After owning, managing, and advising strategic initiatives like mergers and acquisitions several times, we at TrueNxus have created a guide for mergers and acquisitions project management to help you and your organization successfully plan for such transformative events. Coupled with using TrueNxus, even in today's remote work environment, will allow you to translate strategy into execution successfully. As a result, you and your team will create productivity, efficiency, and accountability across all stakeholders, producing savings in time and money. This guide and TrueNxus, are right for you if you are an entrepreneur, a senior executive, a professional project manager, a part of a project management office (PMO), an accidental project manager, or a project team member executing the day-to-day work. Together they untangle the complexity of project management and allow you and your team to focus on what matters most - doing work and driving results.
Now, let’s focus on mergers and acquisitions project management. In this guide, we will outline the below sections. Feel free to skip ahead.
- Understand mergers and acquisitions
- Review the importance of project management in mergers and acquisitions
- Outline the typical merger and acquisition workstreams
- Provide an illustrative merger and acquisition project plan
- M&A best practices
- Understand mergers and acquisitions project management best practices
- Identify common mergers and acquisitions project management challenges and understand how TrueNxus solves the problems while saving time and money
1. Understand mergers and acquisitions
What are mergers and acquisitions
Mergers and acquisitions is a term used to describe the consolidation of a company or assets. Investopedia does a great job of giving an overview of the different types and structures of M&A. However, the topic of M&A is rich with details that we will not cover in this article: from the financial and tax strategies and implications to the legal and operational intricacies of integrating the two entities. M&A is exceptionally complex, which is why there are investment bankers, accountants, lawyers, and management consultants focused explicitly on M&A. However, we will provide you with an overview as to why companies decide to merge or acquire, and the rewards and risks to undertaking such a strategy.
Understand the reasons for mergers and acquisitions
While companies may provide a multitude of reasons for conducting M&A, their motivations are summed up into the following three objectives:
- Improve economics: the combined entity has economies of scale or M&A synergies
- Increase managerial power: management is empire-building and wants a more substantial salary, more influence, or job security
- Transfer of wealth: shareholders wish to realize their investment gains or take advantage of specific tax strategies
Acknowledge merger and acquisition rewards and risks
If you decide to undergo mergers and acquisitions, you should understand the rewards and risks as M&A may be more or less risky when compared to other strategies. Below are the rewards and risks of deciding to do a merger or acquisition.
Merger and acquisition rewards
- Faster time-to-market
- Revenue synergies
- Cost synergies
- Existing customer-base
- Own intellectual property (IP)
- Lower taxes
Merger and acquisition risks
- High acquisition costs
- Failure to live up to financial expectations
- Change in culture
- Loss of talent
- High integration costs and timeline
- Regulatory approval
- Legal exposure to existing lawsuits
2. Review the importance of project management in mergers and acquisitions
M&A is one of the most complicated endeavors an organization can undertake. Mergers and acquisitions impact every aspect of the buyer’s and seller’s business: people, processes, technology, and third party agreements. Every business is like a network, with connections spanning across internal stakeholders from product lines and support functions, to external entities such as clients, regulators, and third parties (i.e., advisors, bankers, consultants, lawyers). As a result, it requires a significant level of attention and organization.
Additionally, unlike the analysis undertaken to determine whether to merge or acquire, which is uncontrollable, the execution of mergers and acquisitions is entirely controllable. It’s the only time when the organization can allocate resources and work toward attaining the strategic objectives. Project management is required to control the execution. However, while execution is the most controllable state of capturing the value of a deal, it is often the most overlooked and poorly managed. Such loss in value capture is unacceptable to shareholders and employees.
3. Outline the typical merger and acquisition workstreams
As in any complex project, it’s important to group large buckets of work into workstreams. In the simplest of terms, workstreams are a way to categorize a set of work. Workstreams can be functional teams (i.e., Finance, Operations, Marketing), business units, product teams, or a standard set of deliverables.
