So this may be a bit out of scope (did you see what I did there?) of what these posts are going to be, but it makes perfect sense to me, so I’m going to go with it. Buckle up, chochachos!
As I mentioned in my class introduction, I work for KeHE Distributors, and I have had the distinct pleasure of serving as a role player on a couple of project teams. In my time at KeHE, I have supported integration efforts on two distinct acquisitions, and (as you might expect) each of the integrations came with a plethora of projects, first focused on merging systems and processes, then on tapping into latent operational efficiencies.
I was reminded of this fact when I came across this article in WSJ.com: (http://blogs.wsj.com/moneybeat/2015/06/25/goldman-sachs-predicts-big-uptick-in-ma/?mod=WSJBlog&mod=MarketsMain). In brief, this article talks about the expected growth in M&A activity in the coming years. When I first read this, I didn’t really think that it has any relationship to project management, but the more I thought about it, the more I felt that it was highly relevant.
M&A activity is jam-packed full of large- and small-scale projects of many types, and they will very likely require exceptional project management – by which I mean both high-quality and out-of-the-ordinary. In my experience, the success or failure of M&A is directly correlated to how well it can be executed – which ties right into project management!
See? I told you we’d get there.
Like I said earlier, I’ve been through one acquisition of one company roughly the same size, and am working as a role player on a second integration today. In both integrations, my company used a matrix approach to project management, but these two acquisitions have yielded very different experiences. The first time around (2009), my company had many antiquated operating procedures and cultural trappings. Said simply, it was a company that sold shy of $1BB/year out of four warehouses and functioned very much like a family business circa 1980s. We had acquired a company roughly the same size but with a much larger operation trappings (international vs. domestic and 14 warehouses vs. KeHE’s 4) and a fundamentally different approach to data management.
On paper, the prospects were great. We thought that we could just combine two companies, taking the best from each, and drive greater growth within 18 months – with few growing pains for anyone involved. Admittedly, we had lofty goals, but we thought we could do better than the average – which spoke to a little bit of ego. What we didn’t anticipate was a paradigm shift in the market that forced us to fundamentally redefine how we went to market. Two years later, we were hanging on for dear life, hemorrhaging accounts, an irate vendor community, and a disenfranchised employee base. What we learned is that, far from being the cat’s meow, our company fell well short of our lofty expectations, and we were humbled by our shortcomings. The integration should have been a series of carefully choreographed and executed projects, but the scope of the project was overly optimistic and didn’t factor for the unexpected.
Fast forward to today, our company is older and wiser for our previous challenges. We recovered well and are on a great growth trajectory, and while this integration is set at a slower pace, what we learned from our mistakes helped us to avoid the mistakes of the past – not least being our failure to factor in risk. We continue to use a matrix approach, but we’re much more deliberate in how we create teams and manage project resources. We plan for multiple contingencies and are able to adapt to the unexpected. This planning has already come into play, as we have to advance a major IT conversion by four weeks to accommodate new business recently awarded to us. Had this happened four years ago, we would have crashed and burned, but the lessons we learned have helped us keep our focus where it needs to be.
There’s no doubt that there’s risk associated with M&A activity, but these risks can be mitigated with strong planning and project management. The more effectively the project team, the greater the financial, operational, and strategic return. And, if the Journal has anything to say about it, we’ll be seeing more M&A activity in the future. Who knows? There may be an M&A project in YOUR future!