Written on 2nd February 2022 - 3 minutes

Don’t be part of the 70-90 percent of Mergers and Acquisitions that fail

With Mergers & Acquisitions (M&As) set to increase significantly in 2022, data has to play a key role in ensuring successful completions

A recent survey has found that M&A deals in the UK are expected to rise over the next twelve months. 90 percent of the respondents believed that there will be an increase in M&A deals in 2022, including 54 percent who believe that it is going to increase significantly.

This is in-line with trends seen throughout the pandemic as companies look at how they can achieve growth and build momentum in unprecedented times. Such an increase in M&A activity is positive for the UK economy but businesses have to be aware of key obstacles that are increasingly a cause of M&A collapse.

Indeed, according to most studies between 70-90 percent of M&As fail. This is a depressing stat for any business to read. Equally depressing is the main reason behind these failures, problems with the integration of the two parties involved.

Data integration key for successful M&A

The integration of two companies obviously encompasses a whole range of factors. For years the problems of merging cultures, staff, buildings, facilities and roles has been well documented. However, one element that is an increasingly large obstacle to a successful M&A is data. The amount of data in organisations is increasing significantly. The Dell Global Data Protection Index found that on average companies are managing ten times more data than they did in 2016.

This is a significant increase in the amount of data residing in businesses. The past five years has seen businesses begin to better understand the value of data (both in a literal financial and business growth sense) and so it has become a real commodity.

Data tends to be split between two different types. Structured data is quantitative (number and values) and unstructured data, qualitative (text files, audio files, video files etc) and is used and stored very differently company to company.

With such a huge range of data residing in companies, all tending to be stored and used in very different ways it becomes clear why data plays such a critical role in the success or failure of M&As. Without a successful integration of such a crucial part of business growth it becomes a block to any M&A.

Critical for data to be in discovery phase of M&A

 Too often data is not pushed high enough up the agenda during the initial phases of M&As. Only over the last few years has IT in general been considered a crucial element to a successful M&A, but the role that data now plays within businesses means it has to be part of the conversation from the earliest stage of the process.

Identifying the scope and details of both companies’ IT infrastructure, including data, has to be a key starting point. Looking at both data sets, including any duplicated data, legacy data and applications, will allow both parties to have a full understanding what they are playing with and to make an informed decision about next steps.

Another aspect that needs to be considered at the earliest stage is ensuring staff buy-in from both sides. Staff will automatically come to the table defensive of the systems they have implemented. Finding a way to overcome these prejudices and make sure there is a clear, non-biased view of the data residing in both organisations is a task easier said than done.

Third-party support in data and technology integration

 Turning to an independent third-party consultancy to undertake an audit of both sets of data and technology can be the answer. It will allow both tech estates to be fully aligned making the process of a seamless integration much easier.

A good consultancy will be able to suggest viable solutions and help manage the integration of data and tech. As an independent party, both sides in a M&A can be confident that any suggestions are there to help the deal succeed, and not coming from a place of bias. A third- party also allows both sides to focus on other, important areas that are crucial to resolve if the deal is to succeed.

Bringing in independent experts will also help to solve another issue facing companies as they go through the M&A process. Data is surrounded by an increasingly complicated regulatory landscape. The high-profile introduction of GDPR in May 2018, as well as other existing regulations, has meant companies have had to be aware of what data they have and where it resides. There are huge fines being handed out by data protection agencies across Europe.

As a result, the merging of data sets, practices and accessibility has to be handled extremely carefully to ensure that the newly merged or acquired company remains adhering to regulation.

With data present in all businesses in more volume than ever before (as well as being more valuable than ever before), it is fast becoming one of the most important factors in whether M&As fail or not. Getting data ‘right’ for any business at any stage of its development is now a must if it is to be successful.

If you would like a chat about data management and the benefits you can gain from it, please do get in touch

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