September 2010 - Association for Corporate Growth

COMMUNITY COMMENTARY
Injecting Efficiency into the Deal Process
Project management techniques allow dealmakers to be better manage transactions
By Byron Kalogerou and Dennis J. White
M&A transactions have no shortage and efficiency.
actions to bring discipline to the process and
of moving parts. They typically Virtually every M&A engagement has a facilitate communication which is key to successful
project management.
present a variety of business, legal,
goal, a general timeline and set resources
accounting, tax and other issues that
require complex documentation and often
involve players spread
making such transactions ripe for project
management. The Project Management Institute
has over 500,000
The first crucial step to any well-managed
project is establishing its scope and objectives.
This can be done
out across multiple time
members advancing
by taking the time to
zones. Few managers
the practice and science.
define a statement of
in any major company
M&A profes-
work or deal charter.
would consider launching
a multi-party, complex,
long-term project,
whether it be designing
a jetliner or building
sionals, however, need
not become certified
project managers to
improve their game.
Employing even basic
The charter need not
be anything overly formal,
but is effectively
a statement of work
providing deal context
an office tower, without
project management
to the deal team. For
project manage-
techniques can signifi-
example, is the con-
ment techniques and
cantly streamline and
templated acquisition
tools. Yet heretofore,
enhance the handling
a “must have?” Is it
seasoned M&A professionals
and deal law-
Byron Kalogerou resulting in potential
Dennis J. White is the nature of the
of transactions, thereby
purely defensive? What
yers have largely failed
to embrace even basic project management
techniques and tools that would equip them
to lead deals more effectively.
Today, however, driven by a variety of
forces, deal professionals are adopting techniques
used by their business brethren to inject
greater efficiency into the deal process.
Whether it be the in-house bar’s initiative to
reconnect value and legal fees as exemplified
by the Association of Corporate Counsel’s
Value Challenge, the recent accounting
change requiring that deal costs be expensed
rather than capitalized, or an economic environment
where deals are done with greater
care and deliberation, there is a growing
impetus to manage deals with a higher level
of transparency, accountability, predictability
time and cost savings.
Project management in M&A has two elements:
processes and technology. The typical
processes in M&A are:
• Defining the scope and objective of the
deal;
• Identifying the stakeholders and corralling
resources to get the deal done;
• Creating and assigning a detailed set of
initial deal tasks, scheduling and
managing the delivery of the tasks and
budgeting and reporting their costs;
• Identifying and managing the risks, issues
and changes in scope that arise in the
flow of a deal; and
• Conducting a post-closing assessment.
The technology element leverages these
competition for the target?
The charter will set the expectations
and establish the framework for resourcing,
tasking and budgeting. A well drafted charter
will often detail what is not “in scope” (e.g.,
purchase price of greater than $X). Finally,
the charter often describes a successful outcome:
e.g., closing the acquisition of the widget
product line from ABC Industries before
the end of fiscal 2010 at a purchase price
of not more that $X, assumption of related
liabilities in accordance with market norms
and employment of the business unit’s CEO
to assure continuity, with total deal expenses
not to exceed $Y.
The next step, identifying the stakeholders,
is in part driven by the scope. The principal
stakeholders are obvious, though con-
46 MERGERS & ACQUISITIONS September 2010