Mergers and Acquisitions: Using Data to Smooth the Transition
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Mergers and acquisitions (M&As) are big business, and those big business deals haven’t slowed down much, even with a global pandemic taking center stage. M&A megadeals — transactions of at least $5 billion — are actually on the rise, as evidenced by Amazon’s acquisition of MGM in a $8.45 billion deal and Google acquires Mandiant for $5.4 billion† With the proliferation of mergers and acquisitions, companies are often pressured to maximize transition and payback quickly. Stakeholders want an organization that works effectively and efficiently from day one, but is that possible?
With technology it is
When two companies come together – with their own data, their own applications, their own processes, their own people – things can get complicated. Cloud computing, artificial intelligence (AI), machine learning (ML), and low-code tools — just to name a few — have made the transition from two entities to one a lot more transparent. These tools and applications have also made it easier for companies to adapt and cope with current labor shortage issues, which can hinder the M&A process. Tools like low-code that don’t require significant human capital are a must-have.
Using these tools and resources is important when you consider that every company has its own applications, datasets and data criteria. Data criteria can include relevance, objectivity, measurability and completeness, and it likely differs from company A to company B. Without the use of technology, merging that data is a long and tedious process, especially when it comes to tracking progress and coordinating activities between the acquirer and the acquiree.
Merging disparate applications and data is one of the biggest obstacles in any M&A, where more often than not every company has different mission-critical applications and legacy systems. It’s important to understand what data exists, where it resides, who uses it, and whether Personally Identifiable Information (PII) is protected before deciding what to integrate.
Companies must keep sensitive consumer data secure and provide smooth customer experiences throughout the M&A process, while avoiding penalties associated with missing transition service agreement deadlines and outages/downtime due to potential service delays. The latter can lead to customer churn, loss of revenue and potentially damage the overall brand.
In the beginning, those involved in the M&A deal need to create a plan, and that plan needs to be driven by momentum.
Mergers and acquisitions: momentum is everything
Many leaders know all too well that once something gets stuck towards achieving a goal or objective, it is very difficult to get it going again. That’s why momentum is key to a successful M&A, and data fuels that momentum.
One of the first steps of mergers and acquisitions is to access the acquiree’s data, establish objectives for the data, and decide which data types and definitions to use in the future. Data integrations, data transformations and reporting must all use those agreed definitions so that everyone is aligned and has a common understanding of what is being done and what opportunities and risks need to be addressed. This ultimately ensures data accuracy and consistency across multiple applications and stakeholder groups.
It is imperative for two previously independent systems (and companies) to work together, and momentum can make or break the success of M&A. Without a flexible IT infrastructure, this can seem like an impossible task.
Integration does not mean completely merging and unifying all systems; Having technology that allows teams to share and access data works just as well, if not better. Sales teams of two newly combined companies must be able to work together and go to market together; they need to see all of the data, including products, customers, employees, and partners, so they can cross-sell and ensure a consistent customer experience. This can be done at a central cloud location.
Taking advantage of cloud applications is a good way to get the newly merged company up and running quickly and delivering data that people need. Cloud apps can be set up almost instantly, they are easy to configure, and data can be migrated to them relatively quickly. Modern integration platforms make this strategy easy to execute as they provide standard connectors for popular cloud applications, drastically reducing the time and effort required with an alternative approach.
Companies take on additional obligations when merging with or taking over another company. They are exposed to major regulatory risks related to information security by not knowing where all their data is and failing to protect PII. Cloud platforms can work wonders in these situations. Within weeks or even days, it will be possible to select and configure a cloud application, integrate it with other systems and make it available to authorized users in the new organization.
While the goal in M&A is to get the business up and running quickly and efficiently, data integration, data access and data protection are key components for a smooth transition. Keep in mind that mergers and acquisitions are changes for multiple organizations.
And the way to get through any kind of change is to show momentum toward the objectives set out as part of the initial investment — in this case, the data. Using tools such as AI, ML, and low-code can help achieve these goals.
As part of the integration plan, organizations must map out the type of visibility stakeholders need and identify the data sources they need. They also need to ensure they have the momentum and integration and transformation technology needed to build connections that meet and ultimately exceed customer expectations.
Chris Port is Boomi’s COO.
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