When two companies merge together, there will be overlaps that result in winding down functions. But what happens when there are two functions that perfectly complement each other? This article will talk about how AMD acquired Xilinx and how to introduce M&A to a large company, featuring Jeff Henig, Vice President of Corporate Development at AMD, and Dan Menge, Head of M&A Integration at AMD.
“Playbooks are only as good as the people using them and their knowledge.” - Dan Menge
When AMD acquired Xilinx, they had a very seasoned strategy team with little M&A experience. Xilinx, on the other hand, had no strategy team but was the more experienced acquirer among the two including the integration team. As a result, AMD decided to bring the teams together to get the most out of their skills and combine into one big M&A function.
When introducing M&A to a larger company, find out where they currently stand. Understand the culture of the company and its willingness to receive new processes. Determine who the decision makers are inside the organization.
Also, take into consideration that the cross-functional teams are all new to the processes. The cross-functional teams have existing work outside of M&A and the worst thing to do is overwhelm them. Start light and small to build the muscle memory of folks across the organization. The goal is to educate and expose them to the processes so they can digest things easily.
Build playbooks. Every corporate development team needs a playbook for folks with no deal experience and for future improvements. The playbook should contain comprehensive details regarding the process from strategy, to targeting, and all the way to integration. The playbook should also provide templates, key deliverables, and governance structures that will promote muscle memory for future transactions.
To execute M&A effectively, the corporate development team must be fully aligned with the integration team. Consistent messaging to everyone throughout the transaction is paramount to success. Dan and Jeff are able to achieve this by going to meetings and doing diligence together. Their ability to work together and be in constant communication has been a crucial aspect of their success.
Another best practice is to ensure sponsor engagement. Ensure that sponsors are committed to the deal in addition to their day job. Sponsors are the ones that will inherit the business post-close and must be dedicated to seeing the deal through.