Technology that is embedded in a business can often be overlooked when considering the true value of a business. With the right systems and structures in place you can realise a greater enterprise value and see a true return on investment for the hard work you have put in to your tech stack. On the flip side when acquiring a business, it is just as important to consider areas that may need immediate investment to bring systems up to a level of best practice. Inheriting inferior tech can present a contagion risk and can have a reasonable effect on the sale price. With M&A evolving at a rapid rate, it is important to understand the things to look out for if you are looking to explore these strategic moves into the future.
If you’re looking to sell your business, you should have a strong technology foundation to ensure your business appeals to potential buyers. Ensuring these foundations are in place before entering into negotiations can save you thousands, and in some instance can even improve your potential sale value. You also become a much more attractive prospect for buyers.
If you’re planning to acquire a business, its equally important to ensure the business in question has solid technology and cyber protection, not only to ensure you aren’t stuck with additional costs to bring everything up to par, but also to ensure there aren’t any undesirable risks that you may take on through the transaction.
When merging, oftentimes considerations need to be made around how the technology of both organisations will work together. One organisation may be strong in one area whereas the other may be stronger in another. A lot of the true value in a merger can surface from leveraging the best tech and processes from both businesses to accelerate business outcomes for all involved.
Whether you’re selling, buying, or merging, we’ve got some key considerations that will help you understand how to best optimise your technology during such a complicated process.
- The Importance of Tech in M&A
- Assessing Your Processes and IT Setup
- Data Backup Solutions
- Preparing Your Team
- Tracking Results
The Importance of Tech in M&A
Before jumping into the exact things to consider, we need to first talk about why it’s even important to focus on tech areas throughout your M&A.
To avoid suffering some (or many) operational disruptions, you need to focus on creating a clear technology roadmap and strategy that includes planning, executing, and training. You don’t want to make drastic changes overnight as this will throw your employees into the deep end which will understandably lead to heightened levels of frustration. If they don’t feel comfortable with understanding how to work within these changes, then don’t expect great results.
From software to tools, it takes time to adapt, but it also takes a great amount of planning on your end to make the transition as smooth as possible.
Don’t add more to your plate when you can just avoid these issues in the first place.
Assessing Processes and IT Setups
One of the first things to consider around tech in M&A is the processes and IT setups. You need to first understand the tech landscape by seeing if they have established practices, processes, systems, resources, and setups to understand the areas in which you can integrate and improve. This can range from software to financials to business plans.
If you’re selling, buying, or merging, ask yourself these questions:
- Are all processes documented sufficiently?
- Is there an efficient system that streamlines the process?
- Are systems fully supported and up to date?
- Are they using their time/resources wisely or could certain areas be automated?
- Are these processes capable of increasing the company’s top and bottom line?
- How are their contracts, agreements, policies, and third-party components (e.g., payment systems)? Do they need to be renegotiated or terminated?
- How strong is their cyber security posture?
Once you have answers to these questions, you’ll have a better understanding of what you’re working with and how to shape the plan moving forward.
Data Backup Solutions
M&A creates great opportunities, however, migrating data and integrating systems also lead to an increase in risk. With all of the fast-moving transactions during M&A, there’s absolutely no room for any delays or data leaks from either party. Imagine moving five steps forward and ten steps back, all because of a missed backup that was noticed a little too late!
Before you make any changes, mitigate your risks by making sure everything is backed up across all systems and devices. If anything were to happen, you can at least rely on restoring your latest version.
If you’re considering partnering or acquiring a business, it’s important to see if they still work off of legacy systems. If they do, this can be a red flag. Old systems often mean limited scalability and flexibility, missing out on great features, higher costs and downtime, and insufficient data backup solutions.
Preparing Your Team
You understandably want to set your employees up for success. To effectively do this, you need to communicate changes and expectations, address challenges, and where required provide ample tech training around changes.
As we mentioned earlier, you need to check to see if the company you’re about to merge with or acquire has documented processes. Change management is such an important component for all involved and having a good change management process removed a lot of ambiguity and uncertainty for all.
When it comes to training, it’s critical that employee training includes cyber security training. With 88% of all data breaches being caused by human error, it’s extremely important to protect your business from the get-go. Make sure that everyone’s on the same page, incorporates best practices, and maintains overall cyber resilience against any potential threats.
Part of undergoing technical due diligence in your M&A is seeing if you’ll have the ability to easily track, document and review the organisation’s progress and results. You should be able to look at any changes over time, goals, expectations, and business plans, then see if the overall movements are effective for your teams and business as a whole.
You’ll also want to consider how the business retrieves its metrics and KPI’s in the first place. It’s critical that they have automated systems and strong data analytics software in place, as real data means being able to get greater business insights to make real business decisions. Not only that but automation and reporting systems reduce manual and repetitive tasks, allowing you to put your resources to other mission-critical areas in the business.
If you’re looking to sell your business, make sure you have strong data analytics in place now that aligns to individual and business KPIs. It pays to get your tech right to get the best value for when you do decide to sell.
The Final Word
By now we hope you feel more comfortable and confident in what to look out for in your M&A tech areas. Whether you’re selling, acquiring, or merging, looking after your IT systems and processes is critical if you want to remain competitive in today’s quickly evolving world. The best time to start is now.
At ONGC Systems, we create tailored IT solutions that enable businesses to solve their unique business challenges and reach their full potential. We work with several organisations, helping them steer technology plans and outcomes in their M&A activities that result in strong outcomes for all involved. If you’re looking to improve the way you work for a better tomorrow, talk to one of our friendly team members today