Last updated on June 23rd, 2023 at 06:47 am
INTRODUCTION
M&A is complex process of consolidation of companies and their assets, through various types of financial agreements like debt-to-equity, purchase of assets, management acquisitions, tender offers etc. It requires an incredible amount of planning, insight, organization, communication and management. Your deal team must also have the proper management expertise, tools and technology to make progress in the deal process. This is where Project Management plays a crucial role. Most mergers and acquisitions fail to achieve their objectives, because they falter at adopting some or other M&A project management best practices.
What is Project Management in an M&A?
The term M&A project management refers to the process of applying the best practices of project management theory to organize pre- and post-merger activities. When you merge two companies or one firm acquires another, you must manage a complex series of steps from the beginning to the end to execute the deal successfully. This is necessary to achieve the M&A objective that generally includes creating higher value for shareholders and maintaining business continuity. M&A project management includes designating responsibilities, key roles and tasks, establishing standards, guide lines, timelines, supervising workflows and targets.
Why is Project Management Important?
How you handle your deal has a big influence on its success, hence M&A project management is important. A merger or acquisition can easily become overwhelmingly complex, and the structured processes of M&A project management will help keep you on track. M&A success needs and depends on a disciplined framework. According to industry estimates, roughly half of the time, failure stems from poor integration. According to a recent Deloitte survey the most important factors determining M&A success are: 23 percent effective integration, 18 percent accurate target valuing, 14 percent proper target identification, and 11 percent sound due diligence.
Other benefits of robust M&A project management include better deal strategies, more realistic pricing, greater alignment in the organization, well-defined roles and responsibilities, prioritization of your most important activities, less disruption of the business, better communication with stakeholders, and decreased risk of losing customers, staff, and suppliers.
Moreover, irrespective of the scale of an M&A deal, M&A project management provides a well-constructed, systematic framework to conduct all the steps in the transaction, such as performing due diligence, integrating operations, communicating with stakeholders, and making decisions about staffing and asset disposal for the post-merger organization.
What does a Project Manager Do?
M&A Managers need not have industry specific knowledge, but they need to have experience of closing M&A deals, implementing post-merger integration plans and a clear idea of each individual project definition at the beginning of the M&A deal. He needs to evaluate both the companies’ opportunities for mergers, acquisitions and divestitures. He also has to oversee the pre- and post-merger financial planning, scope, closing, integration as well as co-ordinate research and analysis activities to assess risks and impact. They must collaborate with stake holders, develop financial models and projections to estimate cash flow and profitability potential and be adept at risk, work, performance, information and staff management.
Thus, Project Management plays a very important role in the success of an M&A deal.
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