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Eliminating Excel from the M&A Process for More Successful Deals

By Kison Patel,
business.com writer
|
Mar 11, 2020
Image Credit: fizkes/Getty
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Microsoft Excel has its uses, but it is not the ideal tool for large mergers and acquisitions. You should be using these agile tools instead.

  • Doing million or billion-dollar deals on Excel trackers is outdated, poses security risks and creates unnecessary, duplicate batch work.

  • The M&A industry needs to be disrupted sooner rather than later if M&A deal success rate is ever going to increase.

  • Agile techniques have been proven to optimize time, effort and capacity to improve overall enterprise effectiveness in companies that have adopted it into their M&A process.

  • If implemented correctly, Agile can improve the overall efficiency of M&A dealmaking.

Excel has been the modus operandi in the world of M&A for decades now, but it’s time for that era to end. Not only is the traditional methodology out of touch with the industry’s current needs, but it’s also not nearly as secure as it needs to be. In today’s digital world where systems like email are easily hacked or breached, it’s imperative for data to be protected, especially when that data involves confidential information and millions of dollars are on the line.   

What are the challenges of using Microsoft Excel for M&A deals?

Sending Excel trackers back and forth through numerous email chains leaves your data and information completely unprotected. Should your email be compromised, all your extremely confidential data can be stolen, risking the success of the deal. When handling a multi-million dollar deal, you do not want any risk of compromising data or missing vital details because it’s lost in an email chain. Even more, you don’t want that data to get into the wrong hands, putting the security of the companies involved at risk. 

Not only do Excel trackers leave your information unprotected, but they create unnecessary batch work for everyone involved. Often times, people end up doing duplicate work or work that’s never needed or even looked at, completely taking away any efficiency from the process. Though Excel trackers may have been the most efficient way to get the job done in the past, it certainly is not anymore. 

The problem is the fundamental processes M&A was built upon was originally based on much more predictable, stable industries, such as manufacturing, and has only existed since the 1950s. Though the M&A industry is young, when you think about how the industry processes haven’t changed since the 1950s it kind of makes you want to bang your head against the wall. So much has changed since then both culturally and technologically, how is it possible that the fundamental system for how M&A deals are done hasn’t been updated?

Shockingly, there is no real standard or evidence-based approach to completing M&A deals. In such a prominent field where millions of dollars are being handled, you would think - or hope - that there would be some evidence behind how these deals are being done. Realizing that the biggest companies in the world are conducting M&A deals with no real framework, or at the very least a highly inefficient one, makes you wonder how the industry has gotten this far at all.

Agile methods are better suited to the dynamic world of M&A

There’s a new M&A methodology on the horizon and it’s called Agile. Turning away from traditional Excel batch work and pivoting towards Agile methodology will modernize an antiquated industry, bringing it up to speed with current standards by focusing on meaningful progress, transparency, and real-time collaboration. If the success rate of M&A deals is ever going to increase, disrupting the industry with a new framework needs to happen sooner rather than later.

Agile management has become popular in the tech community and with companies that are serial acquirers. Companies like Google, Atlassian, and Cisco have already started applying Agile practices to their internal M&A functions, resulting in optimization of time, effort, and capacity to improve enterprise effectiveness. Agile values meaningful analysis of data to ensure a deal is completed successfully based on validated assumptions and accurate information.

How to implement Agile into your M&A process

So how do you begin to implement Agile to your M&A process? First, as cliche as it may sound, comes a change in mindset. M&A industry professionals are often stuck in a certain way of thinking that’s grounded in a rigid playbook structure, not allowing for an easy response to change. Once you get over this initial hurdle of changing your frame of mind from set-in-stone to receptive to change and transformation, the rest comes easily.

After a change in mindset, a shift in the work environment is next. Agile values people over processes, meaning fostering a collaborative workplace is necessary. Teams need to feel supported throughout deals in order to close them successfully. By creating a collaborative environment as opposed to an isolated environment, teams feel freer to communicate and voice any concerns they may have.  

One of the main differences between Agile workflow versus traditional Excel workflow is Agile supports real-time collaboration, not tedious batch work. This is where the usefulness and efficiency of Excel comes into play. During the diligence phase of M&A, deal teams will answer hundreds of requests from clients. 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. Excel lumps everything into one, making it nearly impossible to decipher what’s actually important and what is not, hindering the value of the deal. 

By adopting the collaborative and meaningful progress principles of Agile, teams are able to focus on high priority tasks rather than get bogged down by batch work, avoid the isolation that comes with working in silos, and ensure a deal is completed successfully based on validated assumptions and accurate information. 

Transparency is key throughout an M&A deal, so it should come as no surprise that this is an imperative principle of Agile. All too often assumptions are made, causing a gap in communication and creating roadblocks and challenges. To maximize the value of a deal, teams need to be transparent in progress and obstacles that need to be addressed, thus requiring a centralized form of communication for team members to follow.

The nature of M&A is that it is unpredictable, so why is it that the workflow is grounded in playbooks that don’t account for that? Teams need to be able to respond to change quickly and as smoothly as possible. With Agile, teams are encouraged to respond to change rather than follow a strict plan, allowing them to deliver information quickly and more accurately to clients.

If implemented correctly, these tactics can improve the efficiency of M&A and modernize an industry that desperately needs it.

Are there drawbacks to an Agile approach to M&A?

The only real downside to Agile is the difficulty of getting people to embrace and adopt it. The M&A industry tends to have a mindset of “if it ain’t broke don’t fix it”, and I couldn’t disagree more. At its core, Agile is about being flexible, continuously improving, and fostering a culture of collaboration. It’s the antithesis of the traditional M&A model, which is rigid in structure, stagnant, and isolating. Agile is ideal to implement in an environment where there are either continually changing priorities, or priorities are competing with one another. Again, initial implementation all comes down to receptiveness to change.

Considering no two M&A deals are alike, the industry needs to adopt a project management style better suited for today’s unpredictable and fluid global marketplace. Digital disruption is already a trend in so many industries, it’s time for it to become a trend in an industry that is in desperate need of an upgrade - M&A.

There are so many M&A deals that go wrong, it’s time to critically examine the process and fix what’s broken, starting with Excel.

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Kison Patel
Kison Patel
See Kison Patel's Profile
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.
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