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. In fact, M&A megadeals – transactions of at least $5 billion – are on the rise as evidenced by MGM being acquired by Amazon in an $8.45 billion deal and Google acquiring Mandiant for $5.4 billion. With the increase of M&As, companies are often pressured to quickly maximize the transition and the payback. Stakeholders want an organization that works effectively and efficiently from day one, but is that even 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 to and overcome today’s labor shortage issues, which can hinder the M&A process. Tools such as low-code that don’t require significant human capital are a must-have.
The use of these tools and resources is important when you consider that each company has their own applications, datasets and data criteria. Data criteria might include relevance, objectivity, measurability and completeness, and it probably differs from company A to company B. Without the use of technology, merging that data is a long, tedious process, especially when it comes to tracking progress and coordinating activities between the acquirer and the acquiree.
Merging disparate applications and data is a top obstacle in any M&A, where more often than not each company has different mission-critical applications and legacy systems in place. It’s important to know what data exists, where it resides, who uses it and whether personally identifiable information (PII) is protected before deciding what to integrate.
Companies need to securely maintain sensitive consumer data and provide frictionless customer experiences through the entire mergers and acquisitions process, while at the same time avoiding penalties associated with missing transition service agreement deadlines and outages/downtime due to potential lags in service. The latter can trigger customer churn, revenue loss 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 the minute something stalls toward reaching a goal or an objective, it is very difficult to get it going again. That’s why the key to a successful M&A is momentum, and data fuels that momentum.
One of the first steps of M&A is to access the acquiree’s data, identify objectives for the data and decide what data types and definitions should be used going forward. Data integrations, data transformations and reporting should all use those agreed-upon definitions so that everyone is on the same page and has a common understanding of what’s being done and what opportunities and risks need to be addressed. This ultimately ensures data accuracy and consistency across multiple applications and stakeholder groups.
Making two previously independent systems (and companies, for that matter) work together is imperative, and momentum can make or break mergers and acquisitions success. Without a flexible IT infrastructure, this can seem like an impossible task.
Integration does not mean completely merging all systems and making them one; having technology in place for teams to share and access data works just as well, if not better. Sales teams from two newly combined companies must be able to collaborate and go to market together; they need to see all data – including products, customers, employees and partners – so they can cross-sell and ensure a consistent customer experience. This can be done in a central cloud location.
Taking advantage of cloud applications is a good way to get the newly merged company up and running quickly and deliver data that people need. Cloud apps can be set up almost instantly, they’re readily configurable and data can be migrated to them relatively quickly. Modern integration platforms make this strategy easy to execute because they provide standard connectors to popular cloud applications, dramatically reducing the time and effort required with an alternative approach.
Companies take on additional liabilities when merging with or acquiring another company. They are exposed to major regulatory risks associated with information security by not knowing where all of their data is and not protecting PII. Cloud platforms can work wonders in these situations. Within weeks or even days, it’s possible to select and configure a cloud application, integrate it with other systems and make it available to authorized users across the new organization.
While the goal in any mergers and acquisitions is to get the company up and running quickly and efficiently, data integration, data access and data protection are the key components to a smooth transition. Keep in mind that M&As are changes for multiple organizations.
And, the way to get through any kind of change is to show momentum toward the objectives set forth as part of the initial investment – in this case, the data. Utilizing tools such as AI, ML and low-code can help reach these objectives.
As part of the integration plan, organizations should map out the type of visibility that stakeholders need and identify data sources needed. They should also ensure that they have the momentum and integration and transformation technology needed to build connections that will meet and ultimately exceed customer expectations.
Chris Port is the COO of Boomi.
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