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February 7, 2022

Creating the Right Governance Structure in an M&A Deal

In a typical M&A transaction, two different people are leading the deal team and the integration efforts. But what happens when one person is tasked to do end-to-end M&A? Tomer Stavitsky, Corporate Development, M&A Lead at Intuitive Surgical, leads diligence and integration in his organization. In this article, he discusses how he ensures his acquisitions are successful from start to finish with the right governance structure. 

"In my experience, the person that does the diligence should be the same person that does the integration. Because whoever discovered the diligence findings can translate them into integration activities in real-time instead of handing them off to another person." - Tomer Stavitsky

Tomer has a unique role as he is tasked to lead acquisitions from strategy and diligence all the way through to integration. He says it can be challenging to manage the whole deal while trying to deliver a timely execution with all the planning that needs to be done. However, handling the transaction from start to finish makes guiding everyone easier as he is exposed to every part of the deal. 

Solid Strategy

Like every acquisition, it starts with a solid strategy. The strategy will dictate the target company you will be looking at and the team you will be building. Therefore, the strategy needs to be solid enough to enable the acquisition. 

To solidify and validate the strategy, Tomer does four things:

  1. Anticipate the trend of the target market - The goal is to understand where the market is, where it is going, what it is about, and determine the active players.
  2. Talk to the market - After gaining information, talk to the companies in the space to learn more about the market. You could also speak to the technology or product users and conduct market studies. 
  3. Focus on your thesis - Are you solving a problem by doing this acquisition?
  4. Monetize the Value - How do you profit from this transaction? It could be additional revenue, lower cost, better patient outcomes, or even a more efficient experience for users. 

This exercise will allow you to have a good idea of your potential target companies. 

Building the Right Deal Team

After picking the right target company and getting approval from your executive management, choosing the right deal team for the transaction is crucial. Tomer likes to start by sketching out the timeline and overall tasks required to finish the transaction. 

From there, he maps out the functions needed to accomplish those tasks to give him a clear picture of the people that need to be involved in the deal.  

The key to assembling your deal team is transparency. You need to get them on board and excited about the deal, so they should understand the deal strategy, the complexities that come with it, and the required timeline. 

Remember, these people have day jobs, and you need to know their availability and level of commitment before you proceed. What Tomer has found efficient is to ask them to appoint a backup in case any availability issues come up in real-time. 

Losing members in the middle of the deal can be devastating, especially since the functional team members are also doing the integration planning. This is one of the most effective things Tomer has seen from his experience.   

Setting up the Steering Committee

Having the right people overseeing the execution of the integration is also a huge contributing factor to transaction success. Typically, the head of the steering committee is the deal sponsor or the C-suite of the acquiring entity. The size of this team can vary depending on the deal. Here are some of the criteria that you should consider when choosing people:

  • Deal goals 
  • Timeline of the Deal
  • The complexity of both companies
  • Culture of the Target company
  • Corporate Structure
  • Issues found in diligence
  • Integration tasks   

These criteria will help you find the right people who have deep knowledge on the matter and who can fully commit their time to participate in this process. You must have membership from the management of both companies. 

The primary role of the steering committee is to make sure integration efforts go as planned, course-correct if it goes sideways, and keep the company's performance steady for a period of time.   

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