“A good M&A Playbook saves time, prevents costly mistakes, and keeps team members on pace to accomplish project goals”.
Mergers and acquisitions have long been a popular growth strategy for businesses of all sizes. It frequently comes with the promise of improved revenue, a larger customer base, expanded product offers, and cost-cutting synergy benefits. However, as recurring revenue becomes the de facto operating model for many firms, bringing diverse systems, platforms, and tools—the great majority of which have been tailored based on the organization’s unique needs and capabilities—under one roof, is not an easy task.
When a CEO wants to improve business outcomes or kick-start a long-term initiative, buying another company might be a very enticing option. Corporations spend more than $2 trillion on business acquisitions every other year. Despite this, studies show that mergers and acquisitions fail at a rate of 70 percent to 90 percent of the time.
Post-transaction integration tasks that were once automated now necessitate a custom-built lead-to-revenue integration strategy that combines people, processes, and technologies across Sales, Finance, and Operations to allow the parent and target firms to work as one. Yes, we are talking about playbooks here that can act as a roadmap for the entire deal, and, in this article, we’ll try to explain how extensive playbooks can help you and your deal hit the nail exactly at the right point.
Playbooks are essential for establishing a repeatable and successful procedure.
Good playbooks provide templates, strategies, and processes that drive decision-making, risk assessment, roles, responsibilities, and success indicators, serving as a foundation and roadmap for M&A management during the deal pipeline. A strong playbook saves time, prevents costly mistakes, and keeps personnel on track to meet project objectives.
Many companies claim to have a playbook in the form of a detailed excel spreadsheet, PowerPoint presentations, or even a word document; nevertheless, the main point of contention is the level of information provided in their playbook. Here, we aren’t talking about the medium of a playbook or the structure of a playbook; rather, we are talking about the need for a playbook, the logic for having a comprehensive repository of information. Of course, comprehensive does not imply a to-do list of 10,000 chores, but rather an organized framework that gives sufficient specifics for an integration to be carried out.
So, why do we need an extensive M&A Playbook before the commencement of the deal?
Keeping a track of the voluminous decision-making process
Mergers and Acquisitions involve organizational transformation. Strategic, structural, process, people-oriented, technology, and cultural changes are all involved during the M&A process. They encompass decisions made within functions (intra-function), decisions made in collaboration with other functions (inter-dependencies), and decisions made in collaboration with functions (shared decision making) (trans-dependencies where several functions have a shared responsibility rather than one function leading the decision making). Many people must be involved in the decision-making M&A strategy.
Due to the enormous volume of decisions to be made, it is fairly common for teams to ignore or let some decisions slip through the gaps. As a result, developing a strategic M&A due-diligence checklist and decisions to be made via listing all of them down in a playbook becomes crucial.
Quick decision making
Unlike other transformation projects, only a small number of employees are involved in the early phases of the M&A process due to confidentiality concerns. After the deal is done, a large number of individuals will need to be involved to help with the integration. Not only that but a significant number of decisions must be made quickly. Within the few weeks between signing, closing, and the first few weeks of M&A integration, many decisions must be made. These decisions include integration program design, the scope of activities in functions, resource allocation, communication, dependencies, leadership alignment, cultural assessments, setting up integration management office, governance, and planning for synergies. A playbook with a list of activities, its details & other know-how organized in a logical order, aids in managing and maintaining the decision-making cycle.
Scope of the Project
It is far easier to select a task from a list than it is to think of one and build it from scratch. Imagine having to make a list of food items you want to buy at Starbucks instead of being able to order from a menu. Using a playbook makes the deal structure a little less complicated by allowing integration teams to narrow down the scope of work for specific integrations by providing comprehensive coverage of all functional and integration-related topics.
Having the right set of people for decision-making
Given the high mobility scenarios with which decisions must be made, the correct people must be involved in the project at the right moment. Furthermore, having a thorough perspective of the decisions to be made is critical for the right individual to make the right decision. Integration projects require experts who can assess and make decisions, whether it’s an IT integration strategy for ERP consolidation, the timing of payroll integration, a decision on salary harmonization, a sales strategy for cross-selling and execution plan, the details of consolidated management reporting, or simply a decision to consolidate office spaces. In such a scenario, a playbook with a decision list can assist teams in identifying the list of persons who need to be brought in at different stages.
Making decisions collaboratively
A playbook’s detailed description of the scope of work and activities gives an overview of which tasks may be completed by separate teams and which areas require collaboration among teams. Moreover, cross-team dependencies allow further collaboration opportunities giving a boost to teamwork.
Risk Management
There is always a level of risk associated with any decision. Playbooks can provide a thorough list of common risks and their plausible mitigations so that teams can assess and evaluate potential risks as soon as possible. As M&A playbook is built in consultation with different stream leaders within the corporate organization. Hence, most of the mandatory key actions, potential risks to be managed, and best practices to use within similar kind of deals become available to that team that further helps in better risk management.
Decision-making awareness and bridging the communication gap
A playbook’s communication section is crucial as it has all details of internal communication as well as external communication, strategy, action plans, people responsible, and other key action items. A merger process includes determining what, when, where, and how to communicate decisions and share information. A playbook is a structure that enables better communication planning. These frameworks can be used to assign specific duties to people, as well as providing mechanisms for measuring awareness and methods for capturing data.
How to use the M&A Playbook for your next deal?
M&A Playbooks are critical for deal success, and many leading organizations utilize them to aid in the management of M&A integration teams and to keep personnel focused and organized. Companies, on the other hand, frequently overlook the fact that there are specific recommendations to remember when using the Playbook. Organizations should recognize that when the acquisition process for the company’s M&A operations looks the same every time, it’s time to create an M&A integration playbook. Companies using a playbook have very similar integration plans as well as a consistent M&A methodology.
The M&A integration abilities, competence, analytical, and market comprehension criteria for project leaders and the integration team are determined by the complexity of the deal rationale. Governance gates, milestones, and KPIs/measurements will all be incorporated in the Playbook, making it mandatory for every firm or organization considering a new acquisition or divestiture to have an integrated M&A Playbook.
How can MergerWare help you here?
Playbooks are critical for developing a consistent, successful strategy. MergerWare’s M&A integration playbooks provide expert guidance, helping the team to make confident strategic decisions and successfully execute M&A deals. Good playbooks serve as the basis and framework for the entire integration process, with templates, strategies, and processes to guide decision-making, future actions, risk management, tasks, responsibilities, and performance indicators. A good playbook saves time, prevents costly mistakes, and keeps team members on pace to accomplish project goals.
MergerWare’s all-in-one M&A software makes it simple to fine-tune playbooks based on business realities and best practices, allowing teams to make the process go more smoothly as they go. Customers can choose from a variety of playbook options, including packaged and premium playbooks that are incorporated within the platforms and reach their M&A goals.
MergerWare provides the industry’s most complete playbooks for all stages of the M&A lifecycle, based on realistic and real-world practices, depending on your demands. From initial transaction strategy to post-integration planning to long-term value capture, our wide set of best practices helps the company through the complexities of M&A processes, including the needed phases and activities.
Do you need assistance developing a methodical, high-quality M&A playbook for your organization that reduces the risks associated with the traditional deal management approach?
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Visit us at mergerware.com and schedule a personalized demo with one of our product specialists.
