Most Merger and Acquisition (M&A) projects are really programs made up of many expensive, complex projects needed to accomplish the program goals. To be successful in an M&A endeavor, a company will need to closely manage and coordinate the projects including needed integrations, draw on best practices, have a communications plan covering the program and clearly define project roles and responsibilities. If any business and leadership activity ever cried out for project management skills, it is M&A.
Make the Right Selection
An organization considering M&A projects should be able to be able to define their goal, how big the endeavor is to accomplish this goal, and what resources will be needed to accomplish this goal. Take the time to reflect, step back and look at alternatives before pressing the kick-off button
Accomplishing the goals of an M&A project can quickly create the need for many additional projects. One single integration project can quickly turn into a program encompassing 1,000s of projects and lasting 2-3 years. Having the right Project Portfolio Management (PPM) solution to aid in your efforts can be key to your success.
To be successful with your M&A goals, you should have a good Project Portfolio Management (PPM) tool to help you select and initiate projects based on your organizational capabilities, funds available, and your organizational goals. The right PPM solution should provide a systematic method for selection, the ability to analyze your portfolio based on a number of scenarios, and provide decision support.
Leaders need to make trade-offs, accelerating some projects and delaying or suspending others, requiring some self-knowledge and soul searching and the ability to do portfolio analysis. What is the best use of our existing and future financial and operational capacities? Which projects will create the most value for our company and its stakeholders? Providing the means to answer those questions more rationally is precisely the objective of a good PPM solution.
Selection criteria may include:
- The costs of the project – costs can include resource and non-resource costs
- The risks involved in the project – Risks are the likelihood of the occurrence of an event expressed in terms of probability, impact, and a triggering event
- The potential returns on the investment – The benefits you gain from your investment
- Alignment with the business goals – In what way will your project contribute to your business goals by aligning with strategies or objectives?
- Resource availability/utilization – Do we have the right resources available to accomplish a project in the desired timeframe?
- Available technologies – Do we currently have the technology base in house or will we need to acquire it?
Looking at your new M&A project from the portfolio perspective can provide a much better way to make decisions. One project’s mix of high risk with high potential return may not be acceptable by itself, but when mixed with other low-risk projects, it may become acceptable to the company; especially when considering the alignment with corporate goals or the need to bring a new technology or product to market to stay competitive. If projects are treated as corporate investments in a portfolio, then corporate approval and standards occur at the portfolio level and not at the project level.
Create a Timeline for Success
A merger or acquisition is essentially a transaction with a beginning, a middle and an end. Be sure you are using project estimation practices to define the timeframe for your efforts. Define a top-down high-level plan and adjust it with a thorough bottom-up estimation based on the detailed planning of the individual projects. Multiply the initial time and cost estimates by an appropriate factor. Due to overconfidence in estimating, most projects take longer than expected. Do you know from experience how much longer? Is it 10%? If so, multiply estimates by 1.1. If double, multiply by 2.
Another thing to recognize is your M&A project and the myriad sub-projects are only one part of larger set of projects for the corporation and your corporation is likely going through other transformation projects at the same time. M&A projects can become very complex involving multiple departments and outside contractors. You may be counting on IT staff to do A for you and marketing to do B, but meanwhile their calendars say X and Y. Once created, be sure to communicate the acquisition and integration timeline to all areas of the company. Once the timeline is officially communicated, it can focus the organization in delivering the plans and how your project will interact with other corporate initiatives.
Secure the highest level of sponsorship necessary
The presence or absence of sponsorship can make or break an M&A project. When it comes to M&A, there are multiple levels of oversight, and the more significant a transaction is, the more levels of oversight are necessary. In some cases, your transaction merely needs senior management sponsorship; in others, CEO sign-off; in others, board approval; and in others still, a majority vote from owners.
Know what kind of sponsorship you need and do what you can do to ensure it. Many M&A projects will to fail due to poor project management – or no project management at all. It’s up to the executive team to apply best practices, even before the deal is signed.
Define and obtain resources
No matter what a project is called, it typically needs a variety of elements, including but not limited to people, money, time, leadership, support and, as mentioned, sponsorship. Part of the challenge of an M&A project is defining and obtaining those.
No company has the resources to meet all its business needs in the best of times and even more importantly when times are tough. Having the view of your resources across your project portfolio and being able to prioritize where to apply those limited resources is a key aspect of a PPM solution. The company with the ability to see where the resources are being applied (allocated) and apply project ranking to resource allocation will ensure the right projects are being done.
Sell to your internal stakeholders
The marketing team for your company or client is likely to focus on external public relations for the transaction. If you are managing an M&A project, internal PR will matter more and cannot be delegated. If the project buck stops with you, people had better like you – and the project. On average, an M&A project manager should spend between 60-80% of his or her time communicating.
A PPM solution will allow you to gather needed status information and disseminate it to all stakeholders.
Good project managers and sponsors track and report on many metrics. There are many metrics you can track and report on, but be selective and focus on “outcome” metrics. Don’t forget your ultimate goal, as project manager, is to ensure all the benefits of the deal are captured.