December 18, 2020

Doing Deals Remotely: Long-Form Memos as Collaboration Tools

I wrote a bunch of due diligence memos back in the day.  My magnum opus was a 200+ page masterpiece of monotony summarizing the results of my team’s review of acquisition & financing files for a conglomerate that had acquired over 100 subsidiaries in a period of just over three years. It cost the client a bundle, and although they insisted we prepare it, I’m not sure that anyone ever read it. But I guarantee you that all of us who collaborated in writing it knew a heck of a lot about the target’s businesses when we were done.

I’m sure that memos like these still get prepared on occasion, but I don’t think they’re as common as they used to be. Written work product tends to be in the form of succinct, digestible bullet point formats. But this recent CFO Dive article suggests that these long-form writings may be the key to successful collaboration among deal teams compelled to work remotely:

Every M&A playbook is different, and when unexpected issues arise, I’ve relied on the ability to address them by walking over to my colleagues and working through the details together in real time. Unable to do that, we experienced some miscommunications, particularly while preparing to integrate the two companies. To avoid misunderstandings among our internal teams, we changed our communication style to longer-form writing using collaboration tools such as Google Docs, with more detailed explanations of context, constraints and possible paths forward.

Somewhat ironically, the best tool I found for aligning our team around an acquisition strategy in our new remote working world is long form writing — an old skill the business world has long abandoned for bullet points on slide decks.

To be fair, technological advances have been changing the human dynamics of deal making for a number of years. For a long time, this is how you executed an M&A: After an acquisition was proposed, team members put their lives on hold to spend days in a “war room” reviewing diligence material, structuring the transaction, and negotiating with the other party in the deal. There also were the hours spent assessing the deal’s impact on expenses, tax, intellectual property and many other issues for which various internal teams were responsible.

These complex assessments were written up in long form — sentences and paragraphs that the deal team had to take time to read and synthesize. The physical “war room” gave us a place to work together yet separately, sometimes digesting analysis on our own and other times digging deep into the implications of these complex issues together.

The article argues that document collaboration may not be as ideal as these old style “war rooms,” but is a better alternative for aligning deal teams than PowerPoint slides and instant-messaging.

John Jenkins