M&A Strategy for the win: where are the tools to automate M&A strategy?

The struggle

Many companies struggle with defining their strategy.
OK, they finally make it.

Then they struggle finding the right target.

They finally find one. Again, they struggle to determine the target fit.

Considering that errors made in early in the process are the most expensive ones, we have to change the situation urgently.

Histogram of tools in M&A strategy

I have created a list of tools per task in the M&A strategy phase. Let us have a look at the task Finding Potential Targets . The goal of the task is to create a longlist of target companies. First, you define the selection criteria and the market, then you scan certain sources for potential targets. After that, you review companies to join the longlist. Maybe you have a management level meeting with the target to learn more. Summarizing the results you wil have a longlist of suitable companies to further reduce in the next step.

So, how many tools are there to support me in this task?

In this example, which is not exhaustive, there are 15 tools or services that can be used. So why do we find many tools for this task? For me, the main reason is that search and matching technology is in the market for a long time and is available to many companies.

But to what degree is the task automated by each tool?

We look at it the following way: Each task has a number of activities that are carried out during the execution of the task. We could assign a degree of automation to each of the actions to see how much automation is provided.

Here, The task consists of the following actions

• Define selection criteria and market

• Scan sources for potential targets

• Review companies to join the longlist

• Define the longlist of targets

By assigning each action a degree of automation provided by each tool, we can see what opportunities for automation. I will present the results in one of the following posts.

Please have a look at my current book “Automation of mergers and acquisitions“ by scanning one of the QR codes below. I have also provided an overview of interesting books below.

Digitization potential for M&A strategy - tasks and tools

Tools for automation of M&A strategy tasks

In the M&A strategy phase you typically find the following tasks:

• Embedded M&A Strategy

• Finding potential targets

• Processing the long and short list

• Evaluation of the fit of a target

• M&A Capability Maturity test

• Finalize and Approve Deal Proposal

So far, so good. Now let us assign different tools to the tasks. The result is shown in the next picture. Each box is a task. Within the box, you find the task name in bold. Below the task name, you will find names of tools that can be used for the task.

This is just an interim result. More tools will be added to the model.

By looking at the automatability of a task and available automation oprtions (tool), we can give an estimate of the digitization potential of the tasks in discussion as shown in the next graphics.

By adding more tools over time, we can build a map of tools and automation options for the M&A process. The result will be shown in detail in my new book “M&A strategy automation“.

The book will be available later this year. Until then, enjoy these fine books and magazines on M&A and the software business.

Ensuring merger integration success with innovative due diligence

Merger integration success based on innovative due diligence

We introduce merger integration due diligence as a new type of due diligence that arises from the objective “Maximize likelihood of integration success”.

Definition of merger integration due diligence

Merger integration due diligence has the goal to review the merger integration project and plans. 

All aspects of merger integration are being reviewed for viability and for likelihood of success. Viability relates to the work breakdown structure for the integration to be consistent and complete. It also relates to resources (employees and budgets) that have to be sufficient and available. The objective of the task is to maximize the likelihood of merger integration success.

Based on the decomposition of the merger integration task we can define the corresponding decomposition of the merger integration due diligence task.

Review of the design of the new entity

The design of the new entity has to be reviewed for consistency and completeness. We start with the business strategy and plan layer and review the defined business strategy for the new entity. Then we enter the second layer and ask questions like: will the business processes work? Are the business processes compliant with compliance rules? Is governance of the business ensured?
In parallel, we have a look at the business resources and at the questions: Are enough qualified resources planned and available? Are the assignments of resources to tasks sufficient? Are sufficient resources planned and available?

Review merger integration plans

Next we review merger integration plans. Keeping in mind the design of the new entity and the resource situation, we review the schedules and the steps of the merger integration plans. We ask questions like: Can the merger integration plan be executed the way it is defined? Will sufficient resources and budgets be available at the right time to execute the merger integration plan successfully? What happens if we run late or we have resource shortages?

Review merger integration project

This is the part of the review that is often neglected in practice. We review the structure and behavior of the merger integration project.
It is important to keep in mind that the word “project” implies that we have a professional management of the integration leveraging professional project managers, experienced with complex projects and equipped with skills of a certified project manager. We should also have a project steering committee in place that has wide competencies and can drive and take decisions quickly.
We also focus on getting answers to questions like: Do we have the right assignments of resources to merger integration tasks? Are the resources capable of executing their assigned tasks? Do the resources have appropriate social competences to lead people and convince them the integration is the right thing to do?

