Mergers and Acquisitions (M&As) usually takes place when a firm has reached its peak of success or loss and, in turn, decides to look for other sources of income. Organizations pursue mergers and acquisitions for various reasons, including a need to expand.
One of the greatest benefits of mergers and acquisitions is the increased value generation. In many instances, the value shareholders can obtain grows relative to that of the parent firm.
Participants in M&A also benefit from tax gains as well as revenue enhancement via market share. The joint organizations generally anticipate higher value from separate entities after the merger.
Mergers and acquisitions also bring about efficiency as far as cost is concerned, thanks to the economy of scale. A merger results in large scale production, and hence increased output production. In turn, the per product production cost decreases.
Other benefits of embracing mergers and acquisitions include heightened competitiveness, financial leveraging, and ease of entering into new markets or introducing new products.
According to the Institute of Mergers and Acquisitions, over 790,000 transactions worth over US$57 trillion have been announced across the globe since 2000.
In 2018, the number of deals increased by eight percent to approximately 49,000 transactions, with their value growing by four percent to US$3.8 trillion.
M&As Powered by Integration
The above notwithstanding, organizations must approach M&A with caution, paying attention to every critical aspect. Among these critical aspects, data integration ranks high. The consequences of ignoring data integration after a merger are dire.
As such, large organizations have a duty of developing efficient and repeatable processes capable of facilitating the inclusion of the technologies and methods of other companies. The absence of integration denies the participants the returns they expect to obtain from the M&A activity.
Resist the temptation to manage different companies with their own data depositories. The only things you will achieve are inefficiencies and constant frustrations. The most appropriate strategy to employ since the very beginning is integration and optimization.
Even the leading organizations have underestimated the critical role that data integration plays in a merger and acquisition. They enter into an M&A arrangement but do not realize the importance of centralizing employed data and integrating the IT systems.
They end up dealing with uncoordinated company activities, which can be disastrous to the management and the overall performance.
As such, if your organization is pursuing a merger or an acquisition, you should, before anything else, find reliable data management and systems integration services. Cazoomi, for instance, has numerous integration solutions that can power your merger or acquisition.
You have to aim at centralizing data for financial operations, assets and products/services. The consolidation of employee data is also critical to ensure the realization of M&A goals.
While analyzing 2019 M&A trends, Delloite notes that a good number of transactions have difficulties realizing the goals initially envisioned. However, Delloite has understood that private equity firms and corporations place the most blame on external elements.
Also, they have recognized the importance of integration and increased due diligence to ensure the materialization of the projected revenue.
Upon achieving system integration and consistency in data tracking and governing, it becomes easier to come up with a single technical solution applicable to all the IT systems of the subsidiaries.
Data integration brings about unimaginable economies of scale in mergers and acquisitions. It is the one strategy that you cannot succeed without in an M&A. As such, if you are eyeing M&A deals, or you are in the middle of it, do not fail to notice the crucial role that data governance and integration plays.
That said, you must exercise the utmost caution in your search for the provider of integration services. Consider factors such as the presence of a low-code interface and the ability to accelerate the process.
Stay clear of service providers who cannot guarantee timely integration. In any case, you want solutions that will make your investment in the deal to pay off well and soon enough. Unless your integration solutions are easy to use, low-code, and designed to meet your goals, they can complicate your merger instead of simplifying it.
