A statistic was bandied about years ago that in managing the Apollo moon launch projects, if NASA had 99.9% of its systems working perfectly, there were still 15,837 things (or some such number) going wrong.
Merde! That’s a lot of room for error.
On that score The Merger Verger sees little difference between the moon launch and the integration of an acquisition … lots and lots of room for things to go wrong.
It’s one reason why the Verger finds checklists both empowering and debilitating. Deals contain enormous amounts of wee activities that contribute to the whole of a success. Lose track of them and your spaceship veers slowly off into outer darkness.
BUT … focus too sharply on your checklist and you have no vision on changing circumstances that may obviate certain listed activities and necessitate other new ones.
Good project managers run with checklists but they do not live by them. They think. They envision. They project. They call audibles. And are ready to do so at any time.
The Merger Verger Issues a Challenge:
While we’re on the subject of moon launches and whatnot, TMV would like some computer historian or NASA retiree to provide us with a comparison of the computing processing power available to NASA during, say, the Apollo 11 moon landing and that contained in the laptop from which this post is written.
This posting is for the C-level executives out there who are doing (or thinking of doing) deals for their small or medium-sized businesses. It is about helping you prevent form from overshadowing substance. It is about details. PS: if details bore you, The Merger Verger humbly recommends your stepping down from the deal business ASAP.
The Merger Verger has seen just a ton of due diligence checklists over the years and found almost all of them wanting … including some that were just pathetic.
Why? Because they are not written by people who run businesses; they are written by people who advise businesses: lawyers and accountants.
Let’s be honest here: due diligence checklists are about the details, where God (or the devil) is. A lawyer can make a fine checklist for matters relating to corporate formation or past board meetings. An accountant likewise within his or her purview.
These lists are fine (essential, in fact) for ensuring that you get what you pay for. But when it comes to understanding whether a product is approaching an inflection in its growth curve or the production manager knows the difference between a kaizan event and a tsunami, they ain’t worth squat.
The Merger Verger is not a big fan of “short and sweet” due diligence checklists but this one from Loren G. Carlson, of the CEO Roundtable, is well worth reviewing, particularly for those new to the topic.
CEO Roundtable Blog » Blog Archive » Post Acquisition Integration – A Checklist.
There are two reasons why I like this list:
- It reinforces the essential (and dual) role of due diligence, reminding us that while information is important in the process of buying a company it is absolutely essential in making that purchase succeed; and
- It lays out the sometimes non-obvious connection between legal due diligence and operations, citing examples of how “purely legal” stuff can affect directly the commercial elements of a deal and therefore its success or failure.
Carlson acknowledges that his article is to “get you started” but with that caveat in mind he does a nice job. He also notes that the most successful acquirers were those that “invested in post-mortems after the deal” to learn from what went well and what didn’t. (Too important topic to cover here/now; more another time.)
Being a lifelong Forgetful Guy, I have constructed little organizational systems to protect myself from myself. One of those systems is checklists. So I believe in them. To a point.
When doing acquisitions, checklists are absolutely critical because there is so much information from so many different dimensions to manage. So we have due diligence checklists (legal and financial, about which there are 487 things to say … another time) and integration process (strategic) checklists.
All successful acquirers build a “book” of know-how, constructed in part from lessons learned on previous deals. Out of that process comes a thorough integration checklist, cataloging hundreds, sometimes thousands of items requiring attention.
In that setting – amidst thousands of boxes to check – how is it possible to keep your eye on the ball (by which I mean the larger strategic intent of the deal)? Focused on rows and rows of line items, how can you possibly perceive “trajectory creep” or the surprise rocketing in from some unseen nebula somewhere?
The danger of checklists – and the more “thorough” they are the greater the danger – is that they become substitutes for thinking.
As an integration leader, I insist that my teams pause occasionally to chuck their check lists. In those pauses I ask them questions designed to pull them from their pages to the big picture:
- What are we missing here? What are we not thinking of?
- What could be different here from any of the other integrations we’ve done in the past?
- How would or could we respond if [fill in all kinds of blanks here]?
- What isn’t working so well?
- What expected problem has not materialized (yet)?
and probably the most important of all:
- Why did we do this deal in the first place and what else should we be doing or thinking about to make sure we accomplish that end?
Every now and again, chuck the checklist and think for yourself.