The Next Level of Service Integration for Mergers and Acquisitions Projects

	Transition Phase Duration	Objective	Programme Management
1980-1990	3 year planning	Mobilisation & Transformation	Decentralised approach Progress reporting into normal organisation (either BU or function) Light Programme Management except for very rare deals
1990-2000	9 months	Organisation & Quick Wins	More systematic use of Programme Office techniques (mobilisation and communication, risk management, reporting...) Focus on management of speed and risk Centralisation of progress status reporting
2000-2010	3 months	Synergies Legal & Tax Optimisation	Better linkage between due diligence, post deal implementation and purchase accounting Web-enabled Programme Office Better coordination between functional and operational integration workstreams

Source : PMI Factory ®

The critical conditions for a better programme management coordination and execution are now commonly known.

• Integration strategy design. The necessity to build an overview of the integration strategy in order to align executives' vision of it and accelerate the planning phase has widely been circulated. Most major groups do include this effort in their preparatory works. It is however not that developped among smaller firms.
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  Earlier integration planning. The accelerated development of complex programme plans, build in an iterative mode with top-down milestones and bottom-up detailed plans, has benefited from the general use of planning tools and techniques. The necessity to build an early masterplan, coping the anticipated risks and issues and adressing the sources of synergy, is generally accepted by experienced acquirors, who start to plan during the due diligence phase.
• Workflow IS platforms (merger webs). The use of NICT's is more recent, and less distributed among firms. It has been developped in the 80's to manage mega-deals (eg. the BP-Amoco Mergerweb solution developped and implemented by Ernst & Young LLC). Several solutions now exist for smaller deals being either M&A dedicated platforms or more generic collaborative tools. NICT's can be used at several levels in an integration project :
• in the programme office, to manage the activity of the Integration Task Forces (ITF's) from activation to reporting and synergy delivery and approval.
• at task force level, to use virtual rooms to share working documents, plans, tools, and links to in-house knowledge database (manufacturing, EHS, functional corporate guidelines and policies,...)...
• Communication/mobilisation techniques. After the development of the cascading mobilisation techniques mentioned above, a more recent wave has emerged, building on more interactive technology. The merger TV used in the case of Mittal/Arcelor is a good example. Implementation of intranet cultural surveys, development of Merger podcasts are other examples to ease mobilisation.

 

However, PMI Programme Office techniques seem to have reached a sort of "Plateau":

• Empirical research and litterature exist on most aspects of post-merger integration or carve-out management. Major consultancies have developped viewpoints, organised conferences and training sessions since the 70's.
• The need to design and implement as early as possible a transition phase built on a programme office supported by task forces, mobilising resources from the different entities, etc... is actually known and implemented by most major groups since the mid 80's.
• PMI toolboxes have been less systematically enforced, but the building blocks (people, systems, knowledge,...) are often in place.

 

Our viewpoint is that demand for Value-Add Services and Innovation will increase on new issues:

• Revenue enhancement.
• Ability to bundle functional and operational expertise
• Social responsibility and environmental sustainability
• Security and confidentiality

 

 Conclusions - Recommendations.

 

The post-merger integration market is a mature one - it has benefited from a strong democratization since the 60's. The techniques initially developped by the most famous consulting firms (Mc Kinsey, BCG) have been experienced by thousands of managers and they are commonly learnt in most MBA's around the world. These approaches have also been improved thanks to other service providers, coming from the re-engineering side or from the accounting and financial side. The use of NICT's (and Mergerwebs) have enabled to pass another step, with the industrialisation of the integration process in many important groups. This enables now to assume that the next wave of innovation will deal with an increasing issue: how to be more operational and drill into implementation issues in a quicker way? In other words, how to move from an industrialisation of general management techniques to the industrialisation of expert knowledge?

 

Author: Gilles Ourvoie (gilles.ourvoie@pmifactory.com).

Gilles has worked for c.15 years on strategy and PMI projects for major international groups. Within the Strategy & Transformation consulting activity, he has developped the French PMI Center of Excellence at Gemini Consulting and Capgemini (1997-2004). Between 2004 and 2007, he has launched the Transaction Integration Services practice of Ernst & Young France (within the TAS Corporate Finance), and in the CWEA Area (Italy, Spain, Belgium). As such, he was part of the TIS Global Leadership Team. Since 2007, Gilles is Partner at PMI Factory.