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Rethinking Traditional Approaches to Mergers and Acquisitions

Kison Patel
Kison Patel

An Agile approach creates a more collaborative, people-driven M&A process.

Merger and acquisition markets are thriving. According to the Institute of Mergers, Acquisitions and Alliances, capital markets are seeing the highest levels of M&A activity ever, and in 2017 hit more than $2.9 trillion for the fourth year in a row.

This continued and steady growth casts mergers and acquisitions (M&A) on a modern trajectory. However, will an industry, often resolute in tradition and antiquated convention, be ready?

Advanced organizations, predominantly in the technology and software sphere, have begun implementing new M&A and corporate development techniques to meet this increasing demand and promote successful, efficient outcomes.

Christina Amiry, head of M&A strategic operations at Atlassian, an enterprise software company, says that the organization is moving away from traditional M&A approaches and embracing Agile methodologies. Amiry explains that this modernized approach creates a more collaborative, people-driven and efficient M&A process.

In a traditional M&A strategy, the deal's end-state is predefined while the requirements and practices are flushed out to a microscopic level of detail. However, the nature of M&A is unpredictable and dynamic. The deal's end state evolves as diligence uncovers new information, as finances fluctuate and as integration begins aligning diverse, unique cultures. A product of this traditional approach is the M&A playbook.

The heavily relied upon playbook offers a structured set of practices and procedures to aid in solving the labyrinth that is diligence and integration. More often than not, this methodology and these playbooks are seen as the secret to harmonious M&A.

However, a KPMG study recently indicated that 83% of deals do not boost shareholder returns. To create more successful, modern and efficient deals, there must be a better approach. Amiry explains that Atlassian no longer uses traditional M&A playbooks, rather they use what is called a "game plan" approach.

Game plan approach

This new approach comprises an iterative technique consisting of plays. Instead of trying to squeeze all complexities into predefined templates, plays are administered and tailored to complete goals that arise during a deal's lifecycle.

This approach applies a more flexible, malleable operating model. Rather than setting and following a predefined end goal, plans are iterated on during the process, allowing for a more malleable target. As new information is uncovered and integration begins, deal teams are able to collaborate and align themselves with the deal’s ever-changing ecosystem.

This approach is one way in which Atlassian is embracing Agile methodology.

Agile, originally developed by software developers in the early 2000s to eliminate duplicate work, streamline production, and mirror customer needs, is now being used by numerous industries to modernize project management. At its core, Agile is a problem-solving mindset and a way of conceptualizing and responding to constantly-changing environments.

Amiry shed light on two main areas within M&A that Agile improves:

  • How teams work with each other
  • How the organization works with acquired companies

How teams work with each other

While employing traditional methodologies, Amiry expressed that teams tend to be more siloed. One team defines needs and then hands them off to the team downstream that consumes analysis or requirements, then gives it to another team to execute.

Information is often housed and shared in static Excel spreadsheets rather than more robust and reactive collaboration software. Teams meet frequently in structured meetings for status updates with a majority of the individuals focusing on what they are going to say next rather than actively listening.

Teams often wait for the end of the quarter or next cycle to review inefficiencies and problems, hindering the potential to readjust for a more successful deal.

On the other hand, Amiry emphasizes how Agile fosters cross-functional teams within Atlassian to unite and construct a holistic solution. Defined, self-governed teams are able to organize themselves, communicate and share dependencies. Teams embody dynamism, integrating effective communication and relationship-building within all of the parties involved.

Live communication tools are the essence of being Agile. These collaboration mechanisms allow for teams to notify each other on changes and updates instantaneously, rather than waiting for the next meeting to be scheduled or the next spreadsheet to be emailed, with hopes that the information is current.

How the company works with the acquired company

The efficiencies bolstered by Agile teams are similarly depicted in how the company works with the acquired company. When using Agile, the acquired company is continually involved, from project management tools to stand-ups, to workshops and design. These once two separate entities join together more successfully and efficiently due to increased contact. This greatly improves change management, employee morale and value creation.

Overall, Amiry expressed that the traditional method leaves little flexibility and tolerance for risk and ambiguity. Flushing out extensive levels of detail could easily leave teams unable to successfully process unpredictable events or information. As no two deals are the same, the rigid nature of approaches such as playbooks may mislead teams on direction and implementation, leaving little wiggle room for change.

Meanwhile, Agile rewards iterations and permits teams to hone in on the right goals quicker rather than trapping them within predefined goals. Rather than being captured in the details and trying to delineate every move from your M&A playbook, utilizing tactical plays in an adaptive game plan could bolster communication, learning, and operational efficiency during your next integration.

Image Credit: Atstock Productions/Shutterstock
Kison Patel
Kison Patel Member
As a former M&A advisor with over a decade of experience, I have seen first-hand the many challenges the M&A lifecycle presents. The industry is troubled with a number of deep-seated structural problems, like disconnected tools, poor visibility and communication, and a lack of a clearly articulated plan or vision. However, the biggest single factor holding the M&A industry is its lack of access to latest generation tech tools. That’s why, in 2012, I brought together a team of software developers and created the project management platform DealRoom.