With the results of the merger integration due diligence, you are well prepared to have the right budget, business plan and integration approach.

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

Complementarity and synergies of buyer and target: an attempt at a definition

Synergies and complementarities are often discussed in company acquisitions. Here is an attempt at a definition.

Complementarity

Complementarity between two companies shows advantages in the cooperation or merger of the two companies.

Complementarity at company level can consist of numerous other complementarities at detail level, as the following figure shows.

In this example, complementarity includes brand complementarity as well as market, product and cost complementarity.

Synergy

Each of the complementarities considered can, but does not have to, lead to a synergy. That is why I would like to define synergies as follows:

Synergy is a concrete, anticipated strategic advantage based on complementarity, which will occur in the future, after the purchase of the target. As with complementarities, an advantage can have a wide variety of characteristics such as market, product, technology or cost advantage.

Here is an example: A strategic synergy is a concrete, anticipated strategic advantage that will occur in the future, after the purchase of the target. It can arise if strategic assumptions, measures and goals of two companies complement each other or interact positively.

The separation of these two concepts is advantageous, as it enables a selection of complementarities to be transformed into synergies and also allows explicit consideration of the planning, implementation and control of synergies.

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A Automation - Vision of extreme automation of remote due diligence meetings

How automatable are tasks in Due Diligence?

Every company is pushing the digitalization of business processes. But what about the digitalization possibilities in the M&A process? What is the current status of the automation possibilities? This article is intended to define a vision of extreme automation in the due diligence phase.

Target Due Diligence

This task can be partially automated. Individual actions can be partially automated. Details can be found in the individual subtasks. Activity control is often carried out using project control applications. These can be generic tools such as MS Project or project management tools or data room application systems specialized in the management of M&A projects. But how if we apply extreme automation to onsite due diligence? Onsite due diligence often entails corporate M&A teams to visit a location of the target company for a meeting.

Extreme automation of onsite due diligence

If we automate the visit and the due diligence meeting in an extreme fashion, we fully automate the physical presence of the buyer at the meeting.

Enter Synomic and double robotics

The advent of presence robots enables us to leverage robots for visiting a site and for moving around. But robots can do more, of course. They can ask questions and collect answers for us.

Synomic, together with Double Robotics has provided a solution. See the picture below.

Instead of travelling to a location, you send a box to the target company. The box contains a presence robot from Double Robotics.

Instead of people from the buyer, the robot can participate in the meeting, move around the offices and interact with the representatives from the target company.

During the meeting, the buyer decides if the presence robot is used for communication between people from the buyer and the target or if the robot acts in a fully automated fashion asking questions from the due diligence request list for the buyer.

I hope you liked this extreme automation example. This example was presented in conjunction with my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

#mergerautomation: Quickly review existing tools to automate M&A tasks

Everybody feels the pressure to digitize. How can you best handle it when you are responsible for the M&A process? Say, you would like to get information which tools are available to automate this task. You could start searching, find some tool vendors, look at a few in more details by coordinating meetings. A tedious process.

Domain model can help

I am working on a domain model, which will be available in an online tool, that does two things: first, define all tasks in the M&A process. Second, it allows to map existing tools to this model, showing which tools are available for which tasks.

What would it look like?

Let us have a look at an example. In the early phase of the M&A process there is a task called Processing the long list. You want to automate it. This task aims at providing a long list of potential targets and ways to select a subset of targets resulting in a shortlist. So, how would the information about a tool look like? See the information below on three tools that could automate this task.

Task Processing the long list

The task has the following goal(s):

Shortlist of targets: created

The task has the following objectives:

Information asymmetry: minimized

Automatability

This task is partially automatable. Tools are available.

Task description

From the set of potential targets in the long list, a subset is formed as a short list. This is done with the help of further, detailed information about the targets. After formulating decision criteria for determining the shortlist, the business models, products and services, their value proposition and more precise financial data of the target companies are looked at in greater detail and a comparison of the target companies is drawn up. If possible, the business models of the target companies are compared with the business models of the buyer company and the first signs of a fit between buyer and target company are derived.

Tool/Service: EY Embryonic

Provider: EY

What is offered: EY Embryonic is only offered as a service. Machine learning is used, automatic language processing (NLP) is used. Advanced Analytics are used. Customer access to the tool is not possible.

USP: has licensed all expensive databases like CapIQ, CBInsights, Thomson-Reuters, and has an impressive user experience

Summary: Impressive analysis with graphical navigation of the ecosystems of sponsored and financed companies in a given environment.

