Mergers & Acquisitions: Complete Guide to M&A Project Management

Mergers and acquisitions (M&A) are a consolidation of companies and their assets through various types of financial agreements, including debt-to-equity, tender offers, purchase of assets, management acquisitions, mergers, or acquisitions. 

A merger is an agreement that unites two existing companies into one new company, while an acquisition is where one company purchases most or all of another company's shares to gain control of the business.

Both are complex processes that require an incredible amount of planning, organization, communication, insight, and management. Deal teams must have proper management expertise, tools, and technology to advance each one.

This is where M&A project management comes in. M&A planning is a component of your organization’s strategic planning. Whether you're the company that is acquiring or selling, it's essential to stay on top of what happens in your industry. M&A managers should know how mergers or acquisitions within their industry may impact their organization's positioning.

What is M&A project management?

M&A project management is the process of applying project management best practices to pre- and post-merger activities. When two companies consolidate or one firm acquires another, there is a series of complex steps an M&A project manager must execute to close the deal and integrate both companies successfully.

It's important to be confident in your ability to manage a project from start to finish, as M&A projects are often lengthy and involve conversations at various stages along the way. M&A project management uses project management methods to achieve the goals of the M&A deal, which generally include creating higher value for shareholders and maintaining business continuity. 

M&A project management handles responsibilities, including designating key roles and tasks, supervising workflows, and establishing standards, timelines, and targets in the post-merger organization.

What does an M&A project manager do?

Industry-specific knowledge for an M&A project manager is helpful but not required. It's more important that M&A managers have experience closing M&A deals and implementing integration plans post-merger and a clear idea of each individual project definition when beginning a new M&A deal.

The M&A project manager evaluates both companies’ opportunities for mergers, acquisitions, and divestitures. They oversee pre- and post-merger financial planning, scoping, closing, and integration and coordinate research and analysis activities to assess risk and impact. M&A project managers must be adept at collaborating with stakeholders, managing staff, and developing financial models and projections to estimate cash flow and profitability potential.

A good M&A project manager should have the following skills: 

• Governance: M&A project managers must know how to structure teams, lead execution, and control processes to run the organization simultaneously with post-merger M&A projects.
• Finance knowledge: An M&A project manager should be familiar with financial planning alternatives for financing the deal. They should have financial management and budgeting skills to manage money in the post-merger organization.
• Risk management: The M&A project manager works to achieve the transaction's goals and avoid financial loss. They should be skilled in opportunity-spotting and familiar with law, regulations, strategic thinking, and risk analysis. 
• Performance management: The M&A manager should understand and communicate the critical success factors of the post-merger organization, developing metrics to reflect them and adapting to make sure the team meets its goals.
• Quality assurance: The M&A project manager must ensure all staff members adhere to best practices, complete projects successfully, and document processes and lessons to improve future M&A projects. 
• Work management: M&A work management includes project management skills as well as maintaining collaborative team spirit and productive workflows. It involves applying technology to execute tasks and meet project goals.
• Information management: Due diligence in M&A can spiral out of control if there is no process for reviewing, storing, and collating corporate data. Efficient M&A project management requires managers to store data in a secure yet accessible workspace where team members can communicate and work in real time, making data-driven decisions. 
• Resourcing: Resourcing means knowing how much time, money, people, and other assets you need to execute M&A projects. It also means securing, allocating, and managing these resources efficiently across your ongoing projects.

Why is M&A project management important?

M&A project management is critical because it impacts the post-merger relationship between both companies. M&A is itself a big project with extensive interdependencies. Good M&A project management helps to keep your teams on track, aligned, and successful. Other benefits of M&A project management include:

• Better deal strategies 
• More realistic pricing 
• Alignment between organizations 
• Specified roles and responsibilities
• Prioritization of the most critical tasks 
• Fewer operations disruptions during M&A integration
• More effective stakeholder communications 
• Decreased risks in the post-merger company 

M&A project management provides guidelines, structure, and documentation to close M&A transactions, integrate operations, and make adequate, realistic staffing and resource allocation decisions in the post-merger organization.

Key processes in pre-merger M&A project management

M&A project management is crucial during the pre-merger phase, as it lays the foundation for the rest of the M&A implementation. This includes developing your strategy, searching for targets, conducting negotiations, and making efforts to close a deal. 

To start a project, you need to create a project charter, define its scope, identify your objectives, and bring relevant stakeholders on board. Next, break down the work into tasks and subtasks, setting due dates, allocating resources, mitigating risks, and estimating costs.

