Why Use a Dedicated M&A Tool?
M&A Platforms vs.
Spreadsheets + Email + etc.
Today, it would not occur to us to ask, “Why don’t we run our accounting, HR, and supply chain on spreadsheets?” Because today we have mature dedicated systems for these processes.
M&A, accounting, and supply chain are all very different. But the process advantages of a dedicated system are much the same in each case: Vastly better fit to purpose, greater process control, repeatability, higher throughput, lower information latency, better oversight, simplified administration, and reduced errors and risk.
These process advantages naturally translate into higher organizational performance. But for a given system, it’s fair to ask specifically why those results can be expected. What are specific, concrete, easily appreciated improvements in day-to-day M&A operations?
1. Single Source of Truth
Without a dedicated, database-driven platform, data and status information tends to exist as text, in hundreds (or even thousands) of files. Files can be in multiple locations, and have multiple versions.
By contrast, in M&A Tools data resides in a unified database of “M&A objects.” M&A objects, like deals, actions, reports, and users, are organized in an easily navigated, built-in data hierarchy. “Deal XYZ” is not just a folder name, or a column in a spreadsheet. It’s a Deal. There is only one Deal XYZ, and only one current status of anything. This is what is meant by a single source of truth.
Reports in M&A Tools are live views of the latest data. All authorized users can access the same version of the data from wherever they are, in parallel. Changes, history, and user actions are part of the built-in record. There is almost no risk of items being lost, misplaced, or of versions crossing in email.
The “single source of truth” of M&A Tools replaces the semi-chaos of folders, files, versions, and email. This advantage alone saves hundreds of hours per year in even a single small team.
2. Connect the dots
Without a true M&A platform, your data is “siloed” in separate files: email, documents, presentations, spreadsheets, and project management files. The “data” in those files is typically just text, column headings, or folder names. Any data point in a file can raise questions. Those questions may or may not be answered elsewhere in the same file, or in another file, or in an email. There is no way for the reader to “connect the dots” directly. So we must write more reports and have more meetings, in order to connect the dots for each other.
By contrast, data as M&A objects “knows” what it is, and knows what data it’s connected to. In M&A Tools, deals, people, groups, activities, reports, and more exist in a natural, reliable web of relationships that users can navigate directly. In other words, in M&A Tools the dots are always pre-connected for the user.
This means that users can simply follow the data to answer questions almost as quickly as they pose themselves: What are my active projects? What’s the status of project X? How is the project X implementation coming? What area is responsible for the delay? What specifically is holding it up? What else depends on that? Who owns it? What does the owner have to say? What exactly has changed since yesterday? And so on, ad infinitum.
Once connecting the dots is this trivial, questions that used to require an email or meeting are answered by the system in real-time. Issues can be identified or even resolved in seconds. Many potential issues don’t arise in the first place, because the oversight team can be continuously informed.
3. Proactive Workflow Automation
Without a proper M&A platform, most references to people and data (which exist only as text in files) cannot be leveraged to automate a process. Instead, collaborators must email each other, and contributors must literally read documents, to know what has changed and what has to be done next. As a practical matter, proactive, automated workflows are not feasible.
By contrast, people and data items in M&A Tools are not text in documents, they are “M&A objects.” M&A Tools knows what these items are, and knows their status. The system also knows every associated, authorized process contributor for each type of data. Whether pipeline updates, pre-close activities, diligence review, integration activities, status reporting, decisions to be made, KPI updates, talent selection process steps, and so on. Every type of M&A working data is managed via workflow or process control
For the lightest workflow touch, when users log in M&A Tools simply presents a live, filtered list of the items the user should review and act on now, organized by type of action required and time frame.
For a more structured workflow, M&A Tools can proactively email each contributor regarding specific actions or updates required. The system presents exactly what must be done next, and alert other interested parties of updates from the user.
No matter which approach is leveraged in M&A Tools, users with any level of oversight role can consult dashboard views of the process. M&A Tools dashboards automatically display what’s important now, exactly what has been done, what’s pending, what’s new, and what has changed.
Proactive, automated workflows improve data completeness, timeliness, and quality. Proactive workflows save time for every contributor. However, since M&A Tools allows for greater parallelism and far more direct contributors to M&A processes than traditional approaches (see below), the benefits of automated workflows are further multiplied.