Tool/Service: Alphasense

Provider: Alphasense

What is offered: Alphasense is only offered as a tool. Machine learning is not used. Automatic language processing (NLP) is used. Advanced Analytics are not used. Customer access to the tool is possible.

USP: allows you to view companies and sentiment based on a variety of sources.

Summary: Based on a multitude of sources, a search can be carried out in exactly one language for a company. Available information, news and the sentiment re-garding a company will be displayed.

This example was presented in conjunction with my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A Automation - Due-Diligence tasks: can they be automated?

How automatable are tasks in Due Diligence?

Every company is pushing the digitalization of business processes. But what about the digitalization possibilities in the M&A process. What is the current status of the automation possibilities? This article is intended to give a brief overview based on selected tasks in the due diligence phase.

Target Due Diligence

This task can be partially automated. Individual actions can be partially automated. Details can be found in the individual subtasks. Activity control is often carried out using project control applications. These can be generic tools such as MS Project or project management tools or data room application systems specialized in the management of M&A projects.

Valuation calculation of the target without synergies

This task can be partially automated. Automated tools are available for the "Calculate evaluation" action, but the data usually has to be compiled and cleaned manually.

Financial due diligence

This task can be partially automated. Usually, financial data is extracted from existing ERP solutions of the target and stored as documents in data room application systems. Evaluations of this data are performed using MS Excel or specialized evaluation calculation applications.

Legal due diligence

This task can be partially automated. Fully automated tools are available for individual actions, such as the automatic analysis of contract documents. Other actions such as the evaluation and assessment of contracts must not be automated.

Tax due diligence

This task can be partially automated. While data can be extracted from existing ERP solutions, no automated evaluation of tax information is performed.

Operations Due Diligence

This task can be partially automated. Individual actions can be partially automated. Details can be found in the individual subtasks.

Due-Diligence of the production

This task can be partially automated. The action control is usually not automated. Individual actions can be automated.

Human resources due diligence

This task can be partially automated. The analysis of contractual documents, such as employment contract templates, can be automated.

IT due diligence

This task can be partially automated. There are several automated tools for network scanning and inventory creation, as well as vulnerability scanning tools, which today often completely automate manual actions.



Due diligence of intellectual property

This task can be partially automated. There are automated tools for individual actions, e.g. for scanning contracts, which today often completely automate manually executed actions.

Cultural due diligence

This task can be partially automated. The analysis of the sentiment of employees and former employees on social networks and rating portals can be automated. The action "Survey of the cultural status of the target" can be automated.

Business model due diligence

This task can be partially automated. There are tools for semi-automated creation and management of business models. The action "Check the business model" can be automated, but is usually not performed automatically.

Due diligence of the target strategy

This task can be partially automated. However, there are only a few actions for which tools are available. Since strategies today are usually not managed and updated in application systems, automated analysis and evaluation is difficult.

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A Automation: Automation potential for M&A processes - how to assess it and show the tools

Digitization potential in the M&A process

How can the digitization potential be captured in the M&A process? What information is needed? These questions will be answered here.

Automation and automatability of tasks

Decisions on the digitisation of processes depend on the implementation options available. The goal is the extensive, meaningful automation of operational tasks.

Automation of tasks

To fully automate a business process, both the tasks and the coupling of tasks must be fully automated. In addition to full automation, there are other levels of automation. The automation levels of tasks can be differentiated from the external view of the tasks by the assignment of combinations of task owner types to tasks [cf. FeSi93, 178 f.].

The task owner types available are humans and machine/software (computers, robots, software). If only humans are assigned to a task, it is not automated.

If human and machines are assigned to a task, it is called semi-automated. A task is called fully automated (automated) if it is assigned only to computers, robots or software.

Figure: Degrees of automation of tasks, source: FeSi93

Automated and semi-automated tasks and the associated application systems are relevant for digitisation. Before a task can be automated, the automatability of tasks must be clarified. Only a task that can be automated can also be automated.

Automation of tasks

The following figure describes the execution of a task from an internal perspective. It consists of a set of actions that are linked together and monitored and controlled by an action control.

Figure: Actions and action control, source: FeSi93

Whether a task can be automated depends on the properties of the inside view of a task. To be more precise: the automatability can be described by the automatability of all actions and the action control.

If the inside view can be functionally described, the task can be fully automated. At the current state of the art it is also possible to automate tasks that cannot be functionally described (so-called decision tasks).

