Digital M&A Checklists

When a company acquires another company, a project team covering various functional disciplines, so-called workstreams (e.g. HR, Finance, Operations, ...), is deployed. These workstreams usually have their own checklists which must always be individually adapted to the target (business model, size, country, etc.), the acquisition process (auction or exclusivity) and the integration strategy in advance of a transaction.

Prior to each, the due diligence phase and the integration phase, there comes a time when these lists need to be consolidated. Prior to Due Diligence, the lists of all workstreams must be consolidated to provide a common Request List to the target so that the target can make the appropriate information available in the Virtual Data Room (VDR). In turn, prior to the integration phase, the Due Diligence findings and derived integration actions for the individual workstreams must be consolidated into an integration checklist / action plan. 

Characteristics of these processes are enormous time pressure, high complexity due to a large number of workstreams, and maximum quality requirements. No detail on the individual checklists must be lost when creating the general overview to prevent individual risks or a potential value from from being ignored, both of which would have a negative impact on the deal. Hence, manual execution of the consolidation is time-consuming, error-prone, very complex in case of subsequent changes, and short of certainty that all items of the many individual checklists have been fully transferred.

However, the M&A platforms that have emerged over the course of the digital transition offer a solution to this problem: Instead of emailing checklists in files to a central collection point, the files can simply be uploaded to the platform. The important difference at this point is that from this stage onward, the focus is no longer on the file but on the content. Documents thus become structured data because the content, i.e. the checklist items, requests or questions in each file, are now detached from the file and available on the platform as structured data points. These data points can now be sorted, assigned or even made available to the target in a full overview.

What makes the consolidation of different lists very complex are the content interdependencies that exist between the individual workstreams.

Although the checklists from various workstreams can be clearly separated from one another in terms of subject matter, there are always overlaps in terms of content. For example, in the due diligence process, the key employees of the individual disciplines must be identified in the target company. This is both a task of HR and an important element of the individual workstreams (R&D, Sales, Production, ...). Thus, different workstreams are inclined to request similar HR data and further information about these employees from the target. This leads to additional effort on both sides, frustration for the target and significant delays in the deal, which in turn causes costs to rise.

These cross-connections and technical overlaps can theoretically be represented in spreadsheet programs by adding further columns and various characteristics. Nevertheless, major challenges and efforts arise when changes are made to this, or when all parties involved have to be informed about a new data set. When using an M&A platform, the above scenario can proceed as follows:

The task of discovering the key people in each discipline is noted in each workstream's checklist. However, it is also documented that HR is in the lead and in charge of organizing the underlying data. Once the data is received, it is made available on the M&A platform and the HR manager checks off the item on the HR list; all workstreams are automatically notified of the new data set via a push message. However, M&A platforms do not only offer the possibility to interlink technical correlations between individual checklists, but also to link content with people. This enables individual project members to view a personalized To Do list with extensive explanations and links to other workstreams and To Do's so they are in a much better position to fully execute these tasks in the context of the project. 

If the checklists and their contents are appropriately interlinked and interconnected on an M&A platform, completely new perspectives arise with regard to potential evaluations.

Has the target provided all requested documents and information? How far along is the project team in analyzing the VDR? When will the Due Diligence reports be ready? Are all actions prepared for Day 1 or are we Day 1-ready? What percentage of the integration is complete? ... 

This list of classical questions about the status of M&A projects could be extended at will. What all these questions have in common, however, is that they pose a great challenge to the person who has to answer them using a classical tracking approach based on spreadsheet checklists. This would typically lead to manual queries and feedback from project members, whether by phone, by email or in meetings. All of this is time-consuming and error-prone. While M&A platforms cannot replace the direct human interaction between project members, they can create a more solid data basis and free up time for project members, especially the project management office, to share content instead of having to query the status of individual tasks and manually transferring the information to static reports.

If checklists are managed in a structured format on a platform, the status of the individual items on each checklist can be evaluated ad hoc. Simple evaluations, such as whether the appointment of key employees in all workstreams has been started or completed, can be read on the dashboard without manual intervention.

Checklists are only truly digital when they are freed from files and instead used on a platform. The structured format of content on a platform offers many opportunities to increase the efficiency and effectiveness of checklists in consolidation, workstream interaction, and reporting, and thus to positively influence all KPIs of an M&A transaction.