According to Thomson Reuters, there have been over 40,000 business deals that involved a change in ownership in the last year. However, many of these deals ended up failing, which begs the questions: How well are they being monitored and executed? Are they planned with the best possible project management practices? Have risks been properly identified? Does the project team understand their roles and understand the importance of leadership?
Before managing any M&A project, these are all questions worth considering. Read on to learn more about how executives can apply best project management practices to ensure a successful M&A transformation, and closing the deal.
Ask Clarifying Questions. During the initiation phase of the M&A project, it’s important to ask some clarifying questions to accurately capture of the scope of the project. For example, what problem will a merger solve for an organization? Which opportunity is the organization seeking? Will a merger create the most value for the organization and its stakeholders?
Asking these types of open-ended questions will not only ensure understanding of the project scope, but they can aid executive teams in determining if a particular merger is worth the organization’s time, money, and resources.
Look at the Big Picture. An executive project team should spend some serious time “soul searching” to identify reasons for proceeding with a merger and to look at the big picture. For example, executing a merger will likely spark smaller sub-projects within the organization.
Although M&A projects are often managed as larger programs, sub-projects can add a complex layer involving multiple departments and functional areas within the organization. To ensure successful execution, project teams must look at how the merger will impact the organization as a whole.
Estimate, estimate, estimate. During the planning stage of an M&A project, applying the best practices for scheduling, resource allocation, and estimating are all key. These steps should be done prior to communicating the merger plan to the organization.
Define a high-level, large-scale plan, then estimate costs accordingly and form contingency plans and contingency funds based on the details and information gathered during the initiation phase of the project.
Determine Authority and Sponsorship. Every M&A project requires securing approvals for proposals, work breakdown structures, costs and budgets and change requests.
However, securing approvals when needed can also create a time suck and bottle neck in a project. To avoid running into a schedule constraint, identify the authoritative figures and sponsors in the beginning of the project, such as the CEO or a Board of Directors.