Integrating data after mergers and acquisitions
Original version published April 2018, Updated September 2019.
Disney acquired 21st Century Fox. Salesforce acquired Tableau. T-Mobile could be merging with Sprint. These are just a few examples of high-profile mergers and acquisitions (M&A) in 2019. In today’s competitive business environment, M&A have become strategic tools for boosting growth and power, breaking into new markets, and increasing innovation and relevance in the market. In fact, as of August 2019, there have been 26,257 M&A deals announced worldwide, averaging 121 per day.
While there is an abundance of M&A transactions, 70-90% of them fail to meet the primary goals of the deal. So, why do companies keep pursuing these transactions? It seems that the potential rewards outweigh the possible risks. Is there a way to ensure positive results rather than mediocre outcomes?
The secret ingredient
M&A transactions include several complex moving pieces, but one important factor of a successful merger or acquisition is timely and secure data integration. In 2016, 34% of financial services companies cited an “underestimation of IT challenges” as the reason for M&A failure. Merging IT solutions can include data aggregation, combining of data warehouses and disparate data sets, and implementation of new tools and applications to process the data. To solve this problem, the acquiring company must become more agile at pre-M&A analysis and post-M&A IT and data integration.
Tips for successful M&A data integration
Companies can take an Agile approach to merger & acquisition transactions, especially when it comes to M&A data integration. There are a few planning tasks to focus on that will lead to a smooth integration process.
Thorough due diligence
A comprehensive discovery phase pre-M&A creates a realistic picture of what both companies are walking into. During the due diligence process:
• Identify scope and details of both IT infrastructures. This includes details about data storage, basic infrastructure, and a catalog of the various IT applications in play.
• Identify all data sets, including duplicate data and legacy data.
• Leverage a business intelligence dashboard to unify data. This will allow the two companies to compare and analyze their data. This process reveals trends across the disparate data sets and determines what data would be useful to merge if the deal were to take place.
Once it is determined that a merger or acquisition is a viable and valuable business decision and the transaction is finalized, the hard work of developing the strategy to merge the two companies starts. Based on the findings of the pre-M&A analysis:
• Determine how to combine the existing IT solutions.
• Choose solutions to build that will support overall growth.
• Define a data governance strategy. This should identify how people, data management, and data storage systems will all operate efficiently together.
• Specify which tools are needed to store, manage, and visualize the data.
• Develop a timeline for implementation including resource needs for project managers and developers.
Change management principles should always be at the forefront of any kind of business change, especially M&A transactions. Implementing change management mechanisms starting directly after the deal is signed will ensure that employees are on board with the change and can be part of the driving force for a successful transaction.
• Prioritize transparency to minimize resistance to the change and gain company-wide support. Inform all employees of the upcoming changes.
• Understand how each person’s job might be affected by the change and gather insights from employees on how current processes can be improved.
• Train employees how to use new tools and systems.
• Create a change agent network of people at every level of the company to advocate for and drive the change. Daily users and administrators of the IT system will be the best source of information about how to merge and improve the system, so it’s important to include them in the planning and implementation discussions.
Preventing issues with mergers and acquisitions
With better focus on due diligence, strategy, and change management, companies can prevent some of the following common pitfalls that occur when integrating the acquired company:
• Challenges with business continuity
• Employees feeling confused or blindsided
• Degraded customer experience due to problems in the IT solutions
• Inaccessible or incompatible data and/or IT solutions
• Disrupted daily business operations due to any (or all) of the above
Companies large and small have embraced the competitive advantage that M&A transactions offer, and this trend is expected to continue to grow. As companies combine efforts and build alliances, it is important to include IT and data integration at the forefront of deal discussions and evaluations. In today’s data-powered world with data fueling everything from essential management systems to customer-focused AI solutions, lack of planning can be detrimental to business initiatives. If companies can learn to integrate and optimize IT solutions and data in an agile fashion, they will be on their way to more successful M&A transactions.
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