10 Mar Getting the Best Value from Multiple Advisers in M&A and Integration
A few weeks ago I was asked to take part in a member’s expert Briefing hosted by Constellia, a specialist in supplier spend management with a focus on helping clients optimise their engagements with professional services organisations. The fundamental question under discussion was, “In large complex initiatives in which multiple outside advisers and support groups are involved, how do you manage them effectively to ensure that together they help you achieve your goal?”.
In our work helping businesses through acquisition and integration, we commonly work alongside lawyers, bankers, corporate finance houses, specialist due diligence groups…and that’s just pre-close. Post-close, the support team typically changes to include systems integrators, specialist operational groups and others – all of us supporting a deeply-engaged client team which is itself drawn from multiple functions and parts of the business. (You could almost say that managing multiple teams, internal and external, is as much a speciality for us as M&A and integration.)
As ever, success in our experience lies in genuinely sticking to a few simple principles, all especially important in M&A where ‘connecting the dots’ between different aspects of the deal and integration is critical.
Be clear on the end goal
Ensure all groups – even those with a small or discrete part to play, understand the overarching purpose of the deal, how the business is likely to look post-close, and therefore what’s important in assessing, designing, planning and executing their part of the picture;
Try to incentivise the different groups in a similar or aligned, way; and if you can’t, at least recognise the impact these differences may have on their behaviours and activities: those rewarded with a ‘deal success fee’ may push hard on just getting the deal done regardless of the circumstances, others remunerated on a T&M basis may be prone to taking as much time as possible to explore every detail, regardless of relevance. ‘You get what you measure’ applies as much internally as externally: Groups and individuals for whom the deal represents all upside and no direct risk are likely to have considerable – and if managed well – constructive – differences in perspective from those for whom the deal is ‘all risk and hassle without any kudos or benefit for me or my group’. (local commercial teams vs. corporate legal or finance teams spring to mind as a common example);
Keep communication open
And one that certainly pushes against common practice: Maximise, don’t minimise, regular communication between these groups. Rather than maintain every adviser and consultancy in their own soundproof silo (making you the bottleneck), establish and manage a process in which they all come together frequently to share learnings and insights, and to develop a spirit of collaboration. Slightly more cost perhaps, but well worth the effort.
The image at the top of this post tells you everything you need (unless you’d prefer everyone to be in their own 2-person rowboat, each with detailed directions on how to paddle but nothing more). In short, get groups working together as a single, multi-faceted team rather than separate teams at risk of having different agendas and pursuing different goals. Provided every group has a clear, well-managed remit, insider lists are assiduously and rigorously managed, and any restrictions on sharing of information and deliverables are prohibited, you will be much more likely to ensure due diligence learnings are used effectively, risks are well-managed, uncertainty minimised, deal price and negotiations are fully-informed, and integration is pursued with your eyes wide open.