I’ve never seen anyone talk openly about breaking M&A down before;
it’s unusual in this specialty, whose usual focus is only on the price of
the acquired company. I was impressed with Microsoft’s ability to get
predictability in M&A: Over budget one year to under budget the next is rare.
Although it is sometimes argued that M&A transactions are immune from
value-based techniques, Microsoft & Perkins Coie prove this wrong. Value
concepts work everywhere and on any matter type.
Perkins Coie also participates in Microsoft’s Law Firm
Diversity Program, a pay-for-performance initiative
to promote diversity in the legal profession; diversity
goals are incorporated into the staffing process.
“This is truly innovative,” says Landefeld. “Many
commercial businesses and law firms put a value on
diversity, but in this case the staffing plan actually
reflects diversity on the deal, including the qualifying
number of hours worked. Further, we can review
those diversity staffing numbers midstream and make
adjustments. It’s a very unusual way of looking at
diversity on a transaction basis.”
Dolliver says that the approach benefits legal
outcomes. “These diverse teams have brought a
wider range of ideas to bear on overall deal
management and to process improvements,” he says.
The second phase of the project was designed to track
its success. Microsoft and Perkins Coie meet every
other week to discuss the docket of pending M&A
deals, progress, budget and any issues. For new deals,
they discuss the drivers of the deal, the anticipated
structure, likely areas of focus for due diligence, team
diversity and geographic focus.
“We like this practice because it adapts to the nature of
M&A work,” says Dolliver, who agrees with the “dark
art” characterization. “It’s not prescriptive; it’s flexible.
We set expectations, then we iterate when adjustments
are needed.” Microsoft does eight to twelve deals with
Perkins Coie annually and between 10 and 20 total.
“Volume makes the system better by creating more
precedents that facilitate predictability,” Dolliver says.
“The semi-weekly check-in evidences
Microsoft’s realization that making
adjustments midstream gives you much
more leverage than a post-deal analysis,”
says Landefeld. “Only by having done a
prediction can you shift.”
Several process improvements have arisen from these
regular conversations, including identifying team
leads for each core substantive area, who manage
their respective teams and reduce unnecessary churn
in communication. They also developed standard
operating procedures and a protocols checklist for
intellectual property in M&A deals.
Although not a cost-cutting move initially, Deal 360
has enabled Perkins Coie to maintain time charges
that were 17 to 40 percent under budget on deals
in 2013. Budget predictability has been greatly
enhanced; in fact, forecasting accuracy has increased
by 30 percentage points, according to Dolliver.
Even so, the team hasn’t achieved the degree of
predictability it would like. “We thought that if we
had enough volume of the same sort of transaction,
we could create a highly predictive model for
budgeting; and that would enable a fixed fee, which
ensures absolute predictability,” says Landefeld.
“Variability is driven by circumstances around the
target,” Dolliver explains. “The matrix doesn’t capture
elements such as the personal feelings of stakeholders
or variability on the Microsoft side.
“Every deal is still different because the people
involved are different.” n