Let us discuss tools for successful integration. We are not not referring to system integration, but tools for managing and supporting the Merger integration process from pre-deal through due diligence, up to and including post merger integration.

Today, Excel and Power Point are currently the most used tools in the M&A transaction/integration world. There are also several Virtual Data Room providers that offer solutions at a high cost.

For managing the end-to-end process, Excel, Power Point, and Share Point on their own do not really work. Every project is different and one needs to be aware of the complexity that tools bring with them. So do tools really work? Do they add value and justify the cost and time to introduce & maintain? Does email communication from a tool work?

We can at least specify a list of requirements that a tool should address:

• Project / Deal based

• Document repository capabilities

• Project Management capabilities

• Communication/collaboration capabilities (email/messaging/collaboration)

• End-to-End process management (i.e. transition of Due diligence /Data Room info to integration team)

• Reporting capabilities (i.e. on a project basis, and or for the entire deal pipeline/project portfolio)

• KPI tracking capabilities

• Knowledge bank capabilities

• Highly performant and highly secure (especially with cloud based solutions)

• Stable (i.e. updates must have no impact)

• Highly configurable

• Easy to deploy & configure

• Easy to use with little/no training

Merger integration success based on innovative due diligence

We introduce merger integration due diligence as a new type of due diligence that arises from the objective “Maximize likelihood of integration success”.

Definition of merger integration due diligence

Merger integration due diligence has the goal to review the merger integration project and plans. 

All aspects of merger integration are being reviewed for viability and for likelihood of success. Viability relates to the work breakdown structure for the integration to be consistent and complete. It also relates to resources (employees and budgets) that have to be sufficient and available. The objective of the task is to maximize the likelihood of merger integration success.

Based on the decomposition of the merger integration task we can define the corresponding decomposition of the merger integration due diligence task.

Review of the design of the new entity

The design of the new entity has to be reviewed for consistency and completeness. We start with the business strategy and plan layer and review the defined business strategy for the new entity. Then we enter the second layer and ask questions like: will the business processes work? Are the business processes compliant with compliance rules? Is governance of the business ensured?
In parallel, we have a look at the business resources and at the questions: Are enough qualified resources planned and available? Are the assignments of resources to tasks sufficient? Are sufficient resources planned and available?

Review merger integration plans

Next we review merger integration plans. Keeping in mind the design of the new entity and the resource situation, we review the schedules and the steps of the merger integration plans. We ask questions like: Can the merger integration plan be executed the way it is defined? Will sufficient resources and budgets be available at the right time to execute the merger integration plan successfully? What happens if we run late or we have resource shortages?

Review merger integration project

This is the part of the review that is often neglected in practice. We review the structure and behavior of the merger integration project.
It is important to keep in mind that the word “project” implies that we have a professional management of the integration leveraging professional project managers, experienced with complex projects and equipped with skills of a certified project manager. We should also have a project steering committee in place that has wide competencies and can drive and take decisions quickly.
We also focus on getting answers to questions like: Do we have the right assignments of resources to merger integration tasks? Are the resources capable of executing their assigned tasks? Do the resources have appropriate social competences to lead people and convince them the integration is the right thing to do?

With the results of the merger integration due diligence, you are well prepared to have the right budget, business plan and integration approach.

In past years, there always was a dichotomy: either companies were only on premise, storing their crown jewel data on site, or companies ran certain applications in the cloud. Now, hybrid clouds are on the rise.  This means there are three options now.  

In M&A, data rooms are typically private cloud based storage of highly confidential data during due diligence. Data from other phases are usually stored on site. With all these changes happening and the clear need to manage M&A processes,  where should company store their data about  all phases of the M&A process ?

On premise?

The safest way to store mission critical data is to store them on premise.  locked up.  This is perfect for a the early phases. As soon as more people get involved from inside and outside the company, during due diligence and post merger integration, this approach is not perfect. 

in the cloud? 

Cloud storage makes perfect sense for trustfully giving restricted access to people from different companies. For most companies, this is needed during due diligence and following phases. But many companies also interact with third party companies even before due diligence. 

Requirements for M&A process tools

Customers rule. An end-to-end process tool must respect that. No matter if  customers choose on site, private cloud or public cloud, vendors of end-to-end process tools should give customers a choice. The customer should decide where to store data.