solution vendors and consults actively with clients to ensure fast, effective vendor assessment, selection, implementation and live-deal support. As a co-founder of the M&A Partners Practitioner's Viewpoint M&A Software Solution Evaluation℠, Michael developed a comprehensive software solutions diagnostic that includes over 100 specific criteria in three major domains including: vendor, platform and technology; full M&A lifecycle support; and practitioner effectiveness. Michael's certifications include: PMP®, CMAS® (Certified M&A Specialist), ITIL, and S.A.F.e. Agile, among others.

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