How Technology Is Changing M&A

Technology is changing the world of mergers and acquisitions. With all the activities needed to complete a deal, dealmakers do not have time to sift through and share thousands of documents and contracts manually. Most of them utilize digital tools and platforms to expedite the process. According to Accenture, 74% of CEOs view tech integration in M&A as a competitive advantage and a growth enabler. 

Embracing M&A technology before, during, and after a deal has been found to have multiple benefits. Below are some of the top ways tech improves M&A. 

Facilitate Document Review and Due Diligence

Many documents need to be reviewed during an M&A. In the past, this process was handled manually. Reviewers sifted through the documents to look for supplier contracts while capturing critical provisions.  Examples include renewal dates, take-or-pay requirements, and termination agreements. Unfortunately, this often led to a waste of valuable time and a higher risk of errors.  Technology can be leveraged for this aspect of the M&A process.

Through automation, large volumes of documents can be quickly reviewed with maximum efficiency. Technology can trawl an entire company’s network to separate contracts from other documents. For example, dealmakers can use artificial intelligence tools to draw out key terms used in contracts for review.  Adapting these tools to transaction-specific language to enhance speed and accuracy. They can also set up search queries to analyze contract components on specific areas of concern, such as corporate risk and regulatory compliance. 

Cloud computing allows deal teams to store the information in the cloud and access it anytime using devices connected to the internet. All involved parties, from dealmakers to lawyers and bankers, can access a document simultaneously and collaborate through the cloud. They will also be informed when changes have been made to the data. 

Reduce Execution Time

According to Harvard Business Review, 70% to 90% of all M&A deals fail. One reason is the prolonged execution time.  Many factors contribute, such as lack of a strategic plan or management involvement, internal misalignment, and a large volume of contracts. But even if an M&A deal doesn’t fail, prolonged execution time could still have severe financial implications for the merging companies and stakeholders. 

While technology may not be able to deal with external factors, it can handle internal factors causing extended execution times. If dealmakers need to evaluate thousands of contracts, it could take weeks or even months to complete the deal if they were doing it manually. But by utilizing technology in M&A, the review time will be reduced significantly.  Allowing the involved parties enough time to focus on other critical aspects of the deal.

Increase the Value of Realized Synergies

Technology is changing how we can quantify synergistic value in an M&A transaction.  Having a proper technology strategy during an M&A transaction can massively boost the value of realized synergies. In most cases, the realized synergies are inferior to expected synergies because of unexpected complexities during M&A deals and failure to involve technological tools and personnel. 

The technology used to drive synergies can be divided into three categories:

• Direct technology synergies
• Indirect technology synergies
• Strategic technology strategies

Direct Technology Synergies

In this category, technology is used to drive quick synergy value through various interventions, such as consolidating vendors, reducing labor costs, eliminating manual and duplicated processes, and consolidating end-user technology. For example, the deal teams may consolidate core enabling platforms, say hosting services, to a single provider to allow pricing leverage. 

Indirect Technology Synergies

Indirect technology synergies aim to unlock hidden deal value. Unlike direct technology synergies, they are often not included in the deal rationale. Instead, they are used to ensure proper integration and avoid business or operational disruptions that may result from combining different processes and systems. 

There are many ways of employing indirect technology synergies.  A company may invest in enterprise technology to improve operational efficiencies, such as customer resource management or enterprise resource planning systems. Also, dealmakers may tap into shared information technology systems to drive new operations across multiple business units. 

Strategic Technology Synergies

These technological interventions help drive synergy value well beyond the M&A deal. They are achieved through strategic interventions such as replacing ERPs, migrating to the cloud, and other interventions. 

Today, companies are embracing workflow automation across various departments, such as human resources, IT, finance and accounting, and sales during and after M&A. This has been proven to have multiple benefits, including enhanced efficiency and productivity, cost and time savings, and better accuracy. 

Help Manage and Retain Talent

Companies going through an M&A transaction are susceptible to losing top talent because of all the changes in such deals. But thanks to artificial intelligence, companies today can identify the employees who are likely to quit by analyzing modeling data collected through corporate systems. 

AI tools can also assign risk scores to staff members based on compensation, leaves, demographics, and career progression. These scores allow executives and corporate development leaders to create interventions to retain employees at risk of quitting. In the end, this helps a company to avoid the direct and indirect costs of losing employees and hiring new ones. 

Simplify M&A Activity With Devensoft

There are various complexities associated with mergers and acquisitions.  But M&A technology can play a crucial role in ensuring a successful outcome. As deal activity increases worldwide, companies can save significant resources by embracing the latest technological tools and platforms. In fact, only companies that combine strategy with technology will be able to oversee successful deals as we head into the future. 

If you want to simplify your M&A deal, Devensoft has a platform that can streamline the entire process by tracking the deal from identification to implementation, aligning your team to milestones and outcomes, generating dynamic progress reports, providing powerful project management tools, and more.