Taking your M&A Game to the Next Level

by Mark Herndon, President of M&A Partners

Are You Getting Better at M&A?

It was one of those unique boardroom moments that literally sucked the air out of the room. No one could believe the chart projected on the screen... at least no one wanted to believe it – there was too much red ink, way too much. But the data was what the data was. Of the 20 deals completed by this serial acquirer in the last few years, the vast majority of them had failed to perform to pre-deal projections. Some by a lot, some by a little. Some due to poorly defined strategy; some attributed to ineffective or incomplete due diligence; and several, due to integration failures. Welcome to what we have defined as the “deal-count paradox.” It shouldn’t be that way. We expect that the more deals you do, the better you get. And, generally, that’s true. But in more and more specific instances, we are seeing high deal-count acquirers with 20, 50, even 100 completed deals or more continue to struggle with the same-old challenges and destroying lots of share- holder value along the way.

Beware the “Not Invented Here Syndrome”

Years ago I saw a study in a leading management journal that purported to measure the willingness of a company to seek and adopt best practices compared to the relative industry performance of that particular company. The results were telling. Those with the best business performance, the “A players,” were also the most willing to adopt best practices. Those that were perceived by analysts to be good, yet “B players” were among the least willing to accept best practices. The “C” and “D players” were both more inclined to accept outside best practices than the “B players” were. That concept is helpful in thinking about how to take your M&A game to the next level. You have to stay at it, in fact you have to be relentless in evaluating and investing in each area of M&A operations, or you’ll end up like the “B players,” content to consistently underperform because you are comfortable with “where you are at.” I think that helps explain the deal-count paradox. Executives have confidence in one or more aspects of their M&A capability, but fail to view the entire end-to-end deal lifecycle and true requirements for success to be of any consequence. As a result, they experience the same sub-par results over and over.

Figure 1 - Not Invented Here Syndrome chart

So how does an M&A professional challenge their company’s historical norms and ensure they are able to achieve consistently good results? The hallmark of truly successful acquirers is found in their view of M&A as a core enterprise competency or business process that they need to build and sustain just like any other internal capability.

Enterprise-Level M&A Competency Model

Over the past few years, many acquirers have developed or adopted an M&A process methodology that defines the overall phases, objectives, tasks and desired outcomes for M&A success. A few have taken the additional step of drilling down to the instructions and requirements on a functional and cross-functional level. These are important first steps, but in our work building internal M&A capabilities for corporate acquirers, we’ve identified 12 key categories of skills or processes that must be carefully developed and coordinated to achieve full deal value time after time.

As illustrated in the inset graphic, Enterprise-Level M&A Competency Model, consistent deal success requires each category to be effective independently, but more importantly, each category must be linked to and drive the success of the other components of the model. As a part of a comprehensive M&A capability assessment, each category should be viewed in light of actual historical deal results, and be analyzed based on surveys and direct feedback from both buyer and seller executive staff, deal teams, integration teams, employees, customers and other key stakeholder groups. The following highlights are intended as thought-starters to help guide additional analysis in key priority areas:

Fig 2 - Enterprise-level M&A Competency Model


Are deals driven by clear, compelling strategy and robust decision criteria?

  • Have you completed a comprehensive industry “context of change analysis” to determine major risks and opportunities?
  • Have you translated specific M&A goals and objectives directly from your overall corporate growth strategy?
  • Have you determined what deal types you will and won’t consider and what roles you as buyer will and won’t perform (i.e. transform or turn-around vs. portfolio investor, etc.)?
  • Are executives, corporate development and operating unit leaders aligned on specific target criteria which will prevent wasting time on unqualified target prospects? 


Is there adequate role clarity from top to bottom and throughout each stage of the M&A life cycle to ensure accountability and adequate protocols for timely, effective decision making? 

  • Have you completed a recent “RACI” assessment to specify those groups or individuals that will be responsible, accountable, consulted or involved? On corporate deals? On regional deals? On unit-level deals or special situations?
  • Have you created and published specific organization charts and responsibility descriptions for due diligence and integration teams.
  • Have you provided for adequate continuity from deal-side to integration?
  • Have you provided adequate business focus and leadership visibility on maintaining the core operations and results of the target business?

Transaction Discipline:

  • How do you ensure that the right deals get completed and the wrong deals don’t?
  • What is your ratio of diligence efforts to deal completions?
  • What mechanisms exist to ensure your internal teams and advisors can effectively raise “red flags” without shooting the messenger?
  • What accountability and oversight exists to ensure that a well-intentioned general manager or division head doesn’t get deal-fever and push through a deal that doesn’t fit or meet the specified criteria?
  • What about the CEO?

Methodology & Key Learning:

How effectively do you get your teams on the same page before you get them on the field?

