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Opportunistic M&A can lead to bad acquisitions that don’t align with the company’s overall strategic goals. This creates a disjointed portfolio and integration challenges that could cause massive value leaks. In this article, Wolfgang Schenk, VP of M&A at Belden, discusses the art of executing programmatic M&A to increase the chances of M&A success.
"The voice of customers should be the most important input into your strategy, focusing on their demands, pain points, and needs." - Wolfgang Schenk
According to Wolfgang, programmatic M&A is a strategic and systematic approach to mergers and acquisitions. It involves a well-defined plan and clear criteria for acquisitions. This approach includes regular gap analysis, strategic positioning, and continuous adjustment to market changes, supported by tools and processes to ensure successful integration and value creation.
Understand the market and strategy alignment
The foundation of successful programmatic M&A lies in having deep market knowledge and aligning acquisitions with your strategic goals. This isn't about starting from scratch but leveraging existing understanding to identify and close gaps in your solutions portfolio. A clear business case for each acquisition is crucial, even when acquiring just talent or technology. This ensures that each move supports your overarching strategy and delivers long-term value.
Establish a robust pre-stage funnel management
Start by setting clear expectations and objectives. Wolfgang's recent acquisition was completed within a six-week due diligence period and was achievable only because of structured processes and tool support. This systematic approach helps in maintaining a steady flow of potential targets and keeps the acquisition pipeline robust.
Maintain discipline and consistency
Regularly align activities with your team and ensure that everyone is on the same page. This involves having regular meetings, such as virtual coffee breaks thrice a week, and bi-weekly two-hour sessions to review progress and align strategies. Consistency in documentation and process management cannot be overstated. Link every piece of information to the relevant project and maintain a secure, organized flow of data.
Leverage technology and AI
Technology plays a significant role in streamlining M&A processes. Tools like DealRoom facilitate end-to-end management, improving integration and documentation. Additionally, services like PitchBook provide valuable market insights. Although AI is still an emerging tool in this space, its potential to structure unstructured data makes it a promising addition for future due diligence and white paper generation.
Focus on integration
Dedicated resources for core processes, especially IT and HR, are crucial. IT integration can take years, but it's vital for seamless reporting and workflow management. Aim to simplify processes for customers, such as consolidating multiple orders into a single transaction. Cultural transformation also requires dedicated support to ensure that the new entity aligns with the existing organizational values and processes.
Regularly review and adjust
Nothing is as consistent as change. Regularly review and adjust your strategies to align with evolving market conditions and organizational needs. Measure success through key performance indicators (KPIs), tracking funnel inflow, target acquisitions, and integration milestones. This continuous improvement mindset will help you stay ahead in the competitive M&A landscape.