Chris Port is the COO of Boomi, the intelligent connectivity and automation leader.
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Mergers and acquisitions (M&As) are all the buzz right now with the likes of Amazon and Google making headlines for their big business deals. In 2021, global M&A volumes reached $5.9 trillion—a record high with a 64% increase from 2020. Technology, financials, industrials and energy and power accounted for the bulk of those deals. But, what makes M&As successful? That’s the million-dollar question.
The answer is simple: momentum and data. Momentum, or the lack thereof, can either make or break a deal. I believe it is the most overlooked aspect of M&A and why having a plan pre-close is so critical. Data then fuels that momentum.
Momentum is everything.
Typically in an M&A, there’s a larger acquirer taking ownership of a smaller acquiree. In theory, this means change for both organizations—and the best way to get through any type of change is to show momentum. This means taking the initiative and having the follow-through to get things done.
When one company buys another, there are going to be a lot of objectives that must be met to ensure success; this is expected. Think about Amazon acquiring MGM and all of the moving pieces and objectives set forth as part of the initial investment phase. It’s going to take a lot of momentum to meet those objectives and it’s going to take leaders showing their team members and even the public that they’re invested in making this happen.
Not only should all parties involved show momentum toward reaching set objectives, they should also strive to accelerate that momentum—because the minute something stalls toward an objective, it is very difficult to get it going again.
Data drives acceleration.
Think about all the data that an organization manages. Now think about that data twofold because that’s the reality that comes with merging two organizations. Each has their own datasets, their own processes and their own applications; they probably also have different data criteria that potentially complicates tracking progress and coordinating activities amidst the merger.
Growing revenue is important for businesses and is a key motivation behind many mergers and acquisitions. Data plays a big role here, too. In M&A, it’s vital to have an understanding of the acquiree’s available data, its location and who has access to it. This helps with data integration, data transformation and reporting. Data can then drive acceleration in terms of revenue, offer better customer outcomes and optimize demand generation marketing dollars for products and services.
Data from the newly acquired business can set the stage for revenue growth, so it’s imperative that the acquiring business has access to all customer data. With data in hand, they can identify the overlapping customer base between the two once separate businesses and expand the opportunity set that the merger now has to offer.
They should also delve into the white space (i.e., new customers) and start positioning the acquirer to the newly acquired customer base. Here, they can identify core metrics that previously defined customer success for the acquiree in an attempt to make the customer even more successful with the offerings they now bring to the table. Application and data integration make all this possible and fuel momentum.
Technology addresses challenges.
When it comes to data and setting up a truly integrative M&A process, there are challenges. Some of these are attributed to today’s labor shortage. M&A does require human capital and human resources are always precious—even more precious in these historic times of labor shortage. This is why high productivity, low-code tool sets are now an imperative, and no longer a luxury when doing M&A. Tools that don’t require significant human capital are a must. Low-code offers:
• Faster delivery and lower barriers for creating business applications
• Reduced deployment time
• Increased productivity
• Greater profitability if done correctly
Integration does not mean completely merging all systems. Merging customer relationship management (CRM) stacks is no longer a requirement for data management and data integration. There are solutions available that allow users to simply integrate CRM instances, giving acquiring businesses the ability to create a common view of the customer and the dataset needed to drive momentum.
Taking advantage of cloud applications and platforms can ease the integration process and help businesses overcome obstacles that go along with most M&As. Cloud integration platforms can get the business up and running quickly, delivering the data that people need. Modern integration platforms provide standard connectors to popular cloud applications, reducing time and effort required with alternative approaches.
The ideal cloud-native integration platform includes:
• Integration: Establish connections to critical data, applications and devices with low-code configuration that’s faster than custom coding or legacy middleware.
• Data discovery: Know what data exists, where it resides, who uses it and whether personally identifiable information (PII) is protected before deciding what to integrate.
• Data governance and integrity: Provide a single, accurate view of customers, employees and suppliers across the organization.
• Application rationalization acceleration: Discontinue old applications that no longer meet organizational needs and take advantage of new, feature-rich applications where appropriate.
• Technical debt reduction: Reduce technical debt to make IT architecture more resilient, agile and easier to maintain.
• API management: Make data and applications readily and rapidly available as a service to employees, partners and customers.
• Workflow automation and application development: Extend data that is already integrated to engage employees, customers and suppliers through a single portal and process across business initiatives.
Cloud-native integration platforms can help companies address additional liabilities and risks associated with merging with or acquiring another company and help them meet regulatory compliance requirements.
Mergers and acquisitions are big business and there are many different tools and services available to help businesses throughout the process. A little bit of momentum can go a long way, so imagine what accelerated momentum can do in M&A.
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