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Cloud powered M&A
Key drivers for cloud adoption
When done well, merger and acquisition activity provides significant benefits to private equity (PE) firms and their portfolio companies. However, the transactions are complicated and can be fraught with peril, especially with respect to information technology.
- The cloud as a driver for M&A success
- Key drivers for cloud adoption
- How the cloud powers M&A activity
- Transform before day one
- Questions to jumpstart transformation
- Long-term success
- Sample buyer benefits vs. sample portfolio company benefits
- Get in touch
- Join the conversation
The cloud as a driver for M&A success
The cost, timeline, and feasibility of technology integration between entities operating on different legacy systems is often underestimated. Any such miscalculation can result in cost and time overruns, incomplete synergy, missed opportunities, and unnecessary complexity.
Fortunately, there are solutions that can help companies realize long-term benefits that can begin to pay off even before the transformation is complete. One solution is the cloud.
By leveraging the cloud, PE companies can begin the transformation process early in the merger process, and can gain the agility to more quickly seize opportunities and long term improved performance.
Key drivers for cloud adoption
- Cloud-based storage and delivery of data and analytics capabilities enables smoother day to day IT management
- Technology upgrade and standardization across the portfolio drive expansion and scaling
- Center of Excellence model enhances revenue streams for operating key, standardized functions for portfolio companies
- Potential to eliminate legacy IT debt as part of the cloud transformation
- Ability to allocate a greater percentage of the IT budget to improve overall capabilities rather than daily operations
How the cloud powers M&A activity
Cloud technologies present PE firms with considerable opportunities in the face of an expanding, competitive market. And, while there is a learning curve for cloud implementation, with the right strategy and support, PE firms may gain higher, more predictable margins on future acquisitions and divestitures. Both PE and portfolio companies can gain operational and performance improvements, with compounding benefits, as time goes on.
Transform before day one
In traditional M&A activity, a transition period of process and technology integration precedes any transformation of the newly-merged entity. But when companies leverage the cloud, the transformation can often work in parallel with the transition. By providing a standardized, scalable, and cost-effective operating platform, the cloud enables simultaneous transformation of technology infrastructure, capabilities, and costs.
Run-rate savings can be achieved by moving inefficient back-office functions to the cloud, giving companies the ability to scale, upgrade, or expand the service footprint globally. And moving workloads to the cloud can streamline the cutover and integration process for current and future acquisitions. The foundation for simpler divestitures can also be laid since the PE and portfolio companies will be operating with standardized processes and systems. And since there is considerably less information technology physical infrastructure to manage with the cloud, the divestiture process will be less technically complex.
Questions to jumpstart transformation
In the longer term, the cloud can help PE companies unlock savings in their portfolio companies well past the initial M&A transaction. For example, standardizing the entire portfolio on the same cloud-based back office systems can offer significant economies of scale. Additionally, re-use of common architecture platforms can produce monitoring, alerting, and support model efficiencies.
Moving data workloads and analytics applications to the cloud can also provide long-term predictability and maneuverability. Flexible deployment models for data storage and analytics capabilities can deliver the ability to scale up or down as needed to help unlock deeper insights while controlling costs. The potential result? Sustainable cost-savings and performance improvement along with the agility to meet market and stakeholder demands, to quickly seize opportunities for growth or divestiture, and to improve top and bottom-line revenue.
Sample buyer benefits vs. sample portfolio company benefits