4. Built-in Reporting
Without a specialized platform like M&A Tools, reporting is an expensive management time sink. Spreadsheets, emails and presentation decks have to be chased down, reviewed, compiled and updated. The process must be repeated frequently, as data becomes stale between reporting cycles.
In M&A Tools, report views are built-in, and automatically populated by live data in real-time. This eliminates all manual steps to acquire, edit, compile or aggregate raw report data. For periodic executive reports, of course managers may also add their own text summaries and observations – not in files, but right in their M&A Tools dashboard view.
As a result, the effort to provide management updates in M&A Tools is a fraction of what was traditionally required. With M&A Tools, managers are able to dedicate more time to their business goals, and far less to reporting, even while greatly improving the quality and timeliness of reports.
5. Oversight x Accountability
Who must do what next? And who has done what so far? A project plan or spreadsheet may list “resources” or owners. But when your M&A processes are managed in files on collaboration servers, the practical reality is that detailed accountability information is not available.
By contrast, in M&A Tools, everything that is actionable has an explicit owner. Every action or input in the system, whether by the owner or not, is automatically logged or associated with the user.
In other words, who must do what next, and who has done what so far, are automatically presented and captured by M&A Tools. This means that contributors with pending actions can be alerted automatically, and see them on their personal dashboards. It also means that those with oversight responsibilities can see which items have been completed, which require action, and by whom.
These direct improvements to oversight and accountability also create an important, indirect benefit, via behavior changes: The greater transparency and visibility will make many users more attentive to data they own, and more responsive with updates.
6. Automated Access Control
Without a specialized M&A tool, we must manually control user access to folders and files. Typically these are maintained on an internal file sharing or collaboration resource such as Microsoft SharePoint.
The problem: M&A processes involve dozens of types of data, and the data ultimately originates from many individuals. As the volume of data and number of users increase, it is increasingly difficult to manually ensure that all, but only, the right individuals have access to sensitive data.
This is partly why many M&A teams funnel information through a relatively small group of individuals. For example, a large integration may involve contributions and updates from hundreds of individuals. But these contributions are chased down by, and funneled through, a few team leads or project managers per functional area.
In other words, with file and file-sharing based approaches, the access control issue often is not so much resolved as avoided. The problem is replaced by another problem (see also below).
M&A Tools resolves this problem directly. First, by automatically enforcing real world M&A role access rights, and second, by providing very simple exception mechanisms to further restrict or open access.
The result is that, whether you are e.g. a deal lead, an HR diligence reviewer, or integration team member, your access to different types and phases of M&A data is automatically permitted or prohibited by the system. M&A Tools does allow administrators to make exceptions. But only within limits automatically imposed by the data type and user role. For example, the Supply Chain integration team administrator can choose to share the team work plan with, say, the IT and Operations functional teams. But the Talent Selection team is not able to share personnel data in the same way.
This M&A-specialized Access Control Framework better protects sensitive data from human error, greatly simplifies access administration, and allows many, many more potential contributors to be M&A Tools users – without sacrificing control or security.
7. External Users
In a file-based approach, it is normally not practical for the buyer to provide e.g. SharePoint accounts to external users such as consultants, the seller’s attorneys, or acquired employees before Day 1.
Because EKNOW M&A Tools’ Access Control Framework closely mirrors the roles and access of the real world, M&A Tools has user roles for all external organizations as well. This means not only the buyer’s own consultants, attorneys, accountants etc.; but also the seller’s employees, attorneys, and so on, at every stage of the transaction. M&A Tools is specifically designed to compartmentalize access for these critical roles.
As a result, using M&A Tools allows secure, low-friction collaboration between buyer, seller, and every supporting organization that has something to contribute, before, during, or after close.
EKNOW clients generally realize that including external contributors benefits productivity. This is true. However another less obvious but substantial advantage becomes clear with experience in M&A Tools: The reporting of all external user activity, with a detailed audit trail. It’s difficult to overstate the importance of this benefit.
8. Big Tent = Parallelism = Productivity+
Without the specialized capabilities outlined above, M&A organizations must eventually funnel all of their data and workflow through relatively few individuals. Those individuals, such as administrators and project managers, are not the actual contributors to the process. They are proxies for the true sources of data and updates.
Limiting users, and replacing potential users with proxies, creates many problems. For example, information that must pass through proxies is inevitably filtered, interpreted, or re-summarized, degrading information quality.
