Outsourced M&A Policy

A. Services in Outsourced M&A Policy

Hypotenuse Enterprises, Inc. provides three services to companies, their CEO's, their Boards of Directors, and their Corporate Development Officers (CDO’s) regarding Mergers and Acquisitions Policy:

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1. M&A Policy:  is developed for a specific company, using the process as it currently works in that company, adding Corporate Development best practices¹, adapting and, where appropriate, integrating to the company’s financial and other policies.  Development of customized policy often includes on-site interviews with key management and team members, debriefing on past deal experience, and developing new methods to handle current or anticipated problems.  Hypotenuse Enterprises, Inc. draws on its benchmarking expertise regarding Corporate Development best practices to customize these policies to the client company, and assists the company to build consensus among the key M&A team participants.  Customized production also includes standardizing the appearance of the M&A Policy document, and even overseeing production (e.g. printing, publishing when needed).

2. Standardized M&A Policy:  is based on surveys of how best practices have changed among the Fortune 300¹ over a five year period, and on Hypotenuse’s work experience in benchmarking Corporate Development practice, and writing customized M&A policy.  The standardized policy is provided on disc so that the client company can further customize as needed with, for example, names or exact titles of responsible employees, names of specific committees or cross reference to the company’s internal documents.  Standardized M&A Policy is a “boiler plate” of best practices that goes a long way in relieving the CDO of the need to benchmark dozens of other dealmaking companies’ practices before writing policy.

3. M&A Policy Review and Audit:  two thirds of the Fortune 300¹ (and a lower percentage of the remaining Fortune 1000) have Mergers and Acquisitions Policy in place.  Hypotenuse Enterprises will review that policy and make suggestions for better control, for streamlining the deal process, and for incorporating evolving best practices into a policy update.

B. Reasons to Outsource Policy

1. The Board has a fiduciary obligation^{2, 4} to assure proper controls are in place for its mergers and acquisitions activities, and outsourced policy is often the fastest, most effective way to obtain policy benchmarked against current best practices.  Moreover, companies can often save enough on their Directors and Officers Liability Insurance, with M&A policy in place, to justify the cost of the outsourced policy.

2. Benchmarking:  can be a tedious, time-consuming process.  The principals of Hypotenuse Enterprises have been following Corporate Development Best Practices since 1990.  Outsourcing M&A policy eliminates the need to benchmark dozens of companies for best practices, saving time, expense and resources.

3. Internal Relationships:  can be strained when a Corporate Development Officer (CDO) authors a control policy which may affect the prerogatives of peers.  A neutral, third-party can defuse such reaction through the statistics of the best practices benchmarking, by presenting recommended policy in an appropriate manner, and by developing consensus in the customized policy preparation process.

4. Deal Activity:  is often the most rewarding³ activity to the CDO personally, and to the company’s growth program.  To utilize the CDO’s time for policy-writing distracts from deal activity and diminishes the growth contribution a CDO can make during the same time period.  Outsourcing assists the CDO in continuing to keep ownership over the policy results while disengaging from the day-to-day tedium of authoring policy and procedure.

The Corporate Development Practices Survey of the Fortune 300 by Hypotenuse Enterprises reports that 65% of the respondent companies have M&A Policy in place, up from 53% five years ago.  There is increasing recognition that corporate M&A Policy (also called Corporate Development Policy) represents best practice in Corporate Development. 

Hypotenuse Enterprises also assists its clients in developing intermediary policy, procedures and deal criteria.

1. Corporate Development Best Practices Survey of the Fortune 1000, including five years of changes, Hypotenuse Enterprises, Inc., 2002. $695.00

2.  “M&A Policy: A Board Responsibility”, Director’s Monthly, the official newsletter of the National Association of Corporate Directors. Volume 22, No.7, July 1998 (p.4-6).

3. 1998 Corporate Development Fortune 1000 Compensation Survey, Hypotenuse Enterprises, Inc., covers CDO salaries, bonuses, stock options and grants, perquisites $995.00.

4. “M&A Policy: A Board Responsibility”, M&A Today, A News Letter for the Professional Intermediary. Volume 6, Number 10, October 1997 (3-5)