False Prophets in PMI: Costly Layman’s Advice

Maybe you have contacted a consultancy firm you are working with, or reached out to an agency supposedly specialized in providing the exact right candidate for your post-merger integration project. That’s great – because you have already internalized one of my nine key rules for a successful post-merger integration, namely

Rule #4: Resource your program with top people.

Gladly, I receive calls from those consultancy firms and agencies very regularly (I mean – c’mon, that’s my business model) because it is not them who will support you, but people like myself: The true experts.

Let me give you an example: Recently, I have been called with a project inquiry. The agency read a project brief to me, but couldn’t say whether the target would be acquired in full, or whether we were talking about some sort of limited investment. Moreover, the request was for a three-month integration period, phasing out the consultant gradually towards the end. Yet, there was no clear picture of what the target operating model should look like, let go the investor had an integration plan. Clearly, neither client nor agency had a realistic view on complexity and implementation timeline for a project like this. Oddly, more than half of the conversation was circling around terms and conditions, including my daily rate and potential travel expenses, indicating the agency was a lot more concerned with making their cut than with helping the client solve a problem of strategic dimension.

It took me five minutes to understand the client was setting up himself for failure, and that he needed profound consulting from someone seasoned with the experience of several PMI projects, from design to execution. More concerning, it took me only two minutes to comprehend that those supposed to provide the client with expert support had no clue what they were talking about.

A failed PMI project is not only costly, it can take down an entire business, alongside with its management. So please, dear potential clients, be sure to hook up with someone who takes a genuine interest in your business, and demonstrates at least a basic understanding of the challenge you are facing. At times, this might not be the consultant or agency you (or your procurement department) are used to work with. Google is your friend.

For your needs in post-merger integration or carve-out, you don’t even have to google – the expert is right here, at your fingertips.

Project Management: Sitting on a Beach or Managing Exposure?

If I had a crystal ball to foresee the future, I’d sit on a beach and sip a cocktail. Well – I don’t.

In fact, very likely at the time I can lay my hand on the proverbial crystal ball, everybody else would have one, too. So, in a way, I am glad there are no crystal balls helping me or anyone else to predict what is going to happen: It would destroy my business model as a consultant and project manager, as I manage my clients‘ exposure to risk.

Project Management = Risk Management

Mostly I lead transformation, carve-out and/or post-merger integration projects. Such projects are very complex, and high complexity generally translates into high risk. Many a thing can happen in the course of such programs: System failures, resource issues, a pandemic breaks lose, loss of key people, roadblocks with the works council, unforeseen regulatory hurdles…. You name it, I’ve been there.

Unfortunately, ambiguity lies in the nature my daily business, and dealing with it is one of my core challenges. Hence, I manage my client’s exposure to unwanted outcomes by predicting what might happen, and find ways to either prevent it, or at least prepare for it. The classic risk register is a simple, but proven tool to collect risk information, and hold a catalog of mitigation strategies.

Risks to the Project Timeline

Usually, I am working to a set timeline in my assignments. (If there was no timeline set by the client, I will set one: Swift implementation is a key success factor in PMI scenarios in particular. Procrastination never adds value – compare my article on the subject.) Since anything is connected to everything in transformation projects, understanding and management of functional dependencies is critical to project success: There are no ivory towers in my line of work, and if there were, they needed breaking down.

Since sequential task completion does not work in complex environments, many activities run in parallel; they are interconnected, and yet I have to give the project direction based upon incomplete information and projections. In the interest of time, I make assumptions of projected outcomes and schedule accordingly. Failing to do so, waiting for hard facts instead of applying probabilities to potential alternative events and outcomes will most likely lead to missing the overall timeline.

Conveying the concept of dealing with ambiguity, of being at the ready for a desired outcome, but at the same time prepare for the unwanted, is a project manager’s key competence. It takes conviction, persuasive power and a very good understanding of the project, functional interfaces and dependencies to succeed.

A regular, open and healthy exchange of information on progress, risks and new dependencies across functional workstreams will facilitate cross-fertilization, risk-flagging and early alignment. The good old stand-up meeting presents a great stage for key team members to report on their tasks ahead and challenge others. Be sure to make this a firm part of your team’s schedule.

Integration Pitfalls: Nine Simple Examples of What-not-to-do in Post-merger Integration

Learn from common mistakes in post-merger integration, and unlock the power of prevention strategies for your program’s success. Based upon real-life experience, I have summarized what can go wrong in design and implementation of an integration project, and how to avoid ever-the-same mistakes.

A must-read booklet for any program manager.

Click here for your free download. No sign-up – no obligation.

Follow These Nine Simple Rules Making Your PMI Project a Success

To unlock the secret success factors of post-merger integration, download my free guide right here.

On 19 pages total, I have pulled together best-practice approaches on setting up and running a post-merger integration project: Not overwhelming in terms of detail and process, but sufficient to give Management an initial handle. There is only nine rules to abide by. Following them will increase your odds for PMI success dramatically.

Join the community and build your own PMI expert know-how. Please reach out for a free consultation – confidential, non-binding, and no obligations:

Email:  info@de-mcs.de

Phone:  +49 1577 194 1164

PMI Program Director in Qualitest’s Acquisition of telexiom

Qualitest Group, the world’s leading AI-powered quality engineering company, has announced the acquisition of telexiom GmbH, a Cologne-based specialist in IT consulting and services. Qualitest is owned by Bridgepoint, an international private equity group.

