Although companies have been acquiring and merging with each other for over a hundred years, the dedicated industry, which currently supports high level corporate mergers and acquisitions (M&A), has only existed since the 1950s.
As in almost all young industries, business processes within the corporate M&A domain are modeled on project management techniques pioneered in other industries. Largely, M&A consultants, corporate development teams and investment banks rely on management methodologies first designed to support predictable processes like manufacturing and construction.
The operating environments of 20th-century manufacturing and 21st-century M&A couldn’t be more different. Where manufacturing is sequential, linear, predictive and repetitive, M&A is fluid and unpredictable, defined largely by amorphous goals and constantly shifting requirements.
These traditional approaches fail to deliver adequate value in the highly dynamic and unpredictable operational conditions that have emerged in the M&A industry during the digital age. No two M&A deals are alike, so the industry needs to adapt a project management style that is better suited for today’s unpredictable global marketplace -- a style like lean-Agile systems thinking.
Agile project management offers foundational improvements to the planning and execution of complex projects, like M&A. This approach champions a mindset of collaboration, continuous improvement and adaptation.
Since the 1990s, Agile project management practices have proven to be successful in a variety of industries, including software development, biotech, defense, financial services, and many others.
The M&A industry can easily incorporate lessons from these successful implementations into a model tailored to their specific management needs.
Five Core Agile Principles Adjusted for M&A
Below are the five core principles of Agile project management. Each of these principles, if implemented correctly, can greatly improve the functionality and efficiency of M&A dealmaking:
1. Individuals and interactions over processes and tools.
People come first in Agile management. It is essential that deal teams have the support they need in order to close M&A transactions successfully. That means creating a collaborative work environment that encourages creative thinking. Teams must speak to one another to solve problems and should be allowed to voice concerns or think of ways to improve their environment at work.
2. Meaningful progress over comprehensive documentation.
Within M&A projects large volumes of data and materials are created, exchanged, reviewed and analyzed. The key to a successful M&A due diligence relies on the ability to identify the irrelevant noise from the critical data. Agile values meaningful analysis of data to ensure a deal is completed successfully based on validated assumptions and accurate information.
3. Real-time collaboration over batch work.
Focusing on direct, face-to-face collaboration is an essential component to a highly-effective Agile M&A team. During the diligence process, deal teams will answer hundreds of requests from clients and potential buyers. Collaboration will allow teams to continuously focus on high-priority tasks that are vital for deal success instead of working in silos.
4. Responding to change over following a plan.
M&A transactions are fluid and unpredictable. Therefor, teams cannot easily follow linear project plans and must be able to respond quickly to change. Agile management encourages teams to focus on responding to change rather than trying to follow a set, overarching plan. This mindset will allow teams to deliver what clients need quickly and more accurately.
5. Transparency over implicit assumptions.
Within M&A deals, many critical decisions are made based on complex sets of data. In order to maximize the value of the deal, M&A teams need a clear understanding of progress, challenges, risks and obstacles that must be addressed. This requires transparency and centralized information/communication for all team members to follow.
In M&A, the needs of every deal is unique. Adopting a traditional, programmatic project management style is likely to lead to duplicate work, lost information, procedural bottlenecks, and limited cross-functional visibility. Approaching M&A with an Agile strategy allows team members to react quickly to emergent conditions.
Rather than a predictive, sequential, rigid approach, Agile is adaptive, iterative and flexible. No matter which side of an M&A deal you're on, Agile is especially well-suited for this highly dynamic process.