How to Build an M&A Center of Excellence From Scratch

Corning is a multinational company known for innovation and leveraging M&A activity to grow and cultivate value.

In fact, this mindset and way of operating has landed Corning on Fortune’s list of 500 largest companies multiple times, as well as making it a major supplier to Apple.

It is not surprising then that Corning has led the way in M&A best practices, such as change management and integration.

More specifically, Corning has established a model for other companies highly involved in M&A to mirror by opening a Center of Excellence, specifically tied to integration.

It should be noted that Corning plans to add due diligence to its Center of Excellence given the success of its integration focused Center.

Here, DealRoom interviews Phil Pratt, an integral player in Corning’s Center. He explains what the Center is, why it is valuable, and how other companies can begin creating their own Centers of Excellence. 

What are the benefits of having a center of excellence? 

Having a M&A Center of Excellence provides information, tools, and experiences to contribute to a strong ROI.

In addition, the Center allows for the capture and maintenance of institutional knowledge, which is especially important if you have lulls in M&A activity. Y

ou want to be ready to go when your M&A activity spikes again, and you do not want to have to relearn the process or move haltingly through the process.

Overall benefits include, but are not limited to, the following:

1. An improved return on investment, aka more M&A success
2. Smoother integrations (this is critical because with integration you are either creating or destroying deal value)
3. A robust foundation so mistakes are not repeated
4. The capture and application of knowledge, which drives efficiency and overall creates better outcomes
   

When should companies consider developing their own centers of excellence?

Companies should develop a Center of Excellence when:

1. M&A is a key growth strategy 
2. You have a very active portfolio 
   

5 primary steps to building your own M&A center of excellence:

Corning used a five step process to build its Center. Here we will dive into each step so that the process is practical and repeatable:

1. Develop initial concept - Clearly, this step serves as the cornerstone of the entire process. Here you are defining your vision, mission, scope, and governance. For instance, Corning established visions and mission statements that specifically spoke to the aims of the Center. In terms of scope, it felt integration would be manageable and is a key area where deal value is either created or destroyed. 
   

Next, roles need to be clearly defined. 

Corning employs four full time Center employees and then also has approximately twenty part time functional leaders combined with a handful of business representatives who provide business perspectives.

At this point, you might be wondering who are ideal team members for the Center of Excellence?

Pratt recommends pulling in top M&A folks who are both committed to and excited about M&A - spirit is essential here. These individuals work diligently to ensure their function progresses. 

Once roles are defined, it is time to think about governance. At Corning, the Center itself does not have a reporting structure, though the four full time employees report up to Corporate Development.

Overall, the Center staff maintains and executes as a self-sustaining team organizational structure. 

2. Gain buy-in from team and stakeholders - Gaining buy-in from the team and stakeholders was not a difficult task at Corning as people understood the rationale and value behind the Center. Certainly, M&A Centers of Excellence will look differently depending upon the individual company and what it values; this, in turn, will alter how the Center is presented to stakeholders. 

3. Collect and design processes and content - At this point, the Center needs to develop a knowledge repository and tools. An especially important part of this content is cross-functional tools. Examples of content and tools in Corning’s Center of Excellence include: “Integration Assessment Tool,” which serves as a way to preview and predict how complex a specific integration will be, “Master Integration Plan,” which includes a list and timing of critical integration steps and tasks, and a “Lessons Learned” database sorted by function. 
   

Now having tools and resources is great but pointless if people are not using them or are unable to find what they need. With this in mind, you’ll want an overlay of search functions.

In addition, the tools and information should be easy to use - both accessible and organized.

Of course, it takes effort to maintain and update this information. At Corning, the four full time employees are generally in charge of maintaining the information and tools.

In the early days of Corning’s Center, high levels of new information, tools,and lessons learned were being added, and a full review of content was done on a quarterly basis; now that the Center is more established and things are changing less frequently, this review is done semiannually.

A clear takeaway here is that the amount of review is directly correlated to where the Center of Excellence is in its lifecycle.

4. Launch and execute - When the Center and its website and tools are ready to go, it is critical to communicate not only that the Center is available, but also how to utilize the Center and locate its tools and resources - demonstrating how to use the Center’s resources is key. Taking the time to answer questions about the Center is also recommended. Overall, the success of a Center’s launch is hinged upon strong communication and modeling skills. 
   

5. Train - Building upon the communication surrounding the launch, create a training curriculum that is oriented to program and functional leaders during integration - this will ensure tools will not just sit in the Center, but will actually be used and provide practical value. Of course, it can be challenging to get people’s attention, but having the right people and robust training helps. Additional suggestions from Corning surrounding this include:

• Link functional leads to Center leads
• Make sure everyone understands the value of the Center so it will be seen as a valuable resource to engage with regularly 
• Include Center training in the integration kick-off meeting
  

Conclusion

While there will be significant variance in the shape a Center of Excellence takes depending upon each organization, there is no doubt Centers of Excellence propel companies forward in their M&A practices.

Consequently, Centers are quite dynamic - tool sets are updated, new lessons learned are created, and sometimes new members are added to the Center’s team based on specific business needs.

This all means the best Centers remain Agile and evolve overtime.

‍