I am proud to drive integration between Qualitest and telexiom in the capacity of PMI Program Director on behalf of Global PMI Partners, who have delivered several integrations for Qualitest in the past.

Click here for the corresponding press release.

PMI – Building Internal Capability

Following an acquisition, integration is no cakewalk. It is, in fact, much harder than signing the deal.

Unless you are a frequent acquirer, and have (successfully) completed a number of integrations, there is a high probability of being unsuccessful in realizing your strategic and financial acquisition goals: 50-70% of failed acquisitions (depending on who you ask) speak for themselves.

If you want to win a 10.000 meter-race, the keys to success lie in practice and creating the right conditions to excel. The same applies to acquisition and post-merger integration: A coach, training and repetition of the exercise increase the likelihood of a win tremendously.

If you are planning an acquisition, and view inorganic growth as an integral part of your strategy, internal capabilities will warrant a prosperous and rewarding program implementation. I will work with your M&A team to develop the right post-merger integration approach, and will train your team for future projects:

  • Development of the target operating model
  • Building and leading a strong team
  • Implement project governance and transparency
  • Drive cultural fit
  • Advise on internal and external communication
  • Identify the right KPIs for Controlling
  • Manage the timeline
Getting back on track is not easy, but not impossible either (original photo by Snapwire on Pexels)

Even if your project seems off track already, it is not too late to fix it: Doing nothing is usually not the best option.

I have successfully completed multiple PMI projects and can help you to get to the finish-line, too.

Based out of Germany, Diethard Engel is an independent consultant and interim manager, focused on Business Transformation, Post-merger Integration / Carve-out and Executive Finance. He has run multiple post-merger integration/carve-out projects for international businesses.

Why navigating PMI is so important

Any post-merger integration project is a critical exercise – in case of failure it can take down entire corporations, or at least their management.

Remember the merger between the US carmaker Chrysler and the German manufacturer of luxury cars, Daimler? Daimler’s CEO, Hans-Jürgen Schrempp, celebrated the 38b DM-deal in 1998. After seven years of merger-struggle, he resigned in 2005. Eckhard Cordes, responsible for Daimler’s strategy, was earmarked as Schrempp’s successor, but left the Corporation after Dieter Zetsche had been nominated new CEO.

The merged business became unmerged again in 2007, and Private Equity firm Cerberus took over Chrysler. McKinsey estimated Schrempp’s damage to run at an unfathomable 74b US$, making this one of the top capital-destroying mergers ever.

The DaimlerChrysler merger of cause has been of gigantic dimension, however, the reasons for its failure are not uncommon at all: Cultural differences, incompatible strategies, management distraction, unclear integration focus – the same drivers letting post-merger integrations of all sizes fail (compare my blog contributions „M&A Pitfalls“).

Navigating PMI defines leaders

Below the line, the way the CEO navigates PMI does not only define his contribution to value creation (be it positive or negative), but it defines him as a leader. Great leaders don’t only understand strategy, but they also nurture the necessary talent and know-how to implement it. Any post-merger integration is part of a critical strategic program, and should be treated as such. That’s why resourcing a PMI program with top people is a – if not the – critical success factor in PMI management (compare: Inside Post-merger Integration (4): Drivers of Success).

Based out of Germany, Diethard Engel is an independent consultant and interim manager, focused on Business Transformation, Post-merger Integration / Carve-out and Executive Finance. He has run multiple post-merger integration/carve-out projects for international businesses.

M&A Digitization Week Europe 2021

powered by digiweek M&A, June 14 –18, 2021

This week I am participating in a key event for the M&A community: M&A Digitization Week 2021. Players from software makers to consulting firms will present and discuss hot subjects from my line of business.

Digiweek M&A will be held for the first time this year in digital format from 14 to 18 June. The target group is all M&A professionals interested in tools and solutions to facilitate the M&A process.

The digiweek M&A is organised by M&A Media Services GmbH together with the content partners M&A REVIEW, German Association for Mergers & Acquisitions e.V. (BM&A) , Fusions & Acquisitions and M&A REVIEW EUROPE.

M&A Pitfalls: We will not shed any people!

Decisions on people, their jobs and future are often the hardest. They have to be taken anyhow.

No one likes to communicate unpopular decisions, however, avoiding decisions on people and their future is not helpful in most cases, and certainly not in M&A scenarios. Yet, Management frequently chooses the easy way out and prefers to communicate that there will be no job loss with the merger. More often than not, that’s a promise which cannot be held up. (Also compare my contribution „Setting up Merger Communications“.)

Consolidation of functions and departments (HR, Finance….) usually goes along with a reduced resource need, starting from the heads of department, and ending with the lowest qualified positions. Duplicity of roles is commonly not warranted, neither under a cost perspective nor for organizational clarity. In the new setting of a combined business qualification requirements may change (in IT, for example). Also, holding people in undefined roles will lead to frustration and unhappiness.

Overall, mergers routinely create the need to deal with redundancies – it’s a fact, and should be accepted and communicated as such. Ultimately, reality will catch up with Management, and spreading a message which will be proven wrong over short or long will eat into leadership’s credibility.

Prevention strategies include:

  • Development of a TOM and role definitions for key personnel.
  • Leadership changes are not inevitable, but common. Communicate it.
  • Early involvement of works councils to manage expectations.
  • Prepare the organization for changes.
  • If the future is unknown, say it, but at the same time point out specific future decision points in the integration timeline.