Software Tools Drive Increased M&A Success

Mark Herndon headshot
By Mark Herndon
Chairman, M&A Leadership Council
Aug 10, 2016

For years now, we have advocated the importance of focusing on speed, synergies and stabilizing the business, and core stakeholder groups as mission critical elements of integration success. Prior blog posts including The S-3 Integration Model and S-3: Stabilize the Business explore these topics in more detail. The S-3 Integration Model speaks to the extreme importance of leading with strategy, while delivering outstanding planning, execution and communications through a tightly coordinated and well-managed process based on transparency, accountability and discipline.

But as every M&A pro knows, these objectives are extremely difficult to meet, given the enormous complexity, time and resource constraints inherent to any M&A effort. Even among extremely experienced acquirers we routinely hear comments like these:

“We have a due diligence process and a separate integration process. The two don’t connect well, and we tend to repeat key steps at the least opportune time.”

“There’s a lack of uniform M&A process maturity and capability between functions.”

“Executives seem to be completely unaware of the resourcing requirements, time and workload of integration – and without real-time visibility of project status, milestones and synergies they consistently overestimate our ability to execute, and as a result, we miss deadlines…or worse.”

“It is impossible to track and manage all the cross-functional dependencies.”

"The time has come to upgrade M&A integration management processes with simple, secure and state-of-the-art software solutions..."

These difficulties are validated in our forthcoming study, The State of M&A Integration Effectiveness 2014, as 71% of respondents indicated they would rate their overall integration process effectiveness level as “very poor, poor or average.” A separate, multi-part question analyzed the respondent’s use of specific software “point-solutions” or tools specifically intended to support M&A integration. For purposes of this study we did not analyze the use of virtual data rooms (VDRs) strictly for due diligence purposes, but did ask about similar functionality (secure data repository, manage access, collaboration, etc.) applied to the integration process.

Our hypothesis was that given the costs, complexity, risks and strategic importance of integration, and given the prevalence of many outstanding third-party software solutions on the market, a significant majority of acquirers would already be using these tools consistently as a core part of their process methodology and project management disciplines.

What we see in this particular data set, however, is a bit of a surprise. The data indicates substantial room for improvement in most acquirers' use of software-based solutions. A frequency response summary of our findings on this important question is provided in Survey Highlights – Use of M&A Software Solutions.

While we are encouraged that 57% indicate they “always use” a VDR or similar capability during integration (part c); the other findings (parts a, b, d, and e) are not so rosy, with less than 25% of organizations indicating they consistently use other important software solutions. Write-in comments do indicate that many organizations are currently in the midst of developing or deploying their versions of relevant M&A software tools, but the overwhelming conclusion should be clear. Namely, the time has come to upgrade M&A integration management processes with simple, secure and state-of-the-art software solutions as an important part of every acquirer’s basic “readiness capability.”

This later criterion is seen as especially important as several write-in comments indicate their prior attempts or current installations of M&A software tools had resulted in overly complex, “unfathomable,” or otherwise highly user-unfriendly outcomes, and as a result, were only used by some functions, on some deals, and “if they had to.” Hardly a way to build process maturity and achieve more consistently outstanding integration results!

Rapid Assessment Tool

So let’s come back full circle and ask, “Why bother paying attention to surveys anyway?” Awareness is half the battle. Just having a benchmark or sounding board like this is a helpful way of raising your M&A game to the next level as you take stock internally and dialogue with others in your organization about future needs, challenges and opportunities to get better at mergers and acquisitions.  

Regardless of your current methodology, and regardless of whether you currently use manual processes or a variety of homegrown or third-party solutions, consider using the rapid assessment tool available (Rapid Assessment Tool: M&A Process & Project Management Effectiveness) to help highlight both strengths to build on and potential improvements needed for your continued success and integration effectiveness. 

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