You’ve heard the old one-liner about the two things you never want to see being made. The first is sausage. The other is legislation. Or, in our case, M&A methodology.

First, let’s define what we are talking about. When we say “M&A methodology” we are referring to how your organization does M&A. This is the overall deal cycle and integration cycle workflow, role descriptions, knowledge base of key learning, tools, templates and samples that you codify into institutional knowledge to ensure you can execute effectively every time you do a deal instead of “making it up on the fly.” Creating your own M&A methodology, or adapting an existing workflow, is a proven best practice and is one of our 12 core M&A Enterprise Competency components (see Readiness is Central to M&A Success).

"We have had the opportunity to lead or contribute to dozens of M&A methodology development initiatives over the years – and we have the battle scars to prove it."

Many of you know my true confession story on this. After being tasked with building an enterprise-level M&A practice for a major consulting firm, my colleague and I made the unpleasant discovery that the firm had no core M&A methodology, no consistent service delivery approach and no way to effectively leverage expertise from across the various practice areas (sound familiar?). We had no other alternative than to build our own M&A methodology from scratch.

And that’s exactly what we did. Step-by-step, task-by-task (usually at midnight in our hotel rooms right before an important client meeting the next day) until we had an end-to-end M&A business process that we could train and execute to. We wrote about that early model in The Complete Guide to Mergers & Acquisitions: Process Tools to Support M&A Integration at Every Level, published by Jossey-Bass / John Wiley way back in 1998, and now in its third edition.

Since that first M&A methodology years ago, we have had the opportunity to lead or contribute to dozens of M&A methodology development initiatives over the years – and we have the battle scars to prove it. Here’s another true confession about M&A methodology. There are a lot of good ones out there. But there are no perfect ones and there are certainly no permanent ones. You have to stay at it. It’s too complex and there are too many essential elements to get right. You have to take a continuous improvement approach to get this consistently right. So here’s a quick litmus test to help determine how you are doing.

Is your current M&A methodology (i.e. workflow, role-based instructions, tools and templates, etc.)

1. Linear? It probably shouldn’t be. The M&A lifecycle is dynamic, overlapping and parallel. Most deal phases overlap and are contingent on actions, decisions or requirements that can’t necessarily be defined in a linear process.
    
2. Overly complex? Thought so. Most are so overwhelming they are virtually unfathomable to the typical executive or manager in the heat of battle. A “least common denominator” viewpoint is helpful to find the sweet spot between too much and not enough.
    
3. Tactical vs. strategic? We know – we made that mistake, too. Most workflow models focus on triaging the basics but never get to the really good stuff: long-term value creation.
    
4. Flexible? Adaptable? Deployable? Ouch, ouch and ouch. Let’s start with deployable. If you are still relying on a paper-based or static document version, let’s talk. Now that we have discussed the importance of Deal-type DNA and the Integration Investment Thesis, does your M&A workflow adequately reflect the possibility of very different process requirements for different deals?