Happy New Year from Nearco and best wishes for a happy and prosperous 2020! While we will continue to offer training content in this blog, I wanted to start off the year with a review of the excellent new M&A book “Agile M&A” by Kison Patel (https://www.agilema.com/agile-m-a-book) and a discussion of how it ties in to what we have discussed so far.
The book proposes that Agile program practices, which have been proven successful in software development and many other areas, be adopted by M&A practitioners. Contrasting Agile with traditional program management techniques, it does a great job of providing the reader with an understanding of both approaches and why Agile has received such widespread adoption.
Core tenets of the approach to M&A advocated by this blog are reinforced throughout the book. These include active participation in due diligence by the integration team, tighter collaboration and accountability between the “deal team” and integration teams, the need for flexibility in governance and team structures, and the criticality of keeping the deal strategy and rationale in the forefront at all times.
Target operating model development
While the purpose of the book precludes the discussion of target operating models (TOMS) at length, the book’s key messages are applicable to this step. TOM definition lends itself well to an Agile “Sprint” and teams benefit from the daily standups that highlight collaboration areas. Approaching TOM development in this way provides built in dependency identification and validation, potentially saving a great deal of time and re-work. These efficiencies would then carry forward into planning, as the understanding of the overall program and approach across the organization would both be established and have broad buy-in and support.
Program structure and governance
A challenge often faced by IMO leaders is that not all integration is created equal. Some tasks, such as email setup or creating a new node in the companywide ledger, are often routine and lend themselves well to a checklist executed by low-cost resources. Others, particularly go-to-market activities such as offer design, pricing, marketing strategy, etc. vary greatly from deal to deal and require highly skilled resources and frequent executive interaction and decision-making. Still others, such as designing a data structure, require a great deal of time and skill but not necessarily as much managerial involvement in the details. Agile’s flexibility and low-overhead structure accommodate both activities well by allowing the IMO to “split” the program into teams that focus their efforts on different sprint backlogs, maximizing productivity. Practicing Agile alongside an MBE (management by exception) philosophy minimizes distractions and helps leaders maintain sufficient governance while keeping their focus on the deal strategy and value capture.
I found the book to be both on-point and right on time. Traditional M&A approaches were largely designed to accommodate multinational transactions undertaken by companies with highly structured back offices in a time when mobile collaboration technologies were inferior. Mega-deals, where the parties have high degrees of outsourcing, automation, and customized ERP systems, may still need to modify Agile practices and/or blend them with other methods; however, there are benefits to be gained from even partial adoptions. Certainly, the deal and diligence processes should benefit greatly! As the book states, there is no single Agile methodology and continuous improvement is part of the process.
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