Why M&A Playbooks Are Important for Deal Success

Would you lead your team to a championship game without a proven playbook to guide you through avoiding errors of omission that can derail or decelerate a big win? Mergers and acquisitions (M&A) work along the same thought process because there is so much at stake. Therefore, if you have the right M&A playbook, you can set yourself on the winning side of this process.

Keeping up with all the details, processes, and dynamic challenges encompassing M&A deals is a lot of work. You can easily miss some fundamental particulars — and there’s a lot at stake. You must consider the operational, commercial, financial, organizational, management, and strategic aspects before hatching and sealing M&A deals.

What Is an M&A Playbook?

An M&A playbook documents the entire merger and acquisition life cycle, from strategy development and target identification to integration and post-merger compliance. Put simply, an M&A playbook is a blueprint for the merger and acquisition process.

How M&A Playbooks Foster Deal Success

Mergers and acquisitions are a long-standing strategy companies use to consolidate their market influence, diversify their assets, or supercharge their growth. However, M&A deals are not always profitable. If you don’t get the building blocks right, or if your integration and restructuring strategies come short, your M&A deals will fall short of the full potential. 

According to Forbes, 83% of mergers and acquisitions fail because of: 

• Flawed M&A strategy 
• Poor cultural integration
• Inadequate synergy delivery

On the other hand, a Segal case study lists six factors that advance long-term M&A success. These are: 

• People/talent 
• Culture
• Leadership/governance
• Products/services 
• Customers 
• Organization

Here’s how using playbooks in M&A helps you avoid commonplace M&A shortcomings and pivot your strategies to achieve deal success.

Streamline Information To Bridge Communication Gaps

Communication is at the heart of every M&A deal. From the initial stages, when you announce your merger plans to employees and shareholders, to the sunset stages where you publish post-integration plans, it’s essential to communicate clearly and concisely. 

M&A playbooks lay out the strategies for building a comprehensive communication plan to enable the merged companies to speak as a unit, not two different entities. During a merger and acquisition process, there can be a lot of uncertainty among employees of the entities involved. 

Without a proper strategy to unify internal and external communication and share relevant information at the right time, employees can become apprehensive, causing your attrition rate to skyrocket. Moreover, misinformation and misrepresentation can become rampant if you don’t delegate and streamline communication roles throughout the M&A life cycle. 

M&A playbooks help you build a solid communication plan to avoid such pitfalls from the onset. They ensure that all your designated communication channels deliver the same message to foster transparency among employees and shareholders.

Optimize Post-Merger Activities Efficiency 

After an agreement has been reached and the deal is closed, you must perform many post-merger integration activities throughout the phases of the M&A deal. These activities include:

• Data handoffs
• Merging systems
• Branding
• Supply chain organization and harmonization
• Staff restructuring and task delegation
• Cultural integration

These activities create multiple moving parts that you must manage synchronously. If there are delays in executing any of these functions, it will hinder you from actualizing the expected value and synergy of your M&A deal. 

M&A playbooks provide a well-structured post-merger framework to empower you to fulfill important activities more efficiently. They help you plan and design an agile workflow, mitigating oversights that may cause operational downtimes. 

Oversee Change Management

M&A deals engineer sweeping change in all entities involved. The rapid changes of two entities may be too complex and fast-paced for traditional management structures. This results in a chaotic transition, and important details may fall through the cracks and come back to bite you in later stages.

To counter insufficiencies, it’s smart to delegate change management to a Change Manager. This individual should foster a smooth working relationship between the companies involved in an M&A deal throughout the transaction.

Creating a Change Manager role will help you realize maximum value in a transition process. M&A playbooks spell out best practices to help your change management team operate efficiently and strategically. 

Delegate Decision-Making To Curb Decision Silos

Decision silos often plague M&A processes. They’re especially rampant in M&A deals involving two large organizations. The best way to avoid decision silos is by delegating decision-making to a pre-ordained team of integration managers.

For instance, data-based decisions should be assigned to the top data scientists, while select managers with expert management knowledge should handle authority-oriented decisions. These teams may then report to a change manager or the chief integration manager, who then communicates decisions to all stakeholders. 

Besides curbing decision silos, delegating decision-making also streamlines communication. By leveraging M&A playbooks for success, you can better plan for delegation and avoid decision silos and other related drawbacks. 

Prep for Risk Management 

If you are doing a deal, risk is inevitable. Some common M&A risks include: 

• Inadequate due diligence
• Unexpected market disruptions
• Overvaluing the target company
• Overstating synergies  
• Integration failures
• Data security threats

M&A playbooks help you pinpoint possible risks ahead of time and devise effective mitigation strategies. In this way, they make you more prepared to navigate challenges. M&A playbooks awaken you to the reality of the deal, and help you realize that your strategies are not risk-proof. 

Devensoft Helps You Manage M&A Deals Proficiently

Think about all the back-and-forths behind strategy development, target identification, valuation analysis, and all the other stages in an M&A life cycle. Wouldn’t it be great to manage them on one platform where you can track and review all the procedures? With end-to-end merger and acquisition SAAS software from Devensoft, you can do just that.

To get started, download Devensoft’s free M&A Management playbook and toolkit, which contains tips, templates, checklists, an employee retention plan, and more. You an also schedule a call with one of our experts!