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3 Reasons Corporate Development Historically Fights Against Agile

3 Reasons Corporate Development Struggles with Adopting Agile

Overview:

  1. Background in customization
  2. Less interested in data
  3. Know of Agile as solely a tool

With its roots stemming from the world of software, Agile project management methodologies are, not surprisingly, more often embraced by the IT and manufacturing sectors than by Corporate Development teams.

Further helping Agile’s cause in these disciplines is that their own products are developed in an Agile-like manner. This does not mean, however, that Agile’s principles cannot be applied to Corporate Development and the world of M&A and its stakeholders. What it does mean is that Agile will usually meet a bit more resistance when it is first integrated.

As with many areas of business, if we look to the past we can often learn valuable lessons for the future. With this in mind, today we’ll take a look at 3 common reasons Corporate Development teams have historically been weary of Agile.

corporate development using Agile

1. They have a background based on customization (vs. configuration)

When it comes to dealmaking, Corp Dev teams are used to customization vs. following a methodology like Agile.

This is seen with dealmakers and consultants who often come in, work on a deal, and then leave. Sure the work is completed, but in terms of PMO and education, little is left behind.

While there is nothing wrong with customizing to develop relationships and meet client needs, businesses doing more frequent deals (approximately 6 or more a year) would benefit greatly from Agile as they would become more efficient and close deals faster.

Those new to Agile might consider the fact that Agile principles seem to work best for “plug and play” acquisitions versus transformational acquisitions; therefore, these more traditional and frequent deals might be a good place for Corp Dev teams to begin implementing Agile.

data in corporate development


2. They can be less interested in data

Another “mental hurdle” when it comes to leaning into Agile for Corp Dev can be related to data. Practitioners have noted that at times Corp Dev teams are less interested in, or appreciative of, data and the information that can be extracted from it.

Again, this might tie back to Agile’s foundation as well as the tendency for Corp Dev teams to fall back on old playbooks. Agile’s methods, and Agile tools such as DealRoom, can provide data that when used correctly can solve problems in M&A that will make a difference. This data, such as the data pulled out of DealRoom’s platform, can provide a clearer analysis of trends and save companies time.

using the right Agile tools in corporate development

3. Agile is too often presented in the form of a tool

All too often Agile is presented in the form of a tool and the backers of the tool make it seem like the tool is a panacea.

This is obviously a bold claim, and it is hard to justify to Corp Dev teams that a single corporate development software can solve all of their problems (not to mention these teams have most likely been sold numerous tools in the past and are not too eager to learn another new one).

Certainly Agile-based tools can be helpful and support a transition to Agile-based project management, but the more realistic way to present Agile is through a vision and principles.

Conclusion

Developing a PMO using Agile methodologies can improve almost all aspects of M&A transactions - from diligence to integration - for all stakeholders. Specifically, with increased visibility, heightened employee buy-in, the ability to adapt to change, and efficient and realistic prioritization of tasks, hours of work can be saved and deals can come to completion faster.

Certainly, there may be some resistance, and companies may have to mold Agile to their specific needs, but ultimately, Agile is the way of the future. Perhaps more professional development and education that leaves behind tangible and realistic PMOs will help Corp Dev teams warm up to Agile.

What Causes Deal Fever? What Raises the Risk?

There are several symptoms that can lead to the disease of deal fever. 

One such symptom of deal fever is getting carried away in the heat of the deal. There is a lot of time and effort spent just exploring a potential deal, let along the negotiations involved. Sometimes people spend so much time and effort on exploring and negotiating the deal that they feel is must get done at all costs, while failing to take a birds-eye view in determining if the deal is really the best thing for the company.

Another symptom indicating the presence of deal fever and one that raises the risk of catching it is when certain executives become more excited about the deal and emotionally involved in the outcome than other members of the group. This can lead to inflating the deal’s potential strengths instead of also focusing on potential pitfalls. In a competitive situation, sometimes certain people want to do the deal much more than others for a variety of reasons. 

Many M&A teams also use M&A software to help them source new deals. Just because a software is telling you a deal is a good idea, that doesn't mean you don't have to do the proper research.