Then it's time to execute. Assign responsibilities within your team and create a single source of truth to communicate and collaborate in real-time. A collaborative workspace like Wrike provides a secure platform to achieve these and keep team members on track. Steps in a typical M&A project execution include:

1. Scheduling kick-off and status meetings
2. Conducting due diligence
3. Assessing performance
4. Comparing targets
5. Estimating risk
6. Updating stakeholders
7. Documenting lessons
8. Consulting experts
9. Planning integration 

M&A pre-merger project management tasks usually involve:

• Strategy alignment: Clarify what your company aims to gain from the merger or acquisition and confirm that you're aligned with potential partners.
• Screening: Develop guidelines for selecting potential targets, such as organization size, location, revenue, product, or market. Create a list of candidates that match these criteria and assess them on other factors and alignment with your company. 
• Preparatory work: If the target company is receptive to a deal, sign a confidentiality agreement and review the business. If the review is favorable, send a written offer — usually a price range, not a fixed price.
• Negotiations: Discuss terms and try to close a good deal. Your price may be based on information about the industry or the state of the business. When you reach a price, sign a letter of intent with the other party. 
• Due diligence: Conduct in-depth reviews of the target company's accounts and records to verify the status of the business and check for hidden liabilities.
• Contract development: Write, review, and authorize a final contract for the M&A transaction. 
• Financing: Raise the money for the transaction. You can do this through loans, debt, stock issuance, or a combination of these options. 
• Closing: Representatives of both the buyer and the seller sign contracts and exchange money. 

Pre-merger M&A project management best practices

In the pre-merger phase, project management best practices ensure sound decision-making and risk management. Best practices include:

Using a phase-gate process to manage M&A projects

Using the phase-gate process in M&A project management is a great way to organize and execute tasks in phases as you advance from one critical stage to the next. 

The phase-gate process requires a review of each project stage before moving on to the next. Specific criteria must be met to determine the success of each phase. This helps the acquiring companies review hundreds of potential M&A targets to find the best deal. Setting clear criteria for what makes a target eligible enables you to maintain focus on your organizational needs and strategy. 

Without defining clear parameters, your team may waste resources going after candidates that do not align with the M&A strategy. Typically, there are three main decision points in the pre-merger M&A phase-gate process:

• Strategy approval: You decide whether a deal candidate fits your company's strategy. You do this based on the alignment of values, goals, and other critical factors, such as increased revenue or percentage gain in market share. 
• Negotiation approval: After you have assessed your candidates, you must decide whether to start negotiations with any of them. Based on your review of their financial information, confirm that your objectives for a deal remain realistic. At this phase-gate, you set a target price for a transaction. 
• Deal approval: This decision point is your final yes/no review, where you seek definitive agreement from your board and management. At this point, you are beyond questions about strategic fit and valuation. You seek approval of other details, most of which depend on the nature and goal of your transaction.

Other pre-merger best practices

Other pre-merger project management practices are similarly aimed at making sure your deal is sound and has a good chance of success.

• Articulate "why": Have a clear pitch for pursuing an M&A. List the advantages of doing so against alternatives that would achieve the same objective. Articulate why a merger or acquisition is one of the best ways.
• Be aware of the mental traps: Look out for biases and mental traps that can skew your judgment about the M&A. An example is recency or confirmation bias. Consult diverse stakeholders and actively seek out opposing views.
• Bring in experts: If you're new to M&A, improve execution and chances of success by hiring experienced M&A consultants and advisors to strengthen your process and conduct due diligence.
• Be diligent about due diligence: Be dogged in the vetting process to avoid undiscovered liabilities after a deal closes.
• Coordinate your work: Improve your M&A system with a focused project plan that defines roles, activities, and responsibilities for all team members. Keep this in a centralized location, easily accessible to all employees.
• Prioritize actions in order of impact: Identify tasks with the highest, immediate payoff on the business, and gain some wins and momentum to demonstrate ROI on the M&A deal.  
• Get sponsorship: From inception, make sure senior management and board members buy into and back the M&A strategy. 
• Define the work to be done post-merger: Do this collaboratively with your teams as you wrap up the M&A deal.
• Keep your teams in the loop: Communicate clearly about strategy, expectations, and changes. Ensure staff members know what’s going on, what to do, and what information is confidential until finalized. 

Key processes in post-merger M&A project management

Post-merger M&A project management focuses on:

• Team planning 
• Integration of the companies
• Building organizational structure
• Stakeholder updates
• Monitoring performance
• Achieving M&A goals

Post-merger M&A project management best practices

The post-merger period builds the foundation for realizing the intended benefits of the M&A. Without post-merger project management best practices, missteps can ruin the partnership's potential. Strong project management decreases your risk and provides you with a system.

