Effectively aligning multiple decision-makers with the right data to inform critical M&A choices remains a challenge for private equity (PE) teams. As one PE partner aptly described it, "it can sometimes feel like trying to herd cats."
The Data Sharing Dilemma:
A key aspect of this challenge involves managing risks identified by advisors during due diligence (DD). These risks,along with the associated data, need to be communicated to a wider audience beyond the core deal team. This includes the Investment Committee (IC) and various functional heads (legal, risk, tax, ESG, etc.).
The Current Landscape:
- Information Overload: Deal teams and advisors grapple with vast amounts of data during DD.
- Communication Bottlenecks: Summarizing and disseminating this information efficiently and accurately to multiple stakeholders proves difficult.
- Pre-IC Approval Hurdles: For teams requiring internal expert sign-off before IC meetings, the challenge intensifies.
The Peril of Unstructured Communication:
Relying on ad-hoc emails, interim reports, and update calls to share critical risk data creates a high risk of:
- Inefficiency: Time-consuming processes hinder timely decision-making.
- Information Silos: Crucial data may be overlooked or misinterpreted.
- Missed Risks: Unstructured communication can lead to critical risks slipping through the cracks.
Beyond the Analogue Approach:
Many PE teams acknowledge the limitations of their current "cat-herding" communication methods. Common practices include:
- Forwarding advisor emails to broader teams.
- Creating condensed presentations or Excel spreadsheets based on advisor reports.
- Summarizing internal expert insights from IC memos.
- Scheduling meetings to discuss and manage key risks.
The Need for Streamlined Communication:
A clear consensus exists among PE teams regarding the need for a more streamlined approach to communication during M&A transactions.
Share Your Insights:
Does your organization have efficient communication channels for sharing critical M&A data with decision-makers? How can we improve the flow of information between deal teams and key stakeholders? Let's discuss strategies for fostering informed decision-making throughout the M&A process.
