Mergers & Acquisitions – and The Role Project Portfolio Management Plays
For months, there were whispers around the breakroom. And then, at the last company meeting it became official. A business merger is on! And you had just gotten used to the latest (now “old”) company logo.
What will happen with the massive reorganization project, which we only started six months ago? Will this now be canceled now? And the new people supposedly work with software colossus ABC. We just got rid of that - it was such a pain!
So the question is: what role does project portfolio management play in mergers & acquisitions?
The Project Portfolio Turned Upside Down
Merging with another company, regardless of whether it is a merger or a takeover, is often described in superlatives at the management level: new markets, new synergies, new products – today Fenwick, Connecticut, tomorrow the world. But first, the project portfolio grows. The merger is
merely a program consisting of a multitude of projects for the consolidation of administration, IT, corporate culture…, etc.
The project portfolio, which was still valid yesterday, is thus turned upside down because as a rule, the integration project now takes top priority. And then the “newcomers” bring along their own project portfolio, their own project portfolio management process and their own tools.
Change Management Under Time Pressure
I have witnessed such a corporate merger that even after several years, still wasn’t complete. And I often encounter customers that are basically unavailable for months, while they go through a merger or acquisition. “No time – we’re merging!” they say.
And this is where the greatest danger lies – even from the point of view of change management. If day-to-day projects are stopped and existing commitments are postponed due to too much capacity being relocated into the integration project without proper planning, it can quickly lead to unwanted consequences – both externally and internally. The same goes for the opposite: blindly continuing existing projects that are no longer a priority.
What happens: Employees are frustrated, capacity is wasted or not used optimally, important projects are delayed, and budgets are invested incorrectly.
It can not only be about the success of the merger but also about preserving the substance of the company. Therefore, one should be aware of the effects a merger has on the project portfolio over a period of time. Timely scheduling of the merger into the project portfolio of each individual company involved helps to clarify the actual capacity requirements as well as the direct impact on the existing portfolio. Yes, we want to merge, but how do we secure our customer obligations? The focus on integration must not mean neglecting important projects. The importance of the role of the Project Management Office is to orchestrate the integration as described by Allen Koivo in this blog article.
A Merger Is Also a Project
Ideally, the project “Fusion” should be planned and evaluated from the outset as part of the established PPM process. Which sub-projects are connected with this, and in what chronological order do they need to occur? Which employees are needed for this? And what are the consequences for the existing project portfolio? Timely recommendations for action can save a lot of time, money, and nerves.
In the second step, as part of the integration, the project portfolios of the participating companies must be reassessed and eventually merged. Which projects have become irrelevant or worthless as a result of the merger? Which projects are new? How can the new, larger resource base be used most effectively?
First of all, it is necessary to define new strategic evaluation criteria for the resulting overall project portfolio. These should take into account the new priorities and fields of action arising from the merger. Suddenly, the main goal is no longer to serve existing customers, but to quickly tap into the newly available markets, or to strengthen the resulting corporate brand through intensive marketing. Rescheduling the capacity of Old World projects into the New World in a timely manner helps track these new priorities quickly and effectively.
At the same time, PPM governance must rapidly become unified within the new organization. The process should ensure the ability to act and result in effective project portfolio management. This will allow the new organization to maintain its strategic planning level and respond quickly to unforeseen events. Simple, fast, effective – PPM should not be rocket science, rather a supporting tool utilized before, during and after a successful merger.