Best practices for project management in the post-merger stage fall into broad categories: 

• Project planning
• Communication
• Resource planning
• People issues
• Monitoring progress
• Measuring performance

It’s critical to carry along your team to tackle post-merger tasks with high productivity and engagement. Create a rewards strategy that combines growth opportunities, recognition, and benefits to incentivize employees to achieve post-merger goals.

Ensure your company's mission remains clear and communicate changes quickly, so your employees have stability amid the new developments. Make sure they understand the M&A rationale and how it ties into your original vision so that they can commit their best efforts to its success. 

When it comes to people and culture-fit in the post-merger organization, tread prudently. Organize staff-related issues, e.g., planning for layoffs, creating a new corporate structure, and assigning key responsibilities before moving on to the M&A integration plan.

Common M&A project management mistakes

According to a report in the Harvard Business Review, 70%-90% of M&A projects fail due to common challenges and mistakes. Here's a list of the most recurring mistakes M&A managers make:

• Moving too fast with an integration plan
• Overextending resources
• Insufficient attention to target company culture
• Poor management of relocations and consolidations
• Weak IT planning
• Inadequate M&A project management controls
• Lack of planning for heightened competition
• Inadequate efforts to identify synergies

Acquirers often push their ethos and culture without a healthy transition period for the acquired company. This causes chaos, disorganization, and low morale among employees. Underestimating and overextending staff and resources is another frequent mistake in M&A projects. 

How to create a merger and acquisition project plan

Your M&A project planning process must be disciplined and comprehensive. The following are critical elements of the M&A project planning process:

• Align your vision and strategic plan
• Develop an M&A strategy
• Document relevant M&A policy and procedures
• Assess your organization's M&A readiness
• Identify M&A candidates or partners
• Develop an M&A integration plan
• Conduct post-merger review and assessment

How to create an acquisition plan

One of the errors many M&A managers make as they start a merger or acquisition is not putting together an acquisition plan. The acquisition plan guides the entire process and is a much-needed asset when planning M&A.

It creates a roadmap for what you want from the M&A and reassures sponsors that the merger or acquisition is thought-through and well-managed. 

When writing your acquisition plan, ask yourself if what you're writing explains the M&A opportunity clearly. The format of the acquisition plan follows a similar structure as a typical business plan. Here's an outline of an acquisition plan:

1. Executive summary

Your executive summary should be concise, information-rich, and no more than one page in length. Its goal is to sell the M&A opportunity as best as possible. Make sure to include your target market, business strategy, and summary financials. Investors may read only this page before skipping to the financial projections, so make sure it's strong.

2. Target description

This section outlines the target business and why it's worth what you're proposing to pay for it. Be as thorough as possible. If you see specific weaknesses in the business, talk about how you can iron them out and create value. Make sure to include:

• Headline financials
• A breakdown of the company's primary assets and liabilities
• Organizational structure
• A current SWOT analysis

3. Market overview

The more granular the detail and relevant to your region this section is, the better. Answer the following questions:

• How many customers does the target have?
• What kind of customers are they?
• Is there a different kind of demand for the target outside of its current customer base?

4. Sales and marketing

This section covers sales for the target's products and services. It should compare their pricing strategy to yours and show how both companies conduct marketing. 

5. Financial history and projections

This section is the one that can make or break the deal. You should be as thorough as possible, reviewing and assembling the target's past financial performance. Typically, this should involve at least three years of financial statements and tax returns. Each one should be comprehensive and honest, having supporting documents where needed. 

Raise any issues which may conflict with your business, e.g., different credit arrangements with customers. You should also look at projections for the business. Going through the past and projections sections is a useful exercise to summarize where you will make gains or losses from the merger or acquisition.

6. Transition plan

This is a brief section showing how the business will move from the control of the current owners to the post-merger owners. This section should detail how sales relationships, contract agreements, and intellectual property will be dealt with in the post-merger organization. Minimize the chaos that can come with transitioning the organization by getting this section right. 

7. Deal structure

This section shows the financial structure you will use to acquire the target company.  

8. Appendices and supporting documents

This should include copies of tax returns, compliance licenses, and receipts, including auditors' letters and other relevant legal documents. 

While there is room for variation in sections of each business plan, every plan should convince the reader of the merits of the merger or acquisition. Each section should be compelling, relevant, and detailed.

How Wrike can help with M&A project management

M&A experts recommend using project management techniques to organize your tasks from the beginning when exploring potential deals until you fully complete an M&A transaction and start integrating both businesses. 

Wrike helps M&A executives and project managers communicate and collaborate in real-time, manage information flows and workflows, get approvals and signatures, maintain deep visibility, and extract insights from different sections of the acquisition plan and ongoing projects. 

This collaborative approach with Wrike minimizes chaotic work, misalignment, and scattered collaborations in the post-merger organization. Try Wrike's project management software for free with a two-week trial.