The pace of merger and acquisition may have reduced from last year (2015) in other sectors but technology is the busiest sector for M&A in 2016 as per reports in Wall Street Journal . M&A in Technology industry will continue to rise in 2017 both in number and deal size as per KPMG report.Most of the high-tech companies do serial acquisition and divestiture e.g. Salesforce.com acquired 10 companies in Oct2016, VMware is also a serial acquirer and divestiture company. Our experience shows that companies which continuously acquire and divest are better off if they invest on Post Integration Strategy , have digitized M&A playbook (around 70% of tasks are repeatable) and use digitization tools (either in-house or off the shelf) to manage the acquisitions.
Mind Maps forms base of M&A Playbook
M&A playbook breaks the processes based on each function (HR, Finance , IT etc.) and define the set of activities that needs to be completed by each function so that the acquisition is complete. M&A Playbook also consist of re-usable templates, tools etc. which can help in reducing the acquisition time.Best strategy to build playbook is to create mind map for each function. Mind map should list down all the high level activities that needs to be performed in collaboration with other functions. Sample of acquisition mind map for IT function is shown below. Once the mind maps are created this could be transformed into playbook with more detailed activities and deliverable. Playbook should also contain a list of point of contacts who can execute these activities
Digitization of M&A Playbooks
Earlier playbook were in MS Excel but these playbook had poor usability and were difficult to support. In this digital age it makes more sense to have the playbook digitized. Our experience working with major technology firms shows that each department e.g. HR, Finance, R&D, IT etc. may have playbook but they work in silos and don’t have any collaboration.Digitization of playbook makes sure that functions collaborate, deals are easy to track and continuous improvement can be performed on the playbook.
M&A playbook as per our experience should be broken down into three broad categories Pre-Close (Due diligence), Day 1 and Post Day 1. These categories should then have set of activities and tasks that needs to be performed with the owner list. M&A digitization tools either in-house or off the shelf like (Midaxo, eknow , Devensoft etc.) helps in digitization of the playbook and can also help in managing the deals end to end. M&A Digitization tool should be the one stop shop for the playbooks, deal management, real time task tracking, synergy tracking and reporting. Benefits for end users from digitization of playbook or with the use of digitization tools are tremendous such as
- Depending on deal a subset of tasks can be picked from the playbook and can be tracked for that deal
- Collaborative execution through chats, posts etc. as the tool can provide real time visibility on playbook task execution
- Centralized place for the templates, document etc. which can be accessed controlled
- Tools and accelerators to check the synergies
- Tasks from playbook can be assigned to the respective groups and can be tracked
- Abilities to create workflows and send out reminders
- Efficient real-time reporting functionality
Creating mind maps, digitization/creation of playbook and helping companies’ shortlist the right M&A tool would be the focus area for IT M&A advisory services as we see an increase in the number of M&A deals specifically in Tech Companies. Digitization of playbook and use of M&A digitization tools will enable the companies to collaborate internally faster and integrate companies at a faster rate that will help achieve the required synergies faster.