With the tremendous growth of mergers and acquisitions in the industry, companies need to incorporate strong project management practices for success.
The number of mergers and acquisitions (M&As) in both the medical device and biopharmaceutical industry has continued to grow, with each sector averaging approximately 200 deal closings annually over the past decade. Strong project management practices are critical to ensure a smooth transition and integration. These practices allow companies to maintain customer deliveries and reduce employee stress associated with acquisitions.
Once due diligence has been completed and the framework for a deal has been defined, both the acquiree and acquirer must ensure vital project management personnel and principles are in place. Below are some key areas to focus on to help ensure a seamless transition.
Good Communication Plan
There is inherent stress that comes with M&As, mainly across the acquired company. Employees will automatically have a 'fear of the unknown' as soon as they hear of the deal. It is crucial to mitigate this stress as much as possible by ensuring a good communication plan. In addition to understanding the reasoning behind the agreement, employees must understand what the deal means for them as individuals. When given early and often, communication updates will help eliminate the 'fear of the unknown' and allow employees to prepare for the transition mentally.
Project Management by Workstreams
There are various types and scopes of acquisitions and integrations. They can be complete or partial (e.g., product line only), involve full integration of business and quality systems, or sometimes the acquired company may be left to stand alone continuing its current systems. But it is essential to go into project management of any M&A by making no assumptions.
Start with a complete list of all the possible Workstreams impacted. Next, work with each Workstream to discuss and define the scope of work gain consensus when a particular Workstream is determined to be not applicable. A project manager can help determine a clear Workstream structure. This structure definition manages the overall integration project through an "Integration Playbook." This playbook assists in providing scope clarity as well as clear and consistent communication through a determined communication plan.
Some examples of Workstreams are:
- Legal – Clearly defining and tracking agreements until complete execution. Besides the Asset Purchase Agreement (APA) itself, there may be several supporting agreements involved in any deal (e.g., Transition Services Agreement, Sub-Lease Agreement, Collaboration Agreement, and others)
- IT (aka. Digital & Security) – This includes ERP system integration and IT infrastructure (personal computers, laptops, phones, etc.)
- Sales Operations – Ensuring there is a clearly defined pathway forward for Order to Cash operations
- Manufacturing and Supply Chain Operations – May include the transfer of equipment and other assets, Procure to Pay activities, Inventory Management, and other vital areas to consider
- Finance – Includes Accounts Payable, Accounts Receivable, Payroll, Taxes, and other areas to ensure a transition plan is in place.
Your M&A Partner
Regardless of the type or complexity of the merger and acquisition, it is crucial to consider these two things:
- Put in place a solid Communications Plan, stick to it, and always keep at the forefront the perspective of the people affected by the transaction.
- Be sure to consider a complete checklist of workstreams and do not presume any workstreams are not applicable without first engaging with your subject matter experts within each.
Contact a Partner today to learn about how Network Partners can support your M&A needs.