7 key ways to use data in M&A: #1 Speed

“Speed is absolutely key to creativity. The more time it takes to create something, the less likely you are to create something.”

“I feel the need. The need for speed.”

This article is #1 of seven steps from our European OrgVue M&A breakfasts: speed.

When is speed important in M&A?

In a merger, several stages are done under extreme time pressure, where data can have a real impact. In particular, speed can be critical in three early stages:

Stage 1: Due Diligence. In a contested deal, you and your competitors may have access to the data room for 60 days. If you can process the data faster you can better judge the right price, ask the right questions, know when to walk away and … know when to run!

Stage 2: Pre-Merger Planning. Once the deal is agreed, you need to prepare for Day Zero. With speed on your side, you can prioritise future opportunities, identify future risks, quantify future impacts.

Stage 3: Post-Merger implementation. Once the deal is closed, the focus is on a 100-day period to start achieving impact. With speed you can visualise the future organisation, communicate future roles, reduce human energy lost to uncertainty.

Why is speed important?

In each stage, speed is a critical key success factor. It lets you make the most of the time available. The analogy in sport is useful. Top footballers have stillness; they seem to make time stop when everything around them moves. The ability can be measured: in cricket and baseball, top batters refocus their eyes measurably more quickly than average batters as the ball moves towards them.

How do you achieve speed in an M&A situation?

Here are some lessons from our experience.

1.     Integrate data from multiple sources quickly.

Many organisations still have disparate data. Their information on customer impact, individual performance, process cost, and people cost may all be on separate systems. Bringing them together and identifying correlations gives you fast insight and potential value: for example, activity costs linked to product revenue streams gives you insights on product level profitability. You can identify more quickly the hidden gems in your future business model.

2.     Use Master data management to get data consistent.

Fragmented data is noise. Get the data into one format, and you can compare