  • How effectively does your overall M&A process methodology and functional requirements definition really guide actions and behaviors?

  • What degree of training have you provided to your executive staff? To your deal teams and integration teams? To the target staff? Employees?

  • How do you capture and institutionalize key learning to make sure you don’t repeat past mistakes?

Advisor Team:

Are your outside accountants, lawyers and advisors aligned and coordinated?

Are you working off of four or five completely different and overlapping diligence or integra- tion protocols or carefully standardizing and customizing one game-plan that all internal staff and external advisors march to?

D-3 Due Diligence:

  • Do you customize your assessment efforts to each deal and work “first-things first” to minimize unproductive resource utilization?
  • How and when do you engage in deeper, “integration due diligence” to identify and vali- date key objectives, opportunities or challenges with adequate time to plan for these is- sues prior to launch of the integration process.
  • How effectively does your due diligence process achieve a smooth and seamless setup and handoff to integration?

Target Value Perspective:

  • Have you completed a comprehensive as-is process analysis before making integration assumptions?

  • Have you aggressively and honestly looked for best practices you can import from the target?

  • Have you developed an awareness and consensus among your leadership team about what the target’s underlying core capabilities are and how those can be leveraged for more long-term value creation?

Integration Strategy Framework:

  • How well prepared are you to answer the obvious “big decision” questions pre- announcement? Pre-close?

  • How do you know when you are really ready to launch the integration process?

  • How will you mitigate potential “value-erosion” due to delay in sorting out the tough issues?

  • How do you get both your executive team and the target’s executive team aligned on the most important objectives and priorities prior to announcement? Prior to closing?

  • How do you ensure that your integration leaders and teams have everything they need to start planning / implementing as quickly as possible?

S-3 Integration:

  • Are business stabilization plans in place for immediate post-announcement and post-closing implementation?

  • How are you addressing customers? Business performance? Talent? Vendors and partners?

  • How do you know how fast to go and on which initiatives?

  • What integration efforts should be put off for later phases and why?

  • How do you focus all teams and leaders to be “on the synergy hunt?”

Functional and IMO Depth:

  • What M&A staffing model is optimal for the type and volume of deals you anticipate?

  • What combination of full-time, part-time and external staff or support roles should be anticipated to sustain core operations and effectively accomplish integration in the expected timeframes?

  • How do you manage schedules of key leaders between day-to-day roles and integration roles?

  • Do you know your true costs of integration? What budget parameters should you be using to enable your teams to actually achieve the deal’s value proposition you expect?

C-3 Change Management:

  • How effectively do you manage the people and organizational aspects of integration?
  • Are your communications addressing the key issues through a comprehensive strategic campaign approach?

  • How effectively do you understand the target company’s culture relative to your own?

  • Have you identified and mitigated potential cultural “flashpoints” and identified how to get both combined organizations aligned to more high-performance cultural attributes as op- posed to bickering over “us/them” differences?

  • How effectively are you providing the emotional, psychological and skills support for those most impacted by change?

  • Effective Leadership:

    Is your senior team and management cadre consistently demonstrating competence, credibility and personal conviction?

  • How effectively are your leaders role-modeling the expected behaviors and cultural attributes?

  • Are decisions made based on logic and objective processes as opposed to expedience or personal agendas?

  • Are all communications truthful and transparent?

  • Do you address concerns and mistakes in a way that demonstrates you listen and are committed to “getting it right?” ​

How Does Your Integration Stack-up?

Once you’ve completed an enterprise M&A competency assessment, it’s time for action. Identify the specific items with the greatest potential impact on each deal phase: strategy and readiness, transaction and due diligence, and of course, integration.

But where to start? For most organizations, the greatest risks and opportunities for improvement are still integration related. The encouraging news is that integration success can be codified and replicated, but it takes a deeper analysis than just repeating trite but true statements such as “communicate more” or “start planning earlier.”

That’s why we are so pleased to be able to co-sponsor our new survey with the M&A Leadership Council and publisher Jossey-Bass. “The State of M&A Integration Effectiveness, 2014” is a new study that we just launched and are now making available to the entire M&A community through the M&A Leadership Council. This survey will assess key integration capabilities, governance roles and process mechanics, among other items, to enable us to gain important insights regard- ing the impact on business results, integration results, speed of integration, and other key result outcomes. To help you more definitively answer the question, “are we getting better at M&A integration?” we would encourage all readers of M&A Monthly to help by completing the survey online via this link, The State of M&A Integration Effectiveness. All responses will remain completely confidential and anonymous. For more information on the survey, its objectives and incentives available to each respondent who completes the survey, please click this link: Merger Monday Insights: Are You Getting Better at M&A Integration?