High-voltage tech tools give big-data edge to M&A deals | Deloitte US has been saved
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For decades, spreadsheets dominated the M&A process, providing an essential instrument to calculate, sort, and interpret the data behind deals. As big data becomes a fixture for many enterprises, however, dealmakers are increasingly turning to a broader range of digital tools to manage the millions of records and overwhelming number of data points that can now surface throughout the life cycle of an M&A transaction.
Nearly two-thirds of executives surveyed in Deloitte’s 2018 M&A Trends report (63 percent) say that their companies are employing advanced digital tools in M&A transactions. Cited benefits include cost reduction and reduced timelines, both for deal execution and post-deal integration, as well as reduced conflict during deals through deeper data analytics, which can enhance findings and strengthen assumptions. Among respondents who anticipate using M&A-specific technology tools in the future, a nearly identical share (62 percent) say they’d like to tap into the tools to integrate acquisitions more quickly, affordably, and with fewer hiccups in the process.
The evolution beyond spreadsheets includes visualization software, advanced data management and manipulation tools, and a shift to cloud-based applications to help enable easier collaboration and flexibility. For instance, transaction teams can save time using tools that blend multiple data sources (often from disparate reporting systems) into a single “data lake” and quickly prep data for varied visualizations and analyses. Shifting from a spreadsheet approach to a structured database approach presents opportunities for repeatable processes that may be rendered across multiple datasets, relegating fallible spreadsheet operations, and freeing up valuable time to ask more informed questions about the potential target.
Proprietary software tailored for M&A can also produce a detailed view of historical financials to drive strategic decision-making in a divestiture scenario. For example, programs that replicate a company’s ERP system can provide flexibility and enable analysis of multiple carve-out scenarios, helping provide deeper insight around divestiture scope decisions.
Digital screening tools can additionally accelerate the search phase, when corporate buyers may potentially be considering hundreds of targets. By automating this process, firms can get an instant view of marketplace and financial information on companies they consider to be strong contenders for acquisition. As one example, our M&A Strategy and Target Screening App uses public and proprietary data to model multiple targets and pathways to growth; this enhanced digital screening enabled a large biotech organization to prioritize 10 out of 350 acquisition targets within a few weeks.
Big data tools can also help during post-merger integration. For instance, predictive modeling tools can help managers make decisions around pricing and cross-sell opportunities across a newly expanded portfolio of products, helping them to determine how to market to their newly combined customer base in a more targeted and effective way.
Almost all deals are predicated on effective assessment and integration of talent and human capital—and digital tools are increasingly being used here too. For example, cloud-based organization design modeling tools can accelerate the process of combining data across two merging entities—helping ease integration of underlying employee data sets and enable quick modeling of different organizational design scenarios. To help with alignment of disparate cultures, cloud-based survey and culture assessment tools can be used to quickly collect data on key cultural differences that need to be managed, or similarities that can be used to build upon.
Finally, machine learning and natural language processing tools are being used to speed the extraction and analysis of unstructured data from key documents such as customer and supplier contracts—speeding up value creation, whether it be renegotiating with vendors or aligning customer pricing and terms.
In summary, the spreadsheet will remain a core component of the M&A process, but innovations in digital tools can help dealmakers find and interpret information in the evolving landscape of big data—helping enable better M&A decision-making and faster time to value.
Iain is a Deloitte Consulting LLP Mergers and Acquisitions (M&A) principal with extensive experience across the deal life cycle, from operational and commercial diligence to integration, carve out strategy definition, and execution management. He has managed numerous growth-oriented technology and media deals, including defining operating models, tracking cost and revenue synergies, and organizing to ensure an issue free day one. Iain received his MBA from the Fuqua School of Business at Duke University and holds an undergraduate degree in Law from Durham University in the United Kingdom.
Brian, a managing director with Deloitte & Touche LLP, is part of the mergers, acquisitions, and divestitures group. With more than 20 years of experience, he has worked with strategic and private equity clients, leading due diligence services for domestic and international transactions. Brian also serves as the US M&A Transaction Services leader for analytics, developing methodologies and tools to extract and analyze relevant company information to answer critical transaction specific questions.