The goal of the Certified M&A Specialist program is to allow M&A practitioners to showcase the experience and skills they have gained from their leadership roles in deals: from strategy to due diligence and on through integration. The credential itself is just one component. The M&A Leadership Council, along with the Board of M&A Standards, is committed to building up a community where M&A professionals can network and share what they’ve learned, so we are proud to publish the following insights from CMAS.
5 Themes for Executing an Integration
In December 2010, my company bought an organization that was essentially the same size as our own – our largest acquisition to date. I was given the opportunity to run the full technology workstream, which was my first large integration and at least thirty times more complex than any other integration I had worked on. For the next two years, this integration became my life. I learned many things, experienced many surprises, made many mistakes and developed a tough skin.
Several years later, I decided to do a mind dump of all my experiences. Part of this exercise was a reflection on what helped me through this time and contributed to my success. I looked for learnings beyond having good practices, frameworks and senior management support, landing on the 5 Themes that M&A leaders should always consider and strive to meet. These themes serve as spokes on the M&A Wheel. Why a wheel? First of all, I liked the name “M&A Wheel.” Also, a wheel is always in motion, and as such, the spokes are routinely revisited as the integration navigates through many twists and turns. The Themes that resonated with me then and today are People, Frameworks, Formal vs. Informal Networks, Content Management and Gut Instinct.
Theme #1 – People in M&A. We all know that without the right people, completing any integration is doomed. It is more than just having the right number of resources. It is having people who can deal with the ambiguity, the surprises, the stresses and strains. People who can adjust to the changing pace; demonstrate strong execution skills and focus on delivering the best possible outcomes. But people like this can be a rare commodity. This creates a dilemma as we all want our teams comprised entirely of the absolute top talent. But that is often not realistic. When I looked back on the beginning of my journey in 2010, three things jumped out:
- Have a phenomenal inner core. The inner core are the senior leaders you rely on daily, who have the same mindset and want the same outcomes as you. They are the ones who have your back when you charge into battle and follow without hesitation. I did not know this from the outset and was lucky that my inner core operated that way. Now my inner core is always selected based on these characteristics, regardless of the integration’s complexity.
- Have a strong outer circle of individuals who mange the sub-workstreams on a day-to-day basis. This one is tricky for me, as I must rely on other areas within my company to dedicate resources. The safety valve is being part of the selection process and replacing individuals early if the fit is incorrect. There’s no room for procrastination. I have learned that the hard way and am still trying to be better.
- Watch the inflection points and how well people adjust to them. Inflection points are those times during the period between close and conversion/migration where the work activity spikes exponentially. Some cannot handle this change, and their work suffers, creating stress on others who have to pick up the slack in addition to their already full workload. The best fix is to re-align the resource mix timely to reduce impact. This is another lesson I learned the hard way and is now becoming part of my operating DNA.
Theme #2 – M&A Frameworks. All companies have standard processes, tools (manual and automated), templates, methodologies, etc. – either centrally or de-centrally managed. These are situations where a hybrid approach may be recommended. The commonality is that all teams have variations that they follow (content depth, approach and format, to name a few), and in some cases, the variations are material. The 2010 integration was comprised in excess of 120 sub-workstreams staffed by over 30 internal and third-party teams. With a major integration workstream this broad, framework variations make assimilating, understanding and sharing the content inefficient and time consuming. This results in information that does not surface, or surfaces too late in the game. I have seen situations where the program office had to spend the evenings aligning content, a situation that could have been avoided if a clearly defined set of artifacts and content requirements would have been managed from the beginning.
Another area that can bog down progress is trying to use automated tools – either existing tools that are adapted to the integration, or others sourced from consultants brought in to assist with integration. That is when a team must be assigned to deploy, setup, configure and manage the tool. This can be time consuming and often fails to achieve the benefit. Additionally, the team managing the tool likely already has major integration deliverables. On one of my integrations, months were wasted implementing a third-party tool, and zero benefit was achieved. I prefer when consulting firms use Excel, PowerPoint and SharePoint as their toolset.
Keep it simple. You do not have time to over-complicate things.
Theme #3 – Formal vs. Informal M&A Networks. All employees have a formal network within their company. Most individuals also have an informal network whose depth and breadth will vary based on their tenure, scope of role and other factors. On a complex and lengthy integration program, leaders need to work both networks to the fullest. There are often situations where the formal network becomes a roadblock to delivery. My philosophy is that any team that is held up for a day with an obstacle loses a week of work effort. It is up to leadership to clear these obstacles.
