Structuring a kick off meeting
1. Establish/frame governance
2. Get the right personnel involved
3. Start prioritizing tasks
The process of due diligence is often classified as chaotic, stressful, and fast-paced and, historically, nothing drastic has been done to disrupt the way this procedure is approached. We now know, however, Agile methodologies for M&A practitioners have proven to improve diligence speed and quality.
Agile, while not a panacea, can greatly break teams out of their tradition of ineffectively working in silos, bringing them together to improve the process of diligence and worker morale. The buy-side in particular can play an important role in bringing in Agile principles to diligence.
First, the buyer must realize the target company may never have been through M&A before. Here, the buy-side can utilize Agile principles to create transparency, develop lines of communication, and ease the stress, and perhaps mistrust, of the target company; doing so will help the deal progress at a faster rate and eliminate deal fatigue.
Conceivably, one of the best ways to accomplish these goals is to hold a kick-off meeting. A strong kick-off meeting should set expectations for the process of diligence and accomplish the following:
In order to work quickly and efficiently, employees on both the buy-side and the sell-side need to have clearly defined roles to which they will be held accountable - a key component of Agile’s methodologies. Teams of employees should be led by a team leader or manager who will communicate with the other teams.
Another aspect of establishing governance at the kick-off meeting is setting the cadence of meetings to follow. We recommend the first meeting be scheduled only a few days after the kick-off meeting. This will allow the buy-side to see the target company’s velocity - what it can do and how effectively its members are working.
Moving forward, teams should have daily, or almost daily, stand-ups to maintain momentum and transparency. More formal meetings should be scheduled as needed; no meetings just for the sake of meeting in the world of Agile. We often find having the stakeholders assemble a couple of times a week is the norm, although with Agile things are adaptable and flexible based on the situation at hand.
Lastly, it should be noted these meetings are a great mirror to help teams see their progress. This allows not only for an honest view of what work has been done and what obstacles might lie ahead, but also provides a powerful way to boost morale and to support employees as they can see what they have accomplished and how these accomplishments aid the entire process. This, in turn, will encourage them to keep going during this taxing time.
The kick-off is also the time to figure out who needs to be involved in the diligence process. Making sure the right people are included and connected helps to fill in the gaps so the buy-side can get a complete picture of the target company and collect as much information in a short amount of time as possible. We believe it is okay to have a lot of individuals involved.
Traditionally, during M&A, the brunt of the workload is taken on by a few key players; however, with an Agile approach and specific, clearly defined roles, more people can be involved and the process can still be more efficient because you are pulling in individuals with very specific knowledge and experiences related to the business.
Prioritizing tasks is essential to simplifying the process of diligence and eliminating wasted time and redundant assignments. At the kick-off meeting, the buy-side can be a catalyst for this prioritization by providing a rough outline of the deal’s milestones, such as identifying what tasks need to be completed by signing and what tasks need to be completed by closing.
Prioritizing then shifts to focusing on small steps. From a buyer’s point of view, we tend to only provide just enough information to get the team member to the next step or task.
The reasoning behind this outlook is we do not want to waste time doing things incorrectly or doing things that turn out to be inconsequential. Rather than completing 100 tasks with a checklist-like mentality, and often times having to redo 99 of them, we would prefer to have one assignment of significance done well. With this in mind, we would ask the target company to complete three specific key tasks by our next meeting.
A proven Agile method of prioritizing is to have one team member responsible for establishing the group’s priorities. Tasks should not simply be labeled as “high” or “low” priority, but rather they should be ranked in descending order of importance so it is crystal clear what the most important next step is.
Additionally, some teams may choose to set up a Kanban board or dashboard (physical or virtual) to track tasks.
Establishing governance, prioritizing tasks, and ensuring the appropriate team members are engaged should culminate in increased communication and transparency, which will allow your team to move through diligence able to predict problems, reduce wasted time, and beat deal fatigue.
We all know in many situations there are only a couple of weeks to identify risks and to make a decision; in these cases, there is no way to review everything so the transparency yielded from a more Agile approach becomes all the more valuable.
Additionally, clearly defined roles and prioritized tasks will keep employees and stakeholders on task, moving forward, and, hopefully, will eliminate the all too common pitfall of a majority of the work falling on the shoulders of a few, already busy, upper level management.
In closing, Agile philosophies can revolutionize the process of buy side due diligence by enhancing speed and efficiency and reducing deal fatigue. The buy-side can intelligently utilize its kick-off meeting to plant these Agile seeds, setting the tone for a more successful process.