But the biggest problem is the impact on productivity. A single additional, unnecessary relay point can easily multiply the time required by 2X to 10X. These penalties cascade. An update process that could take hours, becomes days long; an effort that could be managed in weeks takes months, and so on. Limiting users dramatically reduces throughput in almost processes, whether in due diligence, during closing, ongoing status reporting etc.
The M&A Tools “big tent” approach allows EKNOW clients to remove those bottlenecks. Anyone who can advance a process – i.e., anyone who can provide data, a document, a deliverable, a status update, an approval, or a decision – anyone and everyone can be safely added as M&A Tools users. All M&A Tools users, in parallel, can make their contributions directly in M&A Tools. Project managers, leads and administrators gain back their time, but lose nothing, because they can still review, correct, or approve the input of their many contributors, if and when needed.
In sum, the parallelism of M&A Tools enables productivity gains that are not possible from general-purpose or file-based approaches.
9. Automated Non-Disclosure
Often, EKNOW clients must maintain secrecy around a potential transaction, while still engaging team members in stages, before the deal is announced. Deals are given project code names, and users are required to sign a non-disclosure agreement (user NDA) when they are “drafted” to work on the deal.
With traditional, file-based approaches, administrators must manage this entire process manually.
M&A Tools provides built-in, automated user NDA clearance process. The deal team can identify users to receive the NDA, push a request to the user(s), and collect the user’s NDA consent electronically.
Once the user has executed the NDA, the relevant deal project data becomes accessible to the user. Administrators, the deal team, and the users who have already executed the NDA, can always see the up to date listing of which users have already executed the project NDA, versus those with whom the project cannot yet be discussed. This M&A Tools feature is so useful that EKNOW clients use it even between transactions, for non-M&A confidential projects.
10. Comprehensive Audit Trail
In M&A an audit trail is absolutely essential, and not only for large deals subject to regulatory scrutiny. The audit trail can help protect both parties from legal exposure, regardless of the deal size. Even more often, the audit trail is indispensable for resolving potential points of confusion, misunderstanding, disagreement, or memory lapses.
The problem with generic or file-based approaches is that files, user actions, and processes are effectively spread across multiple productivity and collaboration applications, and email. No unified, searchable audit trail of user actions exists.
Because M&A Tools are unified and comprehensive, the M&A Tools Audit Log is also unified and comprehensive. There is no interruption in the audit trail as M&A Tools users move between modules or tools. Every user access or page view; every M&A object that is created, edited, or deleted; every message sent, received, or attached; and every document upload or download, is logged. Authorized client administrators can view, search, report, and even export this Audit Log data at any time.
The M&A Tools Audit Log is obviously valuable in its own right. But experience shows that the Audit Log also has another great, if unintended benefit: On user behavior. Knowing that their actions are thoroughly logged and that the Audit Log is easily reviewed, users are likely to be more diligent, and less likely to make errors, or to make counterfactual claims.
11. Right Tools for the Job
M&A consists of many specialized processes: Deal flow management, deal closing, due diligence, clean room data requests, pre-close planning, seller communication, post-close integration, synergy capture, staffing and structural changes, and more.
Each of these data types and workflows has its own best practices, required fields, status metrics, user roles, strict access control considerations, workflow patterns, reporting, and audit trails. Each also does not exist in isolation; each has actionable relationships to other specialized M&A data and workflows.
A tremendous disadvantage of generic or file-based approaches is that they require the organization to reinvent the wheel. A very large, very complex wheel.
In M&A Tools, all of these data types and relationships are built-in and automated. Countless best practices are built in. M&A Tools have been refined and optimized for decades, and are extended constantly.
M&A Tools relieves the EKNOW client of the responsibility of reinventing the wheel, and provides more effective, secure, and better integrated tools than clients could develop on their own.
12. Continuous Improvement
Organizations using a generic or file-based approach care as deeply about their work as we do. So they work hard to adapt their productivity tools to their M&A requirements, especially initially.
But these efforts can’t be sustained. Corporate development, diligence, and integration management team members already have at least one day job. They do not have the time or expertise to continuously improve these specialized processes at a high level.
On the other hand, software development is EKNOW’s full-time occupation. M&A Tools is EKNOW’s only product.
EKNOW has the luxury of being able to devote all of its attention to continuously improving the M&A Tools platform, as it has for the last 20 years. The best way to ensure that M&A tools and processes improve over time is to use EKNOW M&A Tools rather than a home-grown file-based solution.