M&A is exceptionally complex, and some aspects of a merger or acquisition, specifically the operational integration, may want to be broken down into projects in themselves. Either way, a typical set of workstreams, from pre-deal to post-deal, are outlined below.
- Review portfolio
- Estimate and capture deal value
- Structure tax
- Define legal structure
- Outline regulatory implications
- Analyze and structure financials
- Integrate operations
- Plan and execute communications
4. Provide an illustrative merger and acquisition project plan
Having advised several deals, including some of the largest mergers and acquisitions, companies vary across the board in terms of how much project management structure they undertake. We at TrueNxus have seen companies, with the help of external consultants, stand-up program offices that form at the very beginning of reviewing the portfolio and oversee the entire deal execution, all the way through post-Day 1 operational integration and synergy capture. We have also seen companies piece-meal project management on specific workstreams, or even tasks outlined below. Then, we have also seen companies only begin to put a project management structure in place after signing, only to eventually find that the value estimated, cannot be captured because they waited too long to put a structure in place to oversee the deal.
We at TrueNxus advise putting a project management structure in place from the very beginning. Below is an illustrative example of a comprehensive M&A project plan that outlines the tasks required to control value capture.
Note: The below project plan, workstreams, and tasks are not in any particular order. If you are interested in the execution order or duration of each body of work in the project plan, TrueNxus can help. Reach out to our sales team today.
- Conduct a review of the portfolio
- Define strategic options
- Develop a business case
Estimate and capture deal value
- Identify sellers
- Strategize negotiation tactics
- Launch data room
- Conduct M&A due diligence
- Evaluate synergy sources
- Value integration costs
- Identify and validate synergies
- Track and realize synergies
- Determine tax strategy
- Outline potential tax issues (i.e., timing of tax, impact on NOLs and tax credits, impact on tax basis)
- Establish a tax structure
- Define Day 1 legal entity structure
- Value legal entities
Define legal structure
- Outline regulatory/legislative implications
- Operationalize tax structure and legal entities
Outline regulatory implications
- Consult with work councils and unions
- Receive regulatory approval and business licenses
Analyze and structure financials
- Define Day 1 capital structure
- Develop combined financial statements
- Establish deal-basis financials
- Audit financials
- Define working capital mechanics
- Perform asset revaluation
- Settle working capital
- Stabilize the business
- Define the operational scope of the transaction
- Establish current state operating model
- Create Day 1 operating model
- Develop future state operating model
- Identify operational interdependencies
- Define current state organizational structure
- Prepare Day 1 organizational structure
- Prepare and execute integration plans
- Assess Day 1 readiness
- Execute Day 1 checklist
- Monitor value realization
Plan and execute communications
- Plan and distribute investor relations communications
- Conduct shareholder and executive communications
- Communicate change management
- Draft and agree to legislative communications
- Prepare and share employee communications
- Design and distribute customer communications
- Plan and send vendor communications
5. M&A best practices
M&A is a highly complex process that relies on extensive analysis, attention to detail, and patience. Below is a list of M&A best practices, in relative chronological order:
For the buyer (buy-side):
- Approach the target company with diplomacy. Additionally, have an understanding of the company’s position before initiating contact, and be sensitive to how it might receive your offer.
- Find and retain experienced leadership/advisors.
- Keep culture fit in mind — from initial contact through acquisition integration.
- Build trust between the buyer and the seller
- Create an integration plan before the deal is closed so you don’t head into integration blind.
- Continually monitor and report the progress of the merger or acquisition over time.
For the seller (sell-side):
- Be patient - don’t jump at the first offer.
- Understand the strength of your position, and involve outside advisors with the deal.
- Search and retain experienced advisors who can help you.
- Strengthen your negotiating position by having conversations with real-world buyers rather than solely relying on analysis.
- Get multiple buyers to the table to increase your value.
During the M&A process, issues are bound to arise from both the buyer and the seller. Both the buy-side and sell-side should resist emotion — instead, each should solicit help when needed and keep an open communication channel.
