Building a Core Competency in Mergers and Acquisitions

Building a Core Competency in Mergers and Acquisitions

by James J. Caruso, CPA, CGMA | Dec 02, 2020
Pennsylvania CPA Journal

At many middle-market companies, mergers and acquisitions (M&A) are few and far between. But if your company’s strategy includes growth by acquisition, M&A needs to be a core competency. Fortunately, this does not require staffing a large internal transaction group. It is more about defining a disciplined and replicable process – a playbook – and cultivating the organizational knowledge to execute.

While it is beyond the scope of this article to detail the life cycle of a transaction, the phases of the acquisition process provide important context. These phases are sourcing potential targets and building a pipeline, screening for strategic fit, determining preliminary purchase price for a letter of intent, performing due diligence, negotiating the purchase agreement, and then closing and integration. Building a core competency requires developing and documenting a formal methodology around the transaction process; creating the appropriate tools, templates, and deliverables for each phase; and addressing human resource requirements.


Your methodology must demonstrate a thought-out, defined, and repeatable approach. Processes exist within it. Processes are detailed sets of steps, activities, or tasks, whereas a methodology is a summarized, overarching approach.

A methodology should consider questions for each phase, such as these:

  • What are the key objectives, milestones, decisions, and deliverables?
  • What are the major activities or decision criteria?
  • What are the major work streams?
  • What must happen sequentially, and what themes should run throughout (e.g., communication, risk management, project management, etc.)?

These areas will be addressed in more detail as you build out the process. At the beginning you are developing a high-level roadmap. Methodologies are often illustrated. Designing a visual solidifies your thinking about the process, helps structure the messy and ambiguous nature of knowledge work, provides a frame of reference, and demonstrates to stakeholders that a disciplined approach exists.

Tools, Templates, and Deliverables

Every organization has processes that exist only implicitly. Too many high-level professionals fly by the seat of their pants, relying upon experience and routine. But do you really have a process if those activities are not documented? Knowledge work in general, and the complexity of M&A work in particular, can be nebulous and ambiguous. Only documentation can bring structure to the amorphous and make the intangible tangible. Dense narratives are not required, but project plans, Gantt charts, issue logs, and checklists are basic to a disciplined, replicable process.

A project plan does not have to be excruciatingly detailed; it can be a list of key activities. Develop a high-level master plan organized around the typical phases of a transaction, with supporting plans for the more complex activities. For example, “define integration plan” might be one line on the master plan, supported by a detailed integration plan, which in turn may have underlying plans for each functional area.1 Simple Gantt charts focused on key work streams and milestones are helpful for visualizing timelines and reporting to stakeholders, especially when more than one transaction is in progress.

Checklists support key activities and tasks. Many professionals are resistant to using checklists, perceiving them as stultifying, but even veteran flight crews use a checklist before takeoff.2 Consider what checklists are needed to support your project plans. Some examples may be screening criteria for strategic fit, metrics and data points for determining purchasing price, risks to focus on during due diligence, insurance coverages, and closing date readiness requirements.

The term “deliverable” often has the connotation of a consulting firm providing a report to its client. But it also refers to tangible work product generated internally. Key deliverables might include a pipeline report of potential targets, information request lists, a “transaction review” report for board approval, or a high-level integration roadmap.

Human Resource Requirements

Building a core competency in M&A may require certain additions, but it need not involve significant headcount or the creation of a dedicated group. Depending upon the existing skill set and capacity, you may already have someone that can manage the overall path to closing but need to hire someone to head up integration efforts, or vice versa. You may need a corporate development executive that can source deals, or perhaps you can rely on your private equity investors. Outsourcing is an option, too. Due diligence is typically outsourced, even at the largest companies. Still, someone needs to manage these work streams. Because M&A is episodic, consider candidates that can also contribute in other areas.


The lack of a formalized approach to M&A is endemic in middle-market companies that do not have dedicated transaction groups like their larger brethren. But by adopting fundamental techniques, a middle-market organization can create a professional, scalable core competency in M&A. The right team, following a formal methodology and process, supported by standardized tools and templates, can bring discipline to the messy nature of M&A work. Deploying a replicable process from an existing playbook allows the team to spend its time where it counts and avoid recreating the wheel.

1 You can find more on this approach in The New One-Page Project Manager by Clark Campbell and Mick Campbell.
2 For more on this topic, check out
The Checklist Manifesto: How to Get Things Right by Atul Gawande.

James J. Caruso, CPA, CGMA, is CFO for All Metro Health Care in Valley Stream, N.Y., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at and on Twitter @jamesjcaruso.

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