Introduction

I first started working M&A around the turn of the new millennium. This was an exciting time: America was recovering from the dot-com bubble, the economy grew reliably at 4% per year, the entire business sector entered a period of prime deal-making conditions, and M&A finally emerged from under the shadow of the corporate raider era. In 2003, I founded a boutique M&A firm serving Chicago’s lower middle market. I ran the firm for five years, participating in dozens of deals during that time. Then, the 2008 recession brought the market to a halt. It was time to change things up.

I started reflecting on the lessons I’d learned advising on deals, and on the many challenges my clients faced during their acquisitions.

M&A is an incredibly complex undertaking and, as bankers are fond of saying, no two deals are alike. This means that no two deals will face the same obstacles on the path to success — but as I looked back over the many transactions I’d been involved with, both buy-side and sell-side, I realize that many of the biggest challenges arise from a common basis: poor process management.

Even at the highest levels of the industry, I observed highly inefficient deals. For example, during diligence, massive amounts of manpower goes toward collating and analyzing complex financial and operational information. Typically, all of this information is stored in confusing spreadsheets and virtual data rooms. Bankers and company employees email these trackers and Excel documents back and forth repeatedly. Poor version control on documents and massive email backlogs cause profound information bottlenecks, leading to wasted labor and long lead times on simple actions. These efficiency issues ripple through complex networks of dependencies, creating much larger complications downstream — similar to how a single car changing lanes can create traffic problems down a highway. Once diligence is complete, all of this important information — collected at such great expense — is then simply abandoned, and the integration team must start their next project from the ground up.

It was maddening to watch this process unfold, and I wanted to try to find a way to address some of these problems. Ultimately, I honed in on software. It seemed clear to me that many of the procedural problems facing the industry were directly related to a reliance on technology which was long out of date, even in 2008. These are the infamous “legacy systems”: clumsy and inefficient technology that companies stick with because they have become so deeply embedded in corporate functions, and would be too expensive to build in-house. I knew that these systems would someday reach a tipping point, when the losses stemming from poor functionality would make replacement unavoidable. Change was inevitable, and new software would be critical to future successes in the M&A industry.

So I closed my firm, assembled a team, and founded DealRoom. It was a major pivot. I knew nothing about software design and the learning curve was steep, to say the least. But over the last seven years, we designed, prototyped, and fielded an excellent product that I am very proud of. DealRoom combines all the features of a strong virtual data room — a centralized, secure location to store and organize sensitive information — with a collection of supporting project management (PM) tools, like interactive request lists and comment threads for important communication. The goal was to keep everyone working the deal — from bankers to employees on both the buy- and sell-sides — collaborating on a centralized software infrastructure in real time. This ensures that trackers and requests are not buried in emails, eliminates the type of repeat work associated with malaligned spreadsheets, and reduces wait times on work items across the board. Keeping everything together in a centralized and secure location also allows us to leverage use-data to identify potential bottlenecks and stoppages, and to provide a variety of other analytics to our customers.

Developing DealRoom was an adventure in many ways, but the biggest change it brought about in my professional life was completely unforeseen. Working closely with software engineers brought me, for the first time, into contact with the world of “Agile.” Although Agile is currently a high-profile concept in the business world, ten years ago it was barely known outside the software development industry. Coming from an M&A background, I had never heard of it — but when I saw Agile techniques in action, I was an instant convert. Agile methodologies encouraged the software teams I worked with to navigate and execute complex projects in fresh, exhilarating ways that were rich with potential. Agile inspired me to look outside of the technology solution I had originally envisioned, and to view the challenges facing the M&A industry in a broader, more interconnected way. I knew, deep down in my gut, that Agile could revolutionize the dealmaking world.

So, I started my journey to adapt Agile techniques for the M&A industry — a journey ultimately culminating in the Agile M&A process model outlined in this book. I developed the process by making hundreds of discovery calls to working M&A professionals — bankers, corporate development scouts, and integration specialists — and identifying their pain points. I talked with them about the process and workflow of their companies, what was working and what needed to change, what challenges they saw facing the industry, and a variety of other issues. During the course of this research, I discovered that many companies were independently developing in-house techniques and programs reminiscent of Agile, simply because these approaches are so effective. Industry-wide, teams are moving towards Agile principles without realizing it, constantly reinventing the wheel in the quest for ideal project management. I only encountered two companies, however, openly and explicitly referring to their inorganic growth functions as “Agile”: Google and Atlassian, which tellingly have two of the most robust and successful corporate development programs in the industry today.

Part of the problem here is secrecy. Much of the information uncovered during the M&A process is, by necessity, very closely guarded. This emphasis on security is most vital on the front end of deals, when companies are scouting out, approaching, and ultimately closing with suitable targets. Premature disclosures and informational leakages in these stages can lead to failure, unwanted competitive bids, and even litigation. This drive towards secrecy, however, has permeated other aspects of the industry as well, creating a quasi-paranoid culture where M&A professionals are unwilling to talk about or share important observations, lessons learned, or information on evolving trends. I would like to see this culture change. I would like to see specialists across the M&A field share their expertise and reflections in an open and collaborative atmosphere.

Impetus for this change has to come from somewhere, however. In this respect, I would like to thank Google and Atlassian for their eagerness to discuss their procedures and processes with me, as well as their willingness to let me share those insights in this book. I would like to thank Atlassian in particular for the pioneering work they already do in information sharing. Their “Team Playbook” is an incredible open source information resource aimed at their peers in other companies. It is freely available online at https://www.atlassian.com/team-playbook.

As more organizations start to value and practice a similar openness, the faster and more thoroughly our industry will improve.

A final thought on Agile itself:
Today, “Agile” has become another corporate buzzword. Like “synergy,” it has become so ubiquitous and semantically diluted that, in many contexts, it is essentially devoid of meaning. And, as with other empty buzzwords, savvy corporate professionals have come to regard “Agile” and its promises with suspicion. A bewildering variety of proprietary “Agile” sub-methodologies have sprung up like weeds over the past few years — and a considerable industry of expensive training and certification programs are springing up with them. The effect has been something of a glutting of the market, and I suspect that many people are getting a little sick of hearing the word Agile.

If you have any of these misgivings, I hope you will shelve them as you read this book. The fact is that when you get past all the noise and chatter surrounding Agile, it becomes increasingly clear that the success of the movement is driven by one primary factor: Agile works.

I hope that you find a great deal of value in this book, and I hope that you find my case for the power of Agile process modeling in the M&A world convincing. Apply it how you like. Build on it. Grow it. It is a blueprint, a map — not a rulebook.

— Kison Patel, July 2019