If your company’s strategy is to increase its growth or profitability (rapidly) through several acquisitions or divestments, I recommend introducing playbooks and the method of continuous improvement into your IT processes and solutions. This concept is familiar in the manufacturing industry. I discussed acquisitions and the related playbooks with Metso’s CIO Vesa Erolainen.
According to our common vision and experience, when a company’s strategy is to grow, portfolio adjustment and acquisitions are a continuous process.
“In general, M&A projects come as ‘team orders’ on top of everything else, so it is very important to have a functional playbook and be prepared. A common playbook guides you to the right track and also ensures continuous improvement in M&A projects,” Erolainen summed up.
An up-to-date playbook naturally serves as a guide, a notebook. With the help of the playbook, the company can mitigate risks and nasty surprises. I’m not only referring to IT risks but to related potential reputational/brand disadvantages, customer dissatisfaction, and employee turnover, not to mention financial risks or impacts on the company’s valuation. A playbook provides you with the tools to better understand and take into account the effects of the changes brought about by the acquisition in advance.
Erolainen told me that according to his experience, sometimes what one wants to do and what will be done may be quite far apart: “In spite of broad similarities, all projects are unique in some way. The shortcomings of the DD stage of an acquisition result in challenges and costs afterwards.”
I agreed with Erolainen that many companies handle M&A projects on top of normal day-to-day activities. It is worth considering whether your company has the resources and capabilities to manage it all – after all, completing an acquisition may take several years when you also take integration into account. One of the cornerstones of a successful M&A project is a competent team that is not afraid of surprises. A playbook reminds you to secure sufficient skills and resources and provides you with tools for this. A lack of resources and capabilities is always a risk.
The playbook helps you to reflect on which M&A skills or expertise related to completing the acquisition you should buy from an external partner and when you should utilise the expertise of your personnel. According to Erolainen’s experience, one-off activities in terms of IT applications and infrastructure can be carried out by partners depending on the resource situation. “If you are talking about occasional M&A activities, an external partner is a good solution. If the activity is continuous, however, you should insource the activity.”
The playbook on mergers and acquisitions also highlights the importance of ensuring continuity, which is a familiar concept in the manufacturing industry. After all, the playbook ensures that the acquisition-related know-how remains in the company. Although people move on to new tasks, documented processes, task lists, etc., remain in the company.
As we learn from each acquisition and document things, we can improve and refine the playbook. Our goal is to make each acquisition better than the previous one from an IT perspective.
Erolainen summed it up: “You learn by doing, but you have to ‘industrialise’ certain operating models and document them in a common playbook. I strongly encourage you to prepare and implement a playbook for acquisitions. It will save money, nerves, and time, and commit your employees and managers to completing the deals neatly.”
Midagon helps clients in M&A execution, covering IT and related functions, processes, and technologies. We can support preparing the sale of a company or a part of it, the completion of a due diligence process or, at a later stage, the carve-out or integration of business segments.
Learn more and get in touch to discuss the benefits of introducing a playbook into your M&A processes: https://www.midagon.com/finland/en/services/mergers-and-acquisitions
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