Agile is adaptive, iterative, flexible and particularly well suited for M&A.
- Traditional mergers and acquisitions processes are antiquated and many companies can benefit by switching to agile project management practices.
- Agile project management is a type of management system that involves breaking down large projects into short-term goals. This allows for the continued improvement of a product or service.
- All five principles of agile project management can be used to make M&A deals more efficient with a streamlined process.
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 adopt a project management style that is better suited for today's unpredictable global marketplace – a style like lean-agile systems thinking.
What is agile project management?
According to the Association for Project Management, agile project management relies on methodology to focus on the improvement of a project through short-term cycles. By focusing on short-term goals, the product or service in development is continually being refined and improved. Larger M&A projects are most often used for agile project management since this allows the scope to be narrowed and broken down into smaller tasks.
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 and financial services.
The M&A industry can easily incorporate lessons from these successful implementations into a model tailored to their specific management needs.
What are the benefits of agile project management?
A key benefit of agile project management is that by following a continuous delivery cycle, customer satisfaction levels are prioritized. Improvements are made at a higher rate to a product and service. Project goals are more obtainable for team members, and regular check-ins are a requirement to confirm that short-term goals are being met. With the consistent progress updates, teams can be refined and adjustments made long before projects are finalized.
5 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 successful M&A due diligence is 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 of an effective agile M&A team. During the diligence process, deal teams will answer hundreds of requests from clients and potential buyers. Collaboration allows 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. Therefore, 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 are 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.