The role of the PMO in M&A transitions

One of the most important aspects of readiness planning is establishing a Project Management Office (PMO).  All teams contributing to the transition should report to the PMO and we will outline the PMO’s role in Day 1 readiness.

The PMO is the ringmaster for the integration, providing centralized governance and coordination to keep the many teams involved in the integration on track. As described in my previous post, the PMO should include a PMO Director, Program and Project Managers, as well as a support team to execute programs and projects. The role of the PMO Director is to manage all functional-specific areas of the organization, manage enterprise-level projects, and the resources allocated to projects. The effort of merging two companies is complex, and the PMO’s oversight is critical to manage all the projects that need to be completed before Day 1.

Typically, all integration teams report to the PMO, providing status on key activities, achievements and issues to be escalated. To assist in continuity, the PMO may retain members from the due diligence team.

The PMO provides clarity around the program’s scope, goal, and expected benefits. It oversees governance, transparency, traceability, templates, standards, processes and procedures, and tracks the projects. The functional teams should address all major activities (e.g., finance and accounting, IT, HR, sales, marketing, operations, and customer service). While each functional team plays a key role, ultimately, the PMO and the overall owner of the integration, usually someone within executive leadership at the firm.  The PMO and this key stakeholder are responsible with ensuring the integration is successfully completed.

The PMO should break down tasks into individual projects, representing the key internal and external activities. Projects tied to internal operations should include meeting any legal or regulatory requirements, establishing financials, ensuring accounting and financial activities continue, and creation of critical operational reports.  External activities refer to the activities that are required to run the business. These activities are activities that directly impact customers and the public, e.g., help desk support, customer service, marketing, and sales.

Key stakeholders must be engaged to identify all the requirements and activities that need to be executed by the PMO.  A disconnect between what the PMO is doing and what the business is expecting is a common reason PMOs fail. Obtaining buy-in from key stakeholders sets up the PMO for success, and provides a designated business and IT leader responsible for successful integration. If potential roadblocks arise, buy-in with stakeholders will enable the PMO to leverage the stakeholders to help remove them.  Additionally, the PMO should also communicate success stories to both stakeholders and the organization as a whole. Doing so helps morale and boost confidence in key stakeholders.

As a part of the communication process, the PMO should be tasked with managing the Change Management effort. Not addressing the implications that changing systems, or processes will have on employees and customers creates a risk for the newly formed company.  The PMO oversees this function, as a successful integration depends on understanding and addressing change management throughout the planning process.

The PMO should set up a schedule all projects, key dependencies and a critical path identified.  The PMO should track progress of all projects, communicate with key stakeholders, and escalate issues as required. The schedule for each project should include a test period to ensure there are no surprises come Day 1. While testing is most commonly associated with technology requirements, in the context of Day 1 readiness, many more activities are included.  These activities may encompass validating training for customer-facing roles, and ensuring new policies and procedures have been effectively implemented. That said, IT systems must also be tested.  This testing must encompass all systems, whether they are directly impacted by the integration, or simply ancillary. A test plan must be created with sufficient lead time that any issues discovered can be quickly addressed, and retested.

With a strong PMO in place to guide integration activities and help keep the many players involved in an integration focused on the end goals, your organization will be well positioned to reap the expected value from the transaction and minimize disruption to customers and employees.