6. Understand mergers and acquisitions project management best practices
There are wide-ranging project management best practices when planning and executing M&A. However, below outlines, at the highest-level, TrueNxus’s view of M&A project management best practices based on the founder’s experience in managing several mergers and acquisitions.
- Establish one single source of truth
- Initiate a governance model
- Define a project charter
- Create and maintain a project plan
- Monitor and report project status
Establish one single source of truth
Complex projects such as M&A require collaboration with a large number of stakeholders, both colleagues and third parties. At TrueNxus, we’ve seen deals with 200+ stakeholders through the life of a deal. As you can imagine, managing such a project can become chaotic fast, especially with everyone using different tools and templates. As a result, it’s essential to select one method, preferably a software solution and not presentations and spreadsheets, to manage everything.
Initiate a governance model
Ensure accountability by identifying the deal lead, project manager(s), and workstream owners. Additionally, identify all responsible stakeholders that will be on the hook for doing the work. You may not be able to identify everyone at the beginning, and that’s ok. Throughout the life of the deal, the responsible parties may change. However, the leadership team should be identified at the beginning.
Define a project charter
Do this right away so that you can align all stakeholders at the very beginning. The charter outlines the following:
- Cadence: how often regularly scheduled project meetings will occur (daily, bi-weekly, weekly, semi-weekly, monthly, quarterly, etc.).
- Objectives: are specific, measurable, achievable, realistic, and timely project goals.
- Benefits: is the intended value and/or outcomes the project plans to achieve.
- Risks: are any uncertain events or conditions that, if they occur, would affect the project objectives.
Create and maintain a project plan
Don’t worry if you and your team don’t have full foresight into how the plan should look. The project plan becomes living and breathing and is, therefore, continually updated throughout the life of the merger or acquisition.
Monitor and report project status
Establish a recurring meeting to monitor and report progress. If the deal is large enough, it may make sense to establishes several meetings, one with senior leadership and others as workstream breakouts. In these meetings, the entire project team comes together to review progress to-date, solution roadblocks, and understand the plan. Meetings such as these instill accountability amongst each project team member by creating transparency and ensuring the team is collaborating to move the needle forward.
7. Identify common mergers and acquisitions project management challenges and understand how TrueNxus solves the problems while saving time and money
M&A historically has been resource-intensive and time-consuming. Mergers and acquisitions from planning through execution can take multiple years. Not to mention, there may be numerous starts and stops, especially before a deal signing, during the due diligence. Throughout the M&A lifecycle, there can be a variety of challenges, but below are the top-of-mind pain points your organization should consider.
- Version-control mess
- No governance
- Limited to no resource capacity
- Disparate and remote teams with different and dated project plans
- Limited to no visibility into project status reports
Challenge: Version-control mess
When managing a complex project like M&A, deliverables like project plans, timelines, and status reports are maintained and updated in presentations, documents, or spreadsheets that are often offline and across disparate team members. When it comes to providing status updates, project managers and team members need to consolidate the disparate information across constituents into a digestible view. In an environment like this, there is a version-control mess, and there is no real-time visibility of status for any stakeholder, including management.
With no single source of truth, strategic thinking becomes cumbersome because it’s difficult to see how projects are being executed against their original plans. This leads to a lack of transparency and accountability, which hurts productivity, efficiency, and organizations’ bottom lines.
TrueNxus’s solution: Leverage one source of truth
TrueNxus is your organization’s single source of truth to manage the entire merger or acquisition. No more countless hours herding cats via conference calls and emails, across a multitude of presentations, documents, or spreadsheets. By having the entire merger or acquisition managed on TrueNxus, everyone has access to the information they need when they want it. Additionally, everyone can view the project plan the way it makes sense to them, from a list to a timeline.
Challenge: No governance
Companies often do not establish a governance structure for a merger or acquisition until the deal has closed and its time to integrate the two entities. However, This not only leads to confusion but also creates lost opportunities when execution is required. By not identifying the right accountable resources early in the process, giving them a chance to provide their buy-in to the decision-making, they are frustrated once they are brought into the process. They are required to execute against goals that they were neither involved in creating nor agreed upon.
