For decades M&A was managed the old way – pen, paper, landlines, spreadsheets, word docs, fax machines, face to face meetings – and it worked (at least the deal got done) all be it, in a terribly inefficient way.
Enter the brave new connected economy, the new world of automated project management. Midaxo, a partner of The Portfolio Partnership, has created an effective, digital platform to manage the M&A process. At last, we have a platform, specifically designed to allow collaboration between team members and between buyer and seller, and with controls built in.
However with all automation, the opportunity that is often missed is what to do with all that extra time!
If we stand back and review what makes acquisitions or joint ventures or any combination a success, it’s clearly the crystallization of incremental value. Of course to achieve that, we need a governance strategy, a post-acquisition management strategy of the combined entity.
Experienced operators understand that the key to success revolves around people. The integration of people in the post-acquisition phase requires skill, planning, patience, insight and yes time. The natural, fast process of deals, works against those factors. The emphasis is on getting the deal done, not the empathy and time required to design an appropriate integration strategy, that will survive the long term.
That’s what a platform like Midaxo brings to the party. It demands firstly, that you have a world-class process, that moves seamlessly from strategy through target identification to assessment and negotiation to post-acquisition integration. Then it places that process on a digital platform, to allow real-time sharing, collaboration, and process management. This is deceptively important when buying a business.
Acquisitions require integration thinking right out the box. Integration should inform how you prioritize targets. Integration should drive the psychology and purpose of early target meetings. Questions should be designed to extract information to validate your post-acquisition plan. A digital acquisition platform allows you to share answers with your team, to ensure the significance of this dialogue is truly understood. It allows the small advanced guard, who meet the target, to feel relaxed that their work, and their insights, will be instantly shared with the whole team. Patterns of target behavior can be spotted earlier. For example a target’s resistance to review sales pipelines, or accounting practices or roles of family members will be flagged up on the digital platform, allowing teams to reassess their strategy. This visualization feature of digital platforms is a key benefit to collaboration tools and is particularly effective in time sensitive M&A projects.
A digital platform forces you to consider the “page 15” consequences of answers you receive at “Page 1”. For example early answers to questions surrounding patents or customers inform your approach to due diligence much later (or these answers may stop the deal dead in its tracks). As you spend time getting to know a target’s team, it’s surprising how quickly you build a picture of the culture of the business. It’s not just about the facts and figures, it’s about understanding how they made decisions. These people are going to be your people. A digital platform digests these answers and prompts you to consider the consequences for post-acquisition integration by department. The consequences for product development, channel management, organization structure, IT systems etc.
Automating processes and protocols into any system including M&A, has a paradoxical effect – it frees up time for innovative thinking. It frees up time to understand the consequences of answers. It allows acquirers ironically, to spend more time in relationship building and less time building paper trails of disparate information, that’s never appreciated and tragically rarely informs integration plans.
A digital platform captures the true benefits of an insightful acquisition playbook, by shaping an effective integration strategy, which as we know is the essential ingredient to successful acquisitions.
Earlier this year we embedded our acquisition process (published in our book The Acquirer’s Playbook) into the Midaxo platform.
We would encourage all acquirers to consider automating their process and give themselves time to consider what they’re really buying – people.
Comments welcome below. Reach out at Ian@TPPBoston.com.
Nice article Ian!
Many thanks, keep up the great work!