The M&A market — that is, "mergers and acquisitions" — is set to grow very significantly over the coming years.
The growth will mainly involve SMEs (Small and Medium Enterprises).
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The reason this will happen lies in the fact that today's highly competitive markets are pushing companies towards exports.
As we know, exporting is not viable unless certain volumes are reached (with the exception of some market niches, which are however very rare).
M&A between successes and failures
An always-too-high number of deals (well over half) fails for a range of reasons.
The main of these reasons is the failure to achieve integration between the two structures: the seller and the buyer.
The integration of two companies must take a number of factors into account: for years, the challenges of merging cultures, staff, buildings, structures and roles have been well documented.
However, one element that is becoming an ever greater obstacle to a successful merger and acquisition is data.
M&A and the volume of data
The volume of data within organisations is increasing significantly. The
Dell Global Data Protection Index found that, on average, companies handle ten times more data than they did in 2016.
This represents a significant increase in the volume of data that companies use.
It is a significant increase in the volume of information that companies use.
Data can be divided into two types:
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"structured" data (numbers and values),
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"unstructured" data (text files, audio files, video files, etc.).
All this data is used and stored in very different ways from company to company.
Such a vast range of data resides in companies, all of it stored and used in very different ways.
It becomes clear why
data plays such a critical role in the success or failure of merger and acquisition deals.
Without successful integration of such a crucial part of business growth, it becomes a roadblock to any M&A.
Unfortunately, the issue of analysing the integration of the two IT systems (target company and acquiring company) is often taken too lightly in the early stages of M&A deals.
The role of IT managers
Instead,
the role of IT Managers must be valued from the first stage of the process. Identifying the scope and details of the IT infrastructure of both companies, including data, must be a fundamental starting point.
Examining both datasets, including any duplicated data, legacy data and applications,
will enable both parties to gain a full understanding of what they are dealing with and to
make an informed decision on next steps.
Another aspect that must be considered at the early stage is
ensuring buy-in from staff on both sides. Staff will automatically come to the table defending the systems they have implemented.
Finding a way to overcome these biases and ensure there is a clear and impartial view of the data residing in both organisations is easier said than done.
Turning to an
independent third-party consultancy to undertake an audit of both datasets and technology can be the answer. It will enable both technology areas to be fully aligned, making the seamless integration process much simpler.
Good consultancy will be able to
suggest workable solutions and help manage the integration of data and technology.
M&A and the parties to the deal
As an independent party, both sides involved in a merger and acquisition can be sure that the suggestions provided to help the deal succeed do not come from a place of bias.
A third party also enables both sides to
focus on other important areas that are crucial to resolve if the deal is to be successful.
Involving independent experts will also help solve another problem that companies face during the M&A process. Data is surrounded by an increasingly complicated regulatory landscape. The introduction of
very strict privacy regulations has meant that companies have had to be aware of which data they hold and where it resides. Huge fines are being imposed by data protection agencies across Europe.
As a result, the merging of large volumes of data must be managed with the utmost care to ensure that the newly merged or acquired company continues to comply with the regulations.
