Mitigating Risk for MA and Post Merger Integration

For any company, supporting M&A and Post Merger Integration (PMI) is daunting. The numbers are stacked against you, failure rates are high, timelines are aggressive, and synergies are obfuscated by cultural fog. With expectations high and speed to value a priority it’s critical to prepare for M&A and PMI and engage in a disciplined and deliberate way. As a former software executive, I was often chosen as a Field Stakeholder supporting both major M&A activities and “tuck in” acquisitions to bolster a capability in a tactical way, or to support the strategic GTM direction of the company. As I looked around the Enterprise Software landscape it also seemed to be the standard operating model for many others. One thing was clear, the sooner we knew about our adjoined customers, the better we could serve them. The advantages were plentiful: new markets, new ARR, new offerings, new customers; but so were the risks; nearly all of them affect growth, valuation, and market perceptions. Specifically, if you cannot integrate post-merger, your competition will use that against you. 

“Normally, data management in some form comes up in the separation/integration phase and not that often in the preparation phase. I’d argue that’s at an organization’s own peril.” 

Forbes Technology Council.

After leaving the software industry and turning my efforts toward consulting, a few root causes tied to PMI risk consistently appear. Interestingly they are less about tech integration and more about people and process: Deal Alignment, Culture, Employee Retention, Communication of strategy, change management, amongst others.

To mitigate these known risks, at amino Data we focus on accelerating PMI via data integration and integrity. Trust is everything and seeing the world through a single pain of glass is the best way to bring merged companies together. Systems & data integration often involve data synchronisation, deduplication, and migration. You’ll need a single view of the truth, especially when each company may have their own definitions. What’s critical is that the newly merged company must move forward as one and share a common vision to execute in the marketplace. That’s next to impossible if you can’t come to terms for things like, “what is a customer?” 

While not comprehensive as each client has different needs, at the core foundation we address the data to answer:  

• Who is my customer – define a customer under the merged company?
• Which products do they own?
• Upcoming renewals, churn / risk?
• How can we improve retention?
• How can we bring more value by cross selling and bundling solutions?
• Do we have supply chain risks?
• What’s our combined inventory?
• How can we close our financial statements in an integrated and timely way?

When teaming with PE / VC Firms, if each PortCo delivers different interpretations for sales, inventory, FP&A, etc.… the burden to make sense of it all is on the PE Firm and it is daunting. We’ve found that applying a consistent set of standards and data integrity provides both the portfolio company and the PE/VC with a greater appreciation of what’s needed to ensure reporting integrity and unlock market insights. Most directly, the merged entities have a greater opportunity to take informed action against any number of data signals. By serving the portfolio company and the PE Firm we focus on strategic outcomes via aligned data. This addresses “XLS spreadsheet” wars, gets everyone together for a single view of the truth, and offers unrealised insights which may have been historically unseen. 

When it comes to effective M&A and PMI, data isn’t the only thing, but it is the foundation for valuation realisation.

To learn more about our approach and how we can share some ideas, visit us at www.amino-data.com/PEandVC

#Private Equity #data #M&A