The hefty numbers of a typical merger and acquisition make the entire deal seem like a glamorous affair—and it often is. The millions of billions of dollars involved are often talked about, one story more exaggerated than the next.
That’s all well and good, but behind the scenes, making all of this possible, is the use of data—one of the ingredients, no, the most powerful ingredient of mergers and acquisitions.
According to research, 90% of the global data today has been created in the last two years alone. When merging with another company, or acquiring one, data naturally builds up…extensively. Managing business data is, in fact, one of the challenges in any merger or acquisition deal, since dividing and utilizing takes time, technology and manpower.
But why consider data at all during an M&A deal? We’ve listed the top reasons:
Identify and Understand Targets
The strengths and weaknesses of your target’s workforce contribute to the success, or failure, of a merger or acquisition. As a deal-maker, you need to understand your targets, how they work, what the target workforce structure is like, who is in charge, who is likely to offer the most help after a deal, and who is likely to leave.
Remember, when two organizations merge, or one acquires another, the clash of personalities, interests, and cultures is inevitable. Use data effectively, and you can make more informed decisions to up the speed and confidence with which employees, both old and new, get invested in post-deal business decisions.
Predict Post-Deal Business Trends
Any merger or acquisition is ultimately intended to enhance the success of a company’s core strategies, which requires the use of data to ensure the creation of a well-structured plan.
We’re talking market research, crunching numbers, and in-depth analysis.
By using data, you and your workforce can see what’s ahead. The effective use of data enables you to make comparisons, understand combinations, and cut unnecessary resources to maximize revenue. It also enables you to foresee market response to the merger or acquisition deal.
Minimize Legal and Financial Risks
Use data, and capitalize on the prior knowledge of potential risk factors. Data analysis is a valuable asset for any organization that wants to clarify the nature of numerous legal agreements with the merger/acquisition target. Such a review provides the managers involved with higher awareness of the critical terms of all contracts, such as insurance to indemnify themselves against loss.
If you’re unsure of managing a merger & acquisition deal with limited in-house expertise and resources, you can’t go wrong with the advice and aid of professional strategy consulting services.
There’s no such thing as an exact prediction of how a deal will turn out, but relying on the pros who know how to put available data to good use can get you pretty close.