This is where the informal network needs to be leveraged. Remember, there is an expectation that the completion dates will be met regardless of obstacles, especially when those dates have been announced. I have been fortunate that during my tenure at my current company, I have developed an extensive informal network. I am not shy about using it and using it early because at the end of the day, it is all about execution. You will also find that the closer you are to the conversion/migration deadlines, you will use your informal network more. Do not think of this as shortcutting the processes but as getting the job done.
Build up and nurture your informal network and use it.
Theme #4 – Content Management in M&A. In early 2011, a senior person at one of the consulting firms we used told me, “Tony, you will need to manage content to get through this integration.” I really had no clue what the person was referring to and nodded my head politely. Then a few situations changed my focus and approach. This included status reports that were always too good to be true, and people reviewing artifacts created by other teams who were struggling with the content. Also, summarized critical path plans did not make sense, traditional color coding of work (G/Y/R) did not align with content, and there was unnecessary finger pointing all around.
The big “aha!” moment was a decision to have the Project Management Office (PMO) summarize the content from 120+ sub-workstreams into fewer than 5 pages. This was required not only to report into the Integration Management Office (IMO), other management teams, the board, external parties and regulators, but to enable me to stand up in front of any audience and be articulate on the management of the technology workstream. I could not survive (or stay sane) on poor content.
I realized that content management by the leader was more than a “nice to have” – it was a critical leadership trait. Going forward I adopted these principles:
- Set a common format. Be selfish. Use what you are comfortable with or one from a practitioner who you trust.
- Do not accept poor quality content or push back. It adds no value to the teams, to the company or to yourself.
- Be diligent with PMO on managing content.
- Read all content, always. Yes, it is time consuming, but as the leader, you must exhibit that you have a handle on your workstream at all times.
- Make content providers accountable. If you cannot clearly articulate the status of your workstream, you should not be managing or involved in that workstream.
Theme #5 – The M&A Gut Instinct. This theme may be a surprise to see on a list. All I can say is that a leader who does not listen to their gut is in for a rough ride. Once your gut tells you something does not feel right, listen to it, and action immediately.
It took me a year to get into this mindset on my 2010 integration, but it now starts Day 1 of an M&A deal. It even applies to a business-as-usual project. And when you take action to fix an issue, do not assume it can be completely resolved in a short period of time. This is fine because the consequences of taking no action could be catastrophic.
My best example was a couple of years into the 2010 integration. In early 2012, we were in the home stretch. My gut kept telling me something was not “right” and dots were not being connected. I could not put my finger on why I was feeling this way. My solution was to switch gears and introduce a meeting three times a week that was more than a status read. My team gave it the nickname “Rooster Call” as it occurred at 7 am. A broad section of my leaders was included and were welcomed to invite other team members they thought should attend. I had my own agenda which grew and shrunk with each meeting, focusing on “watercooler” topics and questions that traditionally do not show up in formal reporting. I used these meetings to identify why my gut was not happy, connect the dots and develop a path forward. The results were surprising. People soon became prepared to respond to any “left field” questions I posed. (No more relying on their latest status reports.) Many items surfaced: gaps in our plan, work that had fallen through the cracks because of miscommunication, duplication of work effort, one team struggling where another team had the expertise, important team dependencies that had not surfaced, teams not connecting the dots, teams thinking only a week ahead as opposed to 60-90 days ahead, team A not understanding what team B (a dependency) requires to complete their work, teams not understanding expectations now that we were in the home stretch – along with many other examples. The bottom line is that we created the venue to address items as early possible, rather than at the eleventh hour.
- Do not underestimate the signals from your gut.
- Always adjust when your gut tells you.
- Continuously connect the dots.
Decide on the “spokes” of the M&A Wheel that resonate for you and your operating environment. Keep the strength and integrity of the spokes intact and the wheel will roll true. And keep the wheel moving. As leaders, we are the hub of the wheel, so it is imperative that we utilize all the information and intelligence transmitted to us from each of the spokes. Leverage the People spoke for strong leaders and look out for inflection points. Endeavor to keep the Frameworks spoke simple and utilitarian. Develop, nurture and leverage the Formal and Informal Networks spoke to help remove obstacles. Reinforce the important Content Management spoke by setting commons formats, rejecting poor content, ensure the PMO manages content, read all content and hold content providers accountable. Finally, if you discount the qualitative Gut Instinct spoke – do so at your own peril. The Wheel of M&A will roll on; hopefully these tips will prevent it from rolling over you.