How to Prevent Deal Fever

Great news! There are a number of proven ways to prevent deal fever and keep your company disease-free. Here are some tips to stay deal fever-free:

  • Perform More Research Than You Need To. You can never perform too much research on a potential deal, so we recommend doing even more than you think you need to.  
  • Seek The Opinion Of Experienced Deal Makers. Get another opinion from someone you trust that has embarked on similar deals. What do they think of the deal? Seeking another opinion that can evaluate your potential deal without the emotional involvement will help you ensure the deal is truly one you want to pursue!
  • Know All Of The Potential Risks. Thoroughly evaluating the deal’s potential risks, and involving your team in the process, will help you avoid deal fever. Don’t lose sight of your basic financial calculations! Involving others in the process is essential, as you want to make sure nothing is overlooked and you can remain deal fever-free. 

Resist deal fever by not overlooking the negatives that you may not want to see! If you have been the primary person working on the deal, make sure you involve others so they can help assure that you are seeing everything clearly. There should never be one person working on deal flow tracking. Likewise, don’t let personal pressures to get the deal done get in the way of looking at everything objectively. Sometimes, not doing the deal may be in the best interests of the company.

How to Tell When You Have Deal Fever

Do you have a high degree of risk tolerance? Do you have a burning desire to get the deal done, yet something just doesn’t feel right about it but you’re not sure what? If so, you may be catching a slight bout of deal fever.

Having the above feelings isn’t just exclusive to individuals, either. Many companies surveyed believe that their M&A function of getting the deal done is more important than what follows. If you’re in the M&A department, and you’re not performing M&A’s, something must be wrong, right? No, not necessarily. Inherently good deals are difficult to come by and you may have to pass on many of them before you find the right fit.

If deals contain personal agendas or emotions, or your company provides more incentives and encouragement to do the deals rather than not, than these are signs that your company may have deal fever. Recognize the signs so you can avoid deal fever and ensure you are making deals that have the highest chances of future success for your company.

Deal Fever

Treatment, Care & Medications For Deal Fever

Below are some treatment, care and medications for this contagious disease known as deal fever:

  • Treatment Option 1. Ensure your deal team is incentivized for long term success, and not just for completion of the deal.
  • Treatment Option 2. Have objective, experienced observers review the deal specs, including all of the potential negatives of doing the deal.  This way you can help ensure you’re not overlooking potential pitfalls.
  • Treatment Option 3. Let post-close executives have direct input into whether or not the deal goes through
  • Medications For Deal Fever. Create clear action steps that are to be taken when considering all potential deals. Create a set of red flags, or things to be looked at more closely when they occur. Finally, a healthy dose of objective observation by people not directly involved in the process will both help prevent and cure this debilitating disease!

A very important aspect in our guide on deal fever is to cultivate a business culture in which you have both risk tolerant and risk averse individuals on the team, with both groups having equal say. When both groups sign off on a potential deal, and it is also reviewed by an objective observer, you know you might have a winner!

sign up for deal management software

Don’t Underestimate the Power of Diet, Exercise & Rest

One of the most important ways to prevent deal fever that is often overlooked is to ensure you have a good diet, and are getting enough exercise and rest. Doing so will keep your mind and body in tip top shape, and will help alleviate some of the pressures incurred from pursuing and evaluating a potential deal. 

M&A deals are complex transactions that often go at a very fast pace and can also be emotionally charged, so ensuring you’re eating well, exercising and getting enough rest can help counteract the pressures of working on the deal.

The Takeaway

Many M&A management can sometimes lack a truly accountable leader to oversee the process. Having a great leader, coupled with the goal of long term success instead of short term, are the highlights of the best things to do to not get infected with this crippling disease. Set the criteria for success and focus on that more than focusing on doing the deal just to get it over with. Make sure your team is incentivized on long term goals and are not acting out of the fear of “what if we don’t get this deal done.”

If you and your team are currently managing M&A transactions, check out DealRoom's M&A virtual data room and project management software. DealRoom's platform also includes pipeline and integration management, which helps teams organize deals for their entire lifecycle.

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