.jpg)
Corporate development typically involves their integration team a couple of weeks before closing a deal. According to Kerry Perez, Head of Diligence and Integration Management Office (M&A) at AMN Healthcare, there is a real benefit of involving your integration team earlier than the traditional timeline. In this article, she’s going to be helping us understand how to stand up a diligence and integration management office.
“The key is to have a small group of people who can move from integration to integration, who are committed to the sacred nature of integrations and can iterate as you get those lessons learned.” - Kerry Perez
Benefits of DIMO
Integration teams rarely receive the complete picture of deals. There are nuances that happen during diligence that don't make it in the diligence memo but are essential for the target company and internal team members. This has prompted AMN to combine diligence and integration into a centralized function to have continuity.
In short, DIMO helps create better diligence output, leading to better integration inputs since the integration team is involved right from the start. This also creates better knowledge retention and improves the overall efficiency of their M&A process.
Managing Your Team
The key to managing a large team is to divide the people you are talking to down to functional leads. They will represent their respective departments and lead their function during the process. Talking to 30 to 40 people is not very efficient, especially if you do multiple deals simultaneously.
Ideally, your functional leads will serve as your core group involved in every integration, and they will be the ones who have tribal knowledge of your process so you don’t have to reinvent the wheel every time you make an acquisition.
If you want repeatability and scalability, you need to have dedicated people who can pick up the learnings from integration to integration, from diligence to diligence, etc. and be able to just refine your processes.
Integration Hand-off
The DIMO team typically hands off a four-page document to the integration team as they start becoming involved in the deal. Aside from the usual information like the scope of the deal, integration budget, and key decisions made, Kerry pulls up five key things upfront:
- Integration type - Understand and agree with leaders upfront regarding how much integration is needed for the acquisition and inform the integration team. It helps outline the rest of the transaction.
- Synergies - Be transparent as to why you are doing the deal in the first place so that the integration team has clarity around the value that you are hoping to create.
- Constraints and Assumption - Declare the limitations and assumptions of the deal upfront.
- KPIs - Whether it’s revenue synergies, cost synergies, or employee retention, be clear regarding the success metrics of the deal.
- Disruption Metric - Set a metric that the team needs to watch out for during integration. We don’t want to be too disruptive and distract the business from productivity.