Mergers and acquisitions loves the cloud

Mergers and acquisitions loves the cloud

Today’s competitive business environment is driving companies to focus on core strengths and most profitable activities. Executives are increasingly looking to divestiture as a method to shed underperforming or non-core assets.

Amidst the focus on separation, it is often impractical to develop all of the required infrastructure to support the new organization, and it is common to include Transition Service Agreements (TSA) in which the seller provides post-deal, operational services or support to the buyer for an interim period of time after the transaction closes. As TSAs often include severe financial penalties for not exiting the agreement prior to the agreed upon date, there can be considerable pressure on both sides to exit quickly and with minimal impact to the business. This can be challenging, however, if the TSA includes support services for a traditional, on-premises or hosted ERP system, due to the complexity involved with ERP system configuration.

Moving to a cloud-based ERP system may help turn a potential M&A deal breaker into a deal maker. Opting for a cloud ERP solution can be a practical, less costly alternative to traditional on-premises or hosted solutions and should appeal to both seller and buyer. Requiring no hardware and nominal configuration, a medium-sized company can often be operational on a cloud-based ERP in four-to-seven months and a large international firm in approximately twice that time—both typically faster than traditional on-premises solutions—thereby facilitating a faster exit from the TSA. Considering that a cloud ERP typically provides regular upgrades, the ability to scale users, easy adjustments to system functionality, state-of-the-art security, and increased system capability, it may offer the ultimate in flexibility during a post-deal transition.