Nathan Shinn, Founder and CSO, BillingPlatform
Since 2010, over 500,000 mergers and acquisitions (M&A) have been completed globally – and that number keeps growing. According to a survey from KPMG, global mergers and acquisition activity in 2021 even surpassed pre-pandemic levels, nearly meeting the peaks of activity from 2007 and 2015.
As a growing business tool in today’s economy, M&As can function as an essential method for corporate development. With the number of M&As predicted to climb over the upcoming years, a multitude of businesses are searching for ways to improve their M&A capabilities.
The benefits M&As can provide businesses are endless, offering more products and services, and greater financial strength and economic power, leading to a higher market share and reduced competitive threat. They contribute to developing new social and economic environments that can help companies expand into new markets. However, whilst M&As offer a range of benefits, the challenges they produce are important to take note of.
The main challenge
A primary reason as to why M&As can collapse is the failure of establishing a solid IT integration strategy. IT is the main challenge during a merger as each company has its own data and processes, therefore conjoining two businesses and combining or replacing methods of operations, information and technologies is a time consuming and difficult process. Thorough planning for system integration in advance is vital for a smooth transition, from reducing the threats of interruption to guaranteeing continued data integrity.
Data integration is vital, allowing businesses to address the significant data difficulties that can be encountered post-transaction and gain maximum value from the deal. Each business maintains private, confidential and important information which ranges from customer account history, to prior billing and invoicing information, which must be integrated if the newly established firm aims to uphold their reputation and provide clients with assured quality service.
The absence of an appropriate data integration strategy can result in the inability to be proactive, restricting the ability to respond to opportunities in a timely manner. Firms risk tainting the quality of service that their customers have come to expect, which could result in a loss of business and profits. In addition, an ineffective cost structure post-merger or acquisition could make achieving the synergies anticipated from the initial deal a challenge, costing revenue and failing to produce the outcomes originally guaranteed or forecasted to board members and shareholders.
To efficiently and effectively merge data from two companies, such as customer billing and invoicing information, businesses need to obtain tools which can manage the extraction and loading of data into a solution of choice. They require solutions that possess the capability to collect, deduplicate, consolidate, convert and route the information, matching records where possible and creating new accounts where necessary.
However, organisations often forget that bringing in a multitude of new platforms and technologies, or relying on legacy solutions, to merge customer data have their own set of complications. Instead, firms should search for a single solution they can implement, which can be easily integrated and run existing processes, from data extraction to creating new accounts.
Finding a simple solution
Proactive businesses are solving this issue by prioritising cloud-native solutions which not only reduce time to market and costs, but offer scalable and flexible solutions capable of consolidating disparate and legacy systems into a single, automated platform to store all customer-related activities. Supporting practically any business model, they offer tools which ensure continuous delivery and improve customer experience.
By being able to identify cloud solutions that support M&As better, the acquiring or newly established firms can constructively bring data together from separate organisations without having to overload the process with numerous technologies, or depend on outdated and inefficient platforms. Cloud solutions can accelerate the integration process without harming the customer experience, or the merger and acquisition benefits from the second the transition takes place.
As more firms begin to develop and evolve, the business sector continues to grow competitive. M&As are rapidly becoming a significant mechanism for businesses striving to consolidate and expand their positions in current and new markets. Although M&As can provide multiple benefits, their challenges, including data integration, must not be overlooked. Should they be neglected, firms risk hindering the benefits of an M&A.
Poorly handled and unorganised system integration between merging companies can jeopardise business goals. By implementing cloud-based solutions to collate, consolidate and manage all data in one place, businesses can ensure that their merger or acquisition deals are a success while maintaining their reputation and customer satisfaction too.