TrueNxus’s solution: Establish a governance model and align accountable and responsible parties by leveraging OKR and creating a project charter
TrueNxus helps you instill accountability by having you create a project charter and identify the deal lead, project manager(s), workstream owners, and OKRs. Additionally, you can identify all responsible stakeholders that will be on the hook for doing the work. You may not be able to locate everyone at the beginning, and that’s ok. Furthermore, through the life of the deal, the responsible parties may change. However, the leadership team should be identified at the beginning.
Challenge: Limited to no resource capacity
One of the most challenging aspects of M&A is identifying and freeing up the right resources. There are many people across the organization that are required to help plan and execute M&A. However, more often than not, the employees identified to help drive the execution forward are doing so as a side job. They typically are not freed from their primary responsibilities. Instead, it often feels as though they are working two jobs. Rather than focusing on their day job and help drive results from the deal, they are often bombarded by multiple stakeholders with conference calls and emails for status updates, yet in different formats.
TrueNxus’s solution: Free up resource capacity
Once the right resources are identified, they can easily be added to the project in TrueNxus and assigned to their work. They can also collaborate and communicate directly in the app, removing the distracting and time-consuming conference calls and emails. Additionally, with TrueNxus’s intelligent automation, reliant stakeholders will be notified of any changes, and status reports will be generated automatically, ensuring everyone has access to the same information whenever they want it.
Challenge: Disparate and remote teams with different and dated project plans
There are two types of organizations that plan and execute mergers and acquisitions. The first, are organizations that reallocate internal resources and hire external consultants to run a centralized Project Management Office (PMO), also known as an Integration Management Office (IMO) in M&A. The second is decentralized organizations, meaning they leave up to the workstreams, business units, or support functions to create and run their own siloed IMO.
While the first organization, one that creates a centralized IMO, is likely to be more successful and achieving the outlined goals and objectives for the deal, it is expensive and resource-rich. However, no matter the option pursued, the same challenge persists, time and time again - its a nightmare consolidating and managing project plans. Almost always, every workstream and stakeholder maintains their plan or to-do list, and it’s up to a group of individuals to reconcile the different project plans into one master project plan. To make things even more complicated, it’s a version control mess.
No matter the type of organization, there is always a group of employees where it ends up being their full-time job to maintain a master project plan, and it’s expensive. Each of these employees is making six figures, and more often than not, it is left to external consultants to maintain, which results in millions of dollars.
TrueNxus’s solution: Collaborate as one team and maintain the project plan continuously
TrueNxus is your single source of truth where every project member or project guest (i.e., lawyers, consultants) can have access to the information they need when they want it. With TrueNxus, you’ll have the master project plan always accessible. Additionally, each stakeholder will be able to visualize the data the way it makes sense to them - a list or timeline. Furthermore, everyone has their section called My Work, which allows them to see only their relevant work.
In the event work changes, the reliant stakeholders will be notified immediately for any number of reasons. Additionally, reports will be updated automatically.
Challenge: Limited to no visibility into project status reports
When it comes to providing status updates, project managers and team members need to consolidate information across a wide array of constituents into a digestible view. However, project teams are managing their work across a multitude of presentations, spreadsheets, and documents. At TrueNxus, we have seen in every deal, entire teams assembled simply to maintain status across the whole project, so management has a view into progress. Teams are assembled because management wants to keep a pulse on progress. However, bringing together a group of individuals simply to herd cats, and then reconcile and standardize the data from disparate teams is painfully time-consuming, tedious, and plain wasteful.
TrueNxus’s solution: Monitor and report project status automatically
TrueNxus has automated analytics allowing the project team and management to access reporting whenever they want it. No more herding cats, employing or contracting entire teams just to make sure status reports are generated. Leverage the new found time and money to focus on thinking strategically and driving results.
It’s time organizations had a solution to help them manage mergers and acquisitions project management, and accomplish more with less. If you’re looking for a solution to handle M&A project management, TrueNxus can help. Reach out to our sales team today.