With the increasing availability of machine learning, the automation of decision tasks increases. Many decision tasks, which in the past could only be performed by personnel, can now be fully automated. An example is an automated analysis of contract texts for certain features. Action control can also be at least partially automated today. Workflow systems, project control software or even data rooms with action control are available for process and action control.

Digitalisation potential in the M&A process

A digitization potential for a task exists if the degree of automation of the solution process is lower than the automation capability of the solution process. The same applies to task coupling.

The digitization potential for the M&A process is the sum of the digitization potential of all tasks and task linkages.

Requirements for the reference model regarding tasks

The reference model is to describe the tasks, their automatability and show exemplary automation possibilities in the form of software (tools). This enables companies to determine the digitalization potential in the M&A process.
Displaying the tasks together with tools to automate could look like this:

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A automation: Interview on Automation of M&A Processes

This is the transcript of an interview by Prof. Dr. Kai Lucks with Dr. Karl Michael Popp on the topic of "Digitization of M&A Processes" from July 2020.

Kai Lucks: Mr. Popp, you are propagating a reference model for a digitized M&A process. What is the potential of this model in view of the lack of application knowledge and different M&A procedure models in companies?

Karl-Michael Popp: As the first step, users must understand what is technically feasible today. The second step I see is that the processes in many companies are quite different. So it makes sense to use a reference model. In his current book, Prof. Thorsten Feix has developed a next generation M&A phase and task model. On the basis of this model it is easy to consider which processes can be automated or at least partially automated with the help of which tools. Thus a kind of orientation framework of processes and tools is created. The third step is to consider what can actually be applied from this process and tool map for a specific task in the M&A lifecycle.

Kai Lucks: On the one hand, you speak of individual tools, but in addition, a kind of backbone is needed to which these tools can be connected. Is the typical virtual data room suitable for this?

Karl-Michael Popp: In order to automate the entire process as end-to-end as possible, you need a kind of integration layer that brings together all these specialized tools via interfaces. Besides data rooms, M&A process management applications are suitable candidates for such an integration layer.

Kai Lucks: As innovative M&A tasks, you mention business model due diligence and merger integration due diligence. How should these be used so that they can be applied to achieve successful integration?

Karl-Michael Popp: Currently, the acquisition of new, digital business models and therefore innovative business models is increasing. It is particularly important to compare the business models of target and acquired and, one level below, the operational models. These results have an impact on integration plans and should be transferred to them in the form of data. The implementation of integration plans also requires certain budgets and resources, usually in the form of employees. The earlier the corresponding data is available, the better budgets and resource requirements can be planned.

Question from the podium: How far are we from a data room that can create itself completely on its own from company data, such as data stored in ERP or data warehousing systems?

Karl-Michael Popp: This technology already exists today, but we are not using it. There are very pragmatic reasons for this, because we do not want to and should not make it a reality today. A kind of data vacuum cleaner would be technically easy to implement, but there is also decision-support information that is not available in the ERP systems.

Kai Lucks: I see the main problems with strategic and legal issues. After all, the sellers want to be in control of what data is made available, and an all-encompassing data vacuum cleaner would be difficult, especially since there are limits to data protection laws.

Karl-Michael Popp: It would be conceivable to have a filtered extract that conforms to data protection regulations and is generated automatically. This would do justice to both sides, buyer and seller. Automatic anonymization is already supported by SAP.

This is an interview in line with my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

Due diligence of intellectual property in the software industry: Definition of the task for digitization

Task Due diligence of intellectual property

Why a task definition?

To enable digitization, we have to define tasks in the M&A process in detail. We use goals and objectives, a description of the task and data objects usedby the task. In addition, we list questions used during execution of the tasks to provide more context.

Goals and objectives of the task

 The task has the following objective(s):

• legal IP rights: analysed

• Draft IP integration plan: prepared

 The task has the following formal objectives:

• Risk: minimized

• Quality: maximized

• Information asymmetry: minimized

 Task description:

 In a holistic IP due diligence, the portfolio of intellectual property rights, the target's relations to all IP sources and the different types of current and future use of intellectual property are examined. For all existing and future uses of all target products and services, the following must be identified: all intellectual property rights and obligations, subsidiary measures, associated fees and payments, compliance processes, potential and existing litigation and infringements in connection with the target and its products and services. All of these shall be reviewed and evaluated to ensure that the Target owns the intellectual property to be sold, as well as third party intellectual property rights of use, and that existing and future uses of the intellectual property are consistent with the IP rights of the Target. In the software industry, the focus is usually on the intellectual property and technical due diligence of software products with respect to, for example, the architecture and quality features of the software products and the cloud service providers and web services used. The open source components and third-party products used in the product are also analyzed.

