Mergers and acquisitions: nested processes

Baran Erkel is the Vice President of Corporate Development at Nintex. His role takes him around the world investigating new technologies, products, and companies that could contribute to the growth and development of the Nintex Process Platform.

With years of experience in mergers and acquisitions, we asked him what kind of difference good process management makes.

Culture and process

“After culture and people, nested processes are the most important factors in terms of successful acquisition or merger,” Baran says. As the man who steered numerous successful acquisitions for Nintex, he’d know. He’s unequivocal that the quality of processes and their management on both sides of the acquisition relationship can make a significant difference to everyone involved.

“Organizations are about people, so that’s always going to be number one. We spend a lot of time on culture and employee engagement,” he explains, “But the process has an impact there too.” Understanding that impact and how to reduce it through better process management is an important strategy for any acquisition.

Nested processes

The entire exercise of an acquisition, from setting a strategic direction to completing due diligence, is a series of nested processes. Each major step in the sequence is made up of other, more granular procedures and activities. Some of those are easy to identify and follow, with strict legal and accounting policies and requirements. Others are more fluid, depending on the size, nature, and relative maturity of the new acquisition. What many people fail to consider, Baran suggests, is the place of a business’s process management in these steps.

“People typically think of data integration, as a big part of a merger or acquisition,” he says, “but that’s really table stakes. You know you’re going to integrate. Things like your CRM and core systems; that’s going to happen and honestly, it’s a systems exercise. It’s typically not that complicated.

“I’d say the process part is more important because it’s how the people are going to work, day to day, and how the new employees are going to become effective.” Understanding the processes that exist – and the ones that don’t – provides a clear picture of what can be easily translated, and what needs to be more carefully rebuilt.

Focusing on the ‘how’

As the merger or acquisition proceeds, more people become involved. Baran typically brings in technical experts and connects them with their counterparts in the new organization, fostering conversations about how they operate. He’ll connect the Customer Support lead, for instance, with the head of the customer support team they’re acquiring and begin to build a picture of how it’s structured and what support looks like in that organization.

“It’s to understand how the company operates, to start planning for integration; to start asking how we could make the combined company successful.” This is where process management becomes key. There’s a lot of asking questions and ‘looking under the hood.’ If an organization hasn’t got clear processes, it can slow down the whole exercise.

“The idea is, throughout the questioning and discussions, you’re really trying to understand how things are different and where the gaps are. You need to know how you’re going to migrate or transition into the final state, and even if that state needs to change.”

In an ideal world, both organizations would have well-documented processes that could be compared side-by-side in a gap analysis.

However, that’s rarely the case, so the ability to quickly capture and map processes becomes vital. It allows an organization to create a picture of the procedures and practices they need to adapt or integrate and gives shape to the conversations going on.

The Nintex Promapp® experience

This became vividly clear when Nintex acquired process mapping and management company Promapp in 2018. While Nintex was well established with robust procedures across the business, Promapp had taken it to the next level.

“Typically you’re acquiring a startup,” Baran says, “and their processes are usually not that well defined. A small company doesn’t really have time to document things comprehensively, and then typically they’re joining an organization that’s a little more mature.”

Not so with Promapp. The team’s product is a world-leader in process management that effectively engages business teams to pursue process excellence, and they staunchly used what they sold. “It was a little funky,” Baran laughs. “Because we were buying an organization that has really defined process management, and loves it and uses it. Their processes were very mature, and we had some catching up to do.” This wasn’t a hurdle though. In fact, it made much of the transition easier.”

Generally speaking, it’s more important that the acquiring company has mature, well-defined processes. These will be the end state, so having those as clear goals makes planning easier. However, if the target business’s processes are also well documented, the transition becomes smoother.

“Those processes are probably going to change or go away,” Baran says, “But by having them defined you can easily get the information you need to figure out how to map them into your own, or transition those people and processes into the end state.”

Building on success

Taking on an entire business within an existing enterprise isn’t easy, even with processes in place. Nintex found they were reviewing procedures on the fly as Promapp teams were integrated into the wider organization.

However, even that was more manageable due to the Promapp tool, now referred to as Nintex Promapp®. The cloud-based process management software solution provided a clear and central source of truth for teams from both sides of the equation to collaborate and capture the rapidly evolving state of the processes. One great example was the integration of the sales organizations.

“It was extremely helpful that we could document the processes in Nintex Promapp,” Baran says. Clearly mapping processes like forecasting, quoting, and order fulfillment not only helped us integrate sales operations more efficiently, it also provided a great foundation for training our new colleagues on how to do their jobs in their new home. The team from Promapp actually drove that effort, bringing process management expertise to the table with their subject-matter expert counterparts at Nintex.”

That focus on effective process management continued to pay dividends when it came time to migrate their legacy CRM into Salesforce. What could have been a frustrating and drawn out experience was completed in two weeks, with an estimated improvement in efficiency of 75%.

“There’s a lot of time spent on knowledge sharing and understanding,” Baran says, “but being able to use Promapp made those conversations more effective and efficient in terms of understanding.”

What’s more, the lessons learnt there and the robust processes that resulted from the integration made for a smoother ride for the EnableSoft sales team when they came on board in 2019, following Nintex’s acquisition of the robotic process automation company.

Reducing the risks

A major undertaking like an acquisition or merger carries with it inherent risks. Many of these can be managed through due diligence, but there are still hazards that need to be navigated during the integration phase. The experience of merging two organizations can be unsettling for staff and customers alike, and that has financial implications.

“People naturally have questions,” Baran explains. “Will I like the people? Will I know how to get my job done? How does this company work? Good process management takes a big part of that uncertainty away.” By providing clear paths forward for old and new staff alike, effective processes ensure efficient transitions to maintain business momentum.

The use of effective business process management software also reduces the risk of something going wrong in the integration. “These things are complex. There are a thousand moving pieces, and the more prepared you are around your processes the less risk you have. That really matters because if you get something wrong it will impact on people’s experience, and that will impact on business results.”

If the changes aren’t well managed, you could find employees less engaged, and staff turnover could spike. There’s also the possibility customers that come with the new acquisition will be affected negatively. “You’re trying to welcome those customers. You want to make sure you support them well, and that you communicate with them well, because that will have financial implications.”

Making processes matter

As the pace of business across the globe continues to accelerate, acquisitions and mergers will continue to form a significant part of enterprise-level strategy. Startups will rise, evolve, and become part of bigger corporations that can lift them to greater heights while leveraging their unique propositions. That creates numerous opportunities for growth and expansion, and just as many pitfalls.

Baran is confident though that these experiences can be navigated successfully when process management is kept front of mind. “If you’ve got clear processes, and if you can capture the existing processes effectively, that just makes the whole exercise easier. Nintex Promapp demonstrated that. It just highlighted the value of having sound process knowledge and good management practices.”

 

 

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