Traditionally, M&A integration projects (also known as post-merger integration or PMI projects) are based on project plans depicted in Gantt charts or derivatives of it. This project management approach is also sometimes referred to as "waterfall methodology." Once the plan is developed and locked, the team works almost exclusively on plan execution. It is not unusual that even the best project teams run into unforeseen issues that result in delays. This may be the case if a full integration of the acquired firm is pursued and the buyer's ERP system needs adjusting for a new business model — but it can also be the case for a host of other reasons.
Delayed plans, while explainable and perhaps viewed as inevitable, are never a good thing. From an overall project management perspective, potential delays are addressed by adding buffers to the project plan and related budgets. While veterans of M&A integration projects are accustomed to delays and manage around them, less experienced team members may get discouraged and view this as failure.
The Agile Methodology has long been used in software development. It replaced the traditional waterfall project management methodology, which was viewed as too rigid and did not allow for frequent feedback loops and course changes during the execution phase. The success of Agile in software development begs the question of whether M&A integration projects may benefit from it.
I believe that Agile Manifesto Principles, laid out at the beginning of an M&A integration effort, can set the stage for what to expect during the integration journey and provide tools for managing the project successfully. Below I highlight five of the twelve Agile Manifesto Principles and explain their relevance for M&A integration projects.
1. Create Value
An M&A transaction is typically driven by creating value in the combined enterprise. This should also hold for M&A integration. Therefore, it is a good idea to use the "value lens" when developing and executing the integration plan. Exceptions to this rule are when plan elements are done for reasons of corporate, legal, or regulatory compliance.
2. Welcome Changing Requirements, Even Late in the Execution Phase
Possible changes can come from many directions — resource constraints, changing corporate objectives, or new regulations. It is always good to be aware of possible changes as early as possible, and there is never a stigma attached to bringing up adjustments. It is simply good project management.
3. Business Representatives and Integration Team Members Must Work Together Daily
The collaboration between business and M&A integration team members is critical to ensure the integration takes into account all business requirements. The ultimate goal is always to do what is right for the business. A tight alignment allows for quick course adjustments as needed and as soon as possible.
4. Simplicity — the Art of Maximizing the Amount of Work Not Done — Is Essential
There is a tendency for PMI projects to get increasingly complex during the planning stage, as not all facts and circumstances are fully understood in the beginning. This may result in scope creep and increased integration costs. This principle suggests reviewing work activities during the execution phase and determining whether the costs are justified by the value created.
For example: for certain types of transactions, an ERP modification was initially part of the integration plan. However, during the execution phase the team became aware that only a few transactions of this type were expected on a monthly basis — making the cost of the ERP change economically unjustifiable. The decision was reached to de-scope the ERP change and instead establish a manual workaround.
5. At Regular Intervals, the Team Reflects on How to Become More Effective
In M&A integrations, reflections on what went well and what could be improved are typically done at least at the end of a project, and sometimes at critical milestones during the project. It may be worthwhile to consider more rapid reflections — especially in the beginning. Weekly checkpoints, with the project sponsor briefed on significant outcomes, can surface issues before they compound.
There are other Agile Manifesto Principles that may have applicability to M&A integration as well, but the discussion above illustrates that Agile elements can meaningfully improve the M&A integration process. It also leverages the Agile knowledge that already exists in the IT community and other functions of many companies.