 Questions used when performing the task

 The task is performed with the following questions:

• Has the software provider taken sufficient measures to ensure that work results of employees and service providers are IP of the target?

• Which patents, trademarks, copyrights, title protection and ancillary measures exist and have been taken by the software vendor

• What intellectual property clauses are included in customer contracts and cooperation agreements to ensure that none of the intellectual property rights or trade secrets of the target company are "lost"?

• What intellectual property of third parties (e.g. open source software) has been and is being used by the Target and does the Target have the corresponding rights of use?

• For each supplier relationship, is it ensured that the Target has sufficient rights to use third party intellectual property rights that are consistent with the existing and future forms of use intended by the buyer?

 Data objects of the task

 The task works on the following data object types:

 draft IP integration plan, intellectual property, brand, trademark, trademark authority, legal aspect of a brand or trademark, IP licensing agreement, legal aspect of an IP licensing agreement, licensing agreement to partner, legal aspect of licensing agreement to partner, legal aspect of patent license, third party patent, patent license, IP assignments of the target, patent, patent authority.

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A automation: Definition of the task "IT due diligence"

Definition of the task IT Due Diligence

Why a task definition?

To enable digitization, we have to define tasks in the M&A process in detail. We use goals and objectives, a description of the task and data objects used by the task. In addition, we list questions used during execution of the tasks to provide more context. In addition we can have a look at the automatability of the task and the automation in practice. That will show us the automation potential we have today. More details will be published in my new book “Foundations of digitization for M&A processes: The Due Diligence Phase“.

Goals and objectives of the task IT Due Diligence

The task has the following goals (planned results):

• Draft IT integration plan: prepared

• IT infrastructure of the target: analysed

• Application systems of the target company: analysed

The task has the following objectives:

• Information asymmetry: minimized

• Integration success: maximized

• Risk: minimized

Automatability and automation

While this task can be semi-automated, the level of automation in practice is usually low

• This task is semi-automatable. There are several automated network scanning and inventory creation tools as well as security vulnerability scanning tools that fully automate actions that often are carried out manually today.

• In practice, this task is usually not automated, not even in parts.

Task description

The IT due diligence includes the analysis of IT resources as well as application systems and communication systems of the company. In addition, IT costs and IT budgets are analyzed and the projects planned and running in IT are sifted and analyzed. Security aspects of the target IT are analysed and the risk of the applications, infrastructure and IT projects is assessed. Complementarity and potential synergies between target and buyer IT are evaluated.

The task works on the following data object types

Information technology of the target company, resources for automation of information systems of the target, application systems of the target company, IT infrastructure of the target, risk of the application systems, risk of the IT infrastructure, target IT projects, processes of the target IT, target IT strategy, target IT budget, target IT costs, Target IT Policy, Target Company Hardware, Target Hardware Contract, Legal Aspects of the Hardware Contract, Target IT Software Contracts, Legal Aspects of Target IT Software Contracts, IT Applications, Target Production Application System, Target Application System for Hiring New Employees Payroll application of the tar-gget, application for assessing employee performance, risk of application systems, risk of IT infrastructure, risk of application systems, risk of IT infrastructure, IS automation complementarity, IS automation synergy, resources for automation of information systems of the buyer company, Draft IT integration plan, buyer company information technology, buyer IT projects, buyer IT strategy, buyer IT budget, buyer IT costs, buyer IT costs, buyer company application systems, buyer IT infrastructure, buyer IT processes, buyer IT policy,

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

New book: Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation

Automation of the M&A process: due diligence tasks and automation

OUT NOW: This new book is will help you on your way to digitizing your M&A process.

M&A practitioners need solutions to the following problems related to the digitization of M&A processes:

• It is unclear what exactly needs to be digitized. What are the tasks, can they be automated and how can they be digitised?

• The digitisation potential in the M&A process is unclear. Which tasks can be digitized? The digitization potential lies in the (partial) automation of tasks that are not automated today.

• The digitization possibilities are not transparent. Which tools are available to digitize individual tasks?

These problem areas are addressed and solutions are presented in the new book presented here.

The book can be ordered with the ISBN 9783750462052.

What is fundamentally new in this book

This book is at its core an English translation of the German book “Grundlagen der Digitalisierung von Mergers und Acquisitions: Die Due-Diligence-Phase” published July 2020.

