M&A, Business Models and Ecosystems in the Software Industry

Karl´s blog

Posts tagged m&a
What is merger integration? What do i have to do?

The task of post merger integration

An important ingredient in acquisition strategy is how you integrate the acquired company. Let us describe the task of post merger integration with goals and objectives. You have to think well about goals and objectives, since these will define what is being done through merger integration.

Goal of the merger integration task

The goal of post merger integration is to plan and execute the integration of two businesses. WIthin each business, there is an organization and there are many processes, which are to be aligned and/or integrated.

Objectives of the merger integration task

  • Maximize likelihood of integration success: each merger integration tries to reach successful completion meaning that there is no failure of the integration.

  • Continue target operations: in most cases, it is important to not interrupt the target operations with merger integration activities.

  • Fit integration type: there are different ways to integrate two companies, which are determined in the integration strategy. more information about merger integration types can be found here: Merger Integration Types

  • Fulfill synergy objectives: every merger has synergy expectations and objectives. Merger integration is targeted at creating such synergies.

Decomposition of the merger integration task

There are three subtasks: designing the new entity, planning merger integration (project) and executing merger integration project.
The first two should be started during due diligence to ensure merger integration success.


MergerIntegrationTaskDecomposition.png
Skills of Integration Managers

The success of a merger integration program highly depends on the skills of integration managers and the integration team´s skills. So, what are these skills?

Skills of Integration Managers:
Managers that assign responsible for managing an integration project on a day-to-day basis require various personal skills, such as listening, communication, stakeholder management and people skills. However, in addition to these “soft skills” Integration Manager require also more “harder skills” such as project management, business know how and organizational know how. The entire skill-set that is required for successfully managing a post merger integration can typically be acquired only through first hand experience on-the-job. Therefore a valid question in many cases is, if one single individual should manage an integration project alone. A team of people with complementary skills that is led by a senior executive might be a more appropriate solution for integration management in many cases. However, taking into consideration that corporate top performer are typically not sitting on the bench waiting to be assigned to any post merger integration project (but are rather already busy with other important tasks) staffing of Integration Management is a often marked by compromises.

integrationmanagerskills.JPG

 

Skills of integration team members:
Skills that are required on the level of integration teams might include among others leadership, operative know-howand team management. Different to Integration Management where only few peoplemight get involved (often located within one corporate center) 100 and more operationalmanagers across various geographic regions are easily tight up as team members in a post merger integration. This includes typically not only managers and staff from the buying company but also managers and staff from the target company. Therefore PMI training with regard to team members is often more complex than with regard to Integration Management. Due to confidentiality aspects, time constraints and geographic spread in many cases pure digital courses that are accessible across multiple technical devices and teaching environments are the only way to train 100 and more operational manager from both the buyer and target being.

Come to the European workshop on merger integration and learn more

M&A Digitalization: where should data reside?

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. 

Digitalization of M&A: how the job to be done forces a new generation of tools

What is the job to be done? The job to be done is a concept invented by Clayton Christensen in his book "Competing Against Luck: The Story of Innovation and Customer Choice". It is a new way to look at the needs of customers and why they are "hiring" a product to fulfill their needs. The key concept is to focus on the customer and to avoid the viewpoint of the product. By doing so, you get a wider view what the needs of the customers are, what the customer should hire to help him and who your real competitors are.

How does it influence tool design? As soon as you know the job to be done and the context of the customer, you are able to design a product or service that has maximum value for the customer. As mentioned in an earlier blog, the context of an M&A professional is his office, the work environment on his desk, his smartphone, desk phone and computer. An M&A process platform must respect and enhance this work environment, not add another tool. So let us use this approach to define two requirements for M&A process tools.

From tool to pain reliever: One pain i heard most from fellow M&A professionals is to fill the same data like target valuation data into several different Powerpoint presentations which have different formatting but basically should reflect the same data. So an M&A platform must store the financial data of a business case and generate data into different powerpoint templates. An end-to-end M&A process platform should have a data management component for the financial data of the transaction that can intelligently export parts of the financial model into presentation formats.

From tool to productivity boost: assistive technology helps you to perform better. The pain of the M&A professional is that he has to research market and company data, bring them together and evaluate the opportunities. How can an end-to-end M&A platform help here? Market data feeds are provided automatically for business case creation. The platform offers research as a service data feeds to accomplish that.

Summary

End-to-end platforms supporting M&A processes are the basis for the digital future of M&A processes. The job-to-be-done approach helps to define service of these platforms. These value creating services, which are built on top of this platform, help M&A professionals to get their job done. Stay tuned for more or meet me at Platform Economy Summit in Berlin in November.