Trammell Crow’s Tony Zivalich (left) and Karen Ellzey collaborated with McKesson’s Frank Robinson on the M&A Playbook, sharing the Phase II award photo opportunity with cosponsor Elliott Farber of Equis (far right).

Corporate real estate (CRE) has played an increasingly active role in recent years helping corporate enterprises navigate the complexities of mergers and acquisitions (M&A).

McKesson Corp., the $88-billion Fortune 50 health care supply management and distribution giant, offers an ideal example of how CRE can play a leadership role in an M&A scenario on behalf of the entire company and its shareholders.

For acquisition-minded McKesson, that positioning was achieved through the development of a new tool and through the elevation of a long-standing strategic partnership with a key service provider, Trammell Crow (TCC).

"How can real estate support and add value in this key area" of M&A, McKesson VP of CRE Frank Robinson asked the Global Innovator's Award judges. "Real estate is often a reactive M&A player, constantly facing the 'there's never enough time' factor. We are frequently lean and resource- and time-limited."

With that in mind, Robinson sat back and thought about devising a tool that would make the often-extreme but rushed due diligence surrounding acquisitions more proactive in nature. He realized, however, he would probably need some help. "Maybe through collaboration we could gain some traction," he recounts.

That collaboration led him to a long-time partner, TCC.

"It sparked a journey leading here to the Global Innovator's Award," TCC Managing Director Karen Ellzey confided to the award judges.

"Businesses need a proactive stance when it comes to M&A," she stresses. "The fundamental (M&A) tools are around business, not real estate, activities."

But there was no package, no set of processes or no tools to take the entire spectrum of information, negotiations and decisions that drive - even define - M&A's. Mergers have increased by a whopping 48.6% from 2002 - 2005, and they represent an $11-trillion industry compared to $7.4 trillion in 2002. (Nearly $2-trillion has been announced in the first half of 2006, up 43% from 2005, according to the Stock Market Quarterly Review.)

So there's a lot at stake. Robinson certainly recognizes it. "We've been very active in M&A," he offers. Over the past four to six years, McKesson's acquisition pace has averaged at least half-a-billion dollars annually.

The pace of acquisition made Robinson think about partnering with someone "to share costs, time and resources to develop an M&A book," one that would bring innovation at the intersection of real estate, finance, HR and the business unit.

"Innovation at the intersection is a favorite term of Karen Ellzey," Robinson shares. The insight is telling, because it shows the degree of experience, trust and knowledge McKesson has built with TCC in the outsourced management of its FM, projects, transactions and planning.

Ellzey was thus indeed a worthy partner, and became a key part of the braintrust that would create what became known as the McKesson "M&A Playbook," a resource detailing virtually every conceivable step, action and variance encountered in the crucial transition period from buy-out offer to consolidation of operations and personnel.

Another key team member is TCC Senior VP Tony Zivalich.

As Ellzey describes it, Robinson, Zivalich and she worked to design "a step-by-step process map for real estate support of M&A's." This entailed collecting McKesson's pre-approved set of templated analytics, then "building tools, rethinking tools, and implementing a tool box for speed and agility."

Zivalich recalls that the team asked the question: "What state of readiness are we in before we start?" This led to separate assessments of preparation for M&A, portfolio and physical inventory, portfolio financial and risk review, portfolio analysis, and target company CRE evaluation.

He calls the resulting mix of resources "tiered due diligence - ask the right questions at the right time." First things first became another mantra of sorts to address those questions surrounding things like prioritization of resource matrices, diverse asset types, flexibility and scalable processes, role definition, and - most of all - key decision points, especially in the case of hostile takeovers.

An M&A 'top sheet' is then constructed from a workbook compiled for each property involved in an acquisition scenario. "The portfolio view offers a look at and understanding of critical issues," advises Zivalich. This perspective often serves as a dashboard indicating critical 'green light' and 'red light' decision signals.

Consolidated financial analytics comprise another important piece of the 'Playbook,' named as such because it resembles the mutli-faceted components of a college or NFL playbook outlining different plans for each and every game, and graphically illustrating the respective role of all players for each play called offensively, defensively or on special teams.

Robinson extends the football analogy to law enforcement. "We've used the playbook on the last two transactions. It's like a SWAT team, it depends on how well everyone understands their role and the tools available to do their job."

For McKesson, the 'Playbook' means that "We (CRE) are here and ready to support you (the M&A team) to solve problems, mitigate risk, increase speed and agility, bring savings and cost avoidance, and realize growth objectives."

A primary beneficiary of the value of the M&A Playbook is McKesson's Paul Work, the strategic and business development executive who drives mergers for the corporation. "The Playbook is a script, we've adapted it quickly," he related in a video clip shown to the award judges. "I have confidence in the advice of TCC and McKesson CRE. We're seeing that the best learnings from both groups have been captured and can be sure our real estate advice is the best."

Ellzey refers to the partnership as "better together," saying that "the view of what's critical to the business of the business is something Trammell Crow gets from McKesson."

To Robinson, "better together" translates to "seize the opportunity to reposition CRE through collaboration. Collaboration is a competency not an accident."

Carpe diem!