But it is more than that, it has been massively updated and extended and represents the state of the M&A reference model as of October 2020. Major extensions of this book are:

The section showing parts of the data model for due diligence has been extended.

In section 4 describing all tasks of the due diligence phase, additional questions have been added to the following tasks

• Design of the new entity NewCo,

• Integrated Valuation of NewCo incl. Synergies,

• Design of the merger integration plans,

• Design of the merger integration project,

• Negotiation of the deal.

On a conceptual level, the following is brand-new:

• A business model due diligence is introduced, which deals with the business model of the target and its compatibility with the business model of the buyer.

• An operations model due diligence is introduced, which looks at the implementation of the business model with the help of resources in an organization. Resources can be employees, machines or computers.

• A new form of strategic due diligence is introduced, which deals with the target's strategy and its compatibility with the buyer's strategy.

• Already in the due diligence, plans for merger integration are subjected to an examination in the form of a merger integration due diligence.

• Goals and objectives are defined for each task.

• Inclusion of applications in the functional due diligence instead of only in the IT due diligence

• For the first time an attempt is being made to describe a complete data model for due diligence.

The book can be ordered with the ISBN 9783750462052.

Goal and target audience of the book

The goal of the book is to structure the application domain "M&A Process" in an easily understandable model.

This book can be used as follows:

• Determine the tasks to be digitized: This book describes almost all tasks in the due diligence process. The tasks relevant for a company can be selected and then automated in a targeted manner.

• Overview of digitization options for the M&A process: The automation options described for the tasks provide an overview of which tasks in the M&A process can already be automated today and how.

• Determine the digitization potential of M&A processes: The methodology contained in this book and the details of the tasks, their automation capabilities and automation options allow you to determine the digitization potential.

• Familiarization with M&A processes: In this book, all tasks in the Due Diligence phase are documented with their objectives, a description and with questions during execution. This enables a quick familiarization with the details of the due diligence.

Target Audience

The target group are managers and employees of strategy and M&A departments, persons responsible for post-merger integration and other practitioners, but also students and teachers in the field of M&A.

The book will be published shortly with the ISBN 9783750462052. Sign up below and i will notify you when the book is available.

About the author

Dr. Karl Michael Popp is a member of the Corporate Development and Strategy Team in the Office of the CEO at SAP SE in Germany. In his twenty-five year career at large and small software companies, he has worked on over 50 strategic partnerships and over thirty acquisitions and successful merger integrations. Karl is a speaker, author on software and platform business models, software ecosystems and merger automation and runs workshops on software ecosystems and merger integration.

This is my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A Automation: Finding potential acquisition targets

Findin potential acquisition targets - a task definition

Why a task definition?

To enable digitization, we have to define tasks in the M&A process in detail. We use goals and objectives, a description of the task and data objects used by the task. In addition, we list questions used during execution of the tasks to provide more context. In addition we can have a look at the automatability of the task and the automation in practice. That will show us the automation potential we have today. More details will be published in my new book “Automation of M&A: Due Diligence Tasks and Automation“.

  The task has the following goal(s):

• Longlist of targets:  created

 The task has the following objectives:

• Information asymmetry:  minimized

 Automatability

This task is partially automatable.

Tools are available.

 Task description

 Finding targets requires a selection of the righ sources, ad definition of selection criteria followed by detailed walkthrough of target candidates and decision which candidates make it onto the longlist of potential targets. You can look for acquisition targets in the company ecosystem, e.g. partners, suppliers and in adjacent markets.

 The task consists of the following actions

Define selection criteria and market

• Scan sources for potential targets

• Review candidates

• Decide longlist

The task works on the following data object types, among others:

 Target company, Target company, Target locations, Buyer, Longlist of targets, Ecosystem, Product of the target, Sales of the target, Target employees, Target business model.

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A automation: Definition of the task "Design of the merger integration project"

Design of the merger integration project

Goals and objectives

  The task has the following goal(s):

• Draft integration project plan:  prepared

 The task has the following objectives:

• Integration success:  maximized

• Synergy:  maximized

• Risk:  minimized

 Automatability

This task is partially automatable. Project planning applications are available for the actions "Plan and simulate project" and "Calculate critical path".

 Task description

 It is important to remember that the term 'project' implies that we have professional management of the integration by professional project managers who have experience with complex projects and are equipped with the skills of a certified project manager. The term 'project' also implies that we have a work breakdown structure with tasks to be performed in the project. Buying companies that make frequent acquisitions have a work breakdown structure template that they adapt to each of the new merger integration projects. This ensures completeness in terms of coverage of all integration topics and also allows us to assess whether we have sufficient resources and whether the resources know what to do in the integration. In this task, the sequence of integration activities is recorded in the integration project plan. It determines when the individual integration steps can be performed and whether enough resources are available to perform them at that time. The dependencies between the individual integration activities and the resource situation are taken into account. Critical paths are analyzed. IT integration activities play a special role here, on which many other activities depend. Possible risks are listed in the integration plan risks, mitigations are planned and the risks are tracked in the following integration project.

 The task works on the following data object types, among others:

 Integration project, Integration project plan, Integration Plan Risk, Integration budget, Draft integration project plan, Integration project resources, Organizational plan of the target, Buyer organization, Draft financial integration plan, Task of the draft integration plan for culture, Draft strategy integration plan, Draft production integration plan, Draft plan for future personnel costs, Mapping target jobs to NewCo job descriptions, Draft HR communication plan, Draft HR onboarding plan, Draft HR Training Plan, Draft culture integration plan, Draft tax integration plan, Draft Business Model Integration Plan, Draft Operations Integration Plan, Draft technical integration plan, Draft GTM integration plan, Draft IP Integration Plan, Draft HR Integration Plan, Draft Legal Integration Plan, Draft integration plan for partnerships, Draft IT integration plan, Draft integration plan.

 Questions for the execution of the task

The task is executed with the following questions, among others:

• Do the subprojects of the integration project cover all aspects of the integration plan?

• Which time-based dependencies exist between the sub-integration plans?

• Which sequence-based dependencies exist between the sub-integration plans?

• Does the chronological sequence of integration activities make sense?

• Have all stakeholders of the integration project and their involvement been defined?

• How do we motivate stakeholders of the integration project?

• How do we motivate key players in the integration project?

• How do we award stakeholders and key players in the integration project?

• Are we planning to celebrate milestones and successes in the integration project and when?

• Are all required resources available at the appropriate time?

• Does the load of integration activities at any time adversely impact the NewCo business operations and results?

• How do we avoid work overload of key players in the integration project?

• What time delays do we expect in the project?

• What is the effect of co-determination on project progress?

• Were different scenarios of time shifts in individual subprojects, especially IT integration, simulated?

• How do we react to any unplanned changes during the project, such as massive price reductions in the sales markets, a pandemic or an economic downturn?

• Which integration activities should start before day one and how and who does execute them?

• What are the conditions to declare that the integration is completed?

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A Automation: The Task of Due-Diligence of Intellectual Property

To structure and evolve our profession we need a public, formal description of M&A processes. Let´s start here and look at how such a description looks like.

For each task, goals and formal objectives are specified. In addition, a task description and data object types that are required for task execution are specified. Functional goals describe the result of a task at type level. Formal objectives are used to select a result from a set of results. 

The task has the following goals: 

IP Legal matters: analyzed 

Draft IP integration plan: prepared

The task has the following formal objectives: 

Risk: minimized 

Quality: maximized 

Information asymmetry: minimized

Task description:

In a holistic IP due diligence, the IP portfolio, the target's relationships to all IP sources and the different types of current and future use of intellectual property are examined. For all existing and future uses of all target products and services, all intellectual property rights and obligations, subsidiary measures, related fees and payments, compliance processes, potential and existing litigation and violations related to the target and its products and services must be identified. All of these should be reviewed and evaluated to ensure that the Target owns the intellectual property to be sold and the rights to use the intellectual property of third parties and that the existing and future uses of the intellectual property are consistent with the IP rights of the Target. In the software industry, the focus is usually on intellectual property and technical due diligence of the software products with regard to e.g. the architecture and quality features of the software products as well as the cloud service providers and web services used. The open source components and third-party products used in the product are also analyzed.

Questionnaire

The task is performed with the following questions: 

Has the software vendor taken sufficient measures to ensure that the work results of employees and service providers are IP of the target? 

Which patents, trademarks, copyrights, title protection and ancillary measures exist and have been taken by the software provider? 

What IPR clauses exist in customer contracts and cooperation agreements to ensure that none of the target company's IPRs or trade secrets are "lost"? 

Which intellectual property of third parties (e.g. open source software) was and is used by the target and does the target have the corresponding rights of use? 

Is it ensured for each supplier relationship that the Target has sufficient rights to use third party intellectual property rights that correspond to the existing and future forms of use intended by the buyer?

The task works on the following data object types: 

Draft IP Integration Plan, Intellectual Property, Trademark, Brand, Trademark Authority, Trademark and Brand Authority, Legal Aspect of a Brand or Trademark, IP License Agreement, Legal Aspect of an IP Licensing Agreement, Partner Licensing Agreement, Legal Aspect of the Partner License Agreement, Legal Aspect of the Patent License, Foreign Patent, Patent License, IP Assignments of the Target, Patent, Patent Authority

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Automation of Mergers and Acquisitions: Due Diligence Tasks and Automation Karl Michael Popp Books on demand M&A Media Services Digitization M&A 978-3750462052

M&A automation: M&A data model as a sound basis for the M&A API

What is the domain model for M&A?

The domain model will consist at least of the following parts:

• A data model that shows the data objects that are involved in M&A transactions and processes.

• A Hierarchy of tasks in different phases of M&A Processes.

• APIs for data objects and tasks.

The domain model is a programmable model. This means it is available electronically and can be navigated and displayed as you wish. It is implemented in a set of Prolog facts and rules.

Give me an example for a task in the M&A domain model

Here is an example of the documentation of each task. The task Review Merger Integration Project works on data objects:

 Integration Project Plan, Integration Budget, Stakeholder, 

Integration Success, Integration Project, Integration Project Resources.

It has the goal (that describes the result):

Integration project: tested and verified

and the objectives, which describe the qualities of the result:

 Integration success: maximized

 Quality: maximized

It has the following task description:

We review the structure and behaviour of the merger project. It is important to remember that the word "project" means that we have a professional management of integration by professional project managers who are experienced with complex projects and equipped with the skills of a certified project manager. We should also set up a project steering committee that has comprehensive competencies and can make decisions quickly.

The word "project" means that we have a project structure plan with tasks to be performed in the project. Buying companies that make frequent acquisitions have a project structure plan template that they adapt to each of the new merger integration projects. This ensures completeness and also allows a correct assessment of whether we have sufficient resources and whether the resources know what to do in the merger.

But we also focus on providing answers to questions like: Do we have the right resources for the integration tasks in mergers? Are the resources able to perform the tasks assigned to them? Do the resources have adequate social skills to guide people and convince them to integrate?

What about the data model inside the M&A domain model?

Each of the data objects used by tasks in the M&A domain model are connected in a domain data model. So let us have a look at Integration Project Plan and how it is connected in the data model. Currently the data model contains 376 data objects and many more relationships.

The data model can be used for several purposes. It is used as part of the documentation of tasks and allows a user to understand the task at hand better. Secondly, it can serve as part of a M&A domain API definition that allows to integrate several digital tools within the M&A process.

Example of a data object and its relationships

The task Review Merger Integration Project works on a data object called integration project.

on the left side you see other data objects that have relationships that are incoming. On the right side you see outgoing relationships pointing to other data objects. This data object relates to a stakeholder and an integration plan. So every integration plan has at least one integration project. The integration project might have several risks associated with it. And the integration project has an integration plan.

Since the data model contains 876 data objects, it provides a comprehensive model for implementing tools for the M&A process.

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

CLICK OR SCAN THE QR CODE TO ORDER THE BOOK

Updated: #mergerautomation: Imagine you can easily review existing tools to automate M&A. Now with several examples

Everybody feels the pressure to digitize. How can you best handle it when you are responsible for the M&A process? Say, you would like to get information which tools are available to automate this task. You could start searching, find some tool vendors, look at a few in more details by coordinating meetings. A tedious process.

Domain model can help

I am working on a domain model, which will be available in an online tool, that does two things: first, define all tasks in the M&A process. Second, it allows to map existing tools to this model, showing which tools are available for which tasks.

What would it look like?

Let us have a look at an example. In the early phase of the M&A process there is a task called pipelining. You want to automate it. This task aims at providing a long list of potential targets and ways to select a subset of targets resulting in a shortlist. So, how would the information about a tool look like? See the information below on a single tool that partially automates this task.

Tool/Service: EY Embryonic

Provider: EY

USP: EY has licensed all expensive databases like CapIQ, CBInsights, ThomsonReuters and has an impressive user experience.

EY Embryonic is offered as a consulting service. 

Great information right? This is just a snippet of the available information. The plan is to list several tools to enable you to select the right tooling to digitize the M&A process.

Here is an example for the tasks Embedded M&A Strategy and Finding potential targets, which are described in detail in my new book. Each of the tasks has several tools assigned which are listed below the task name.

Stay tuned for more news about the domain model and its many uses. Like what you read? Click on one of the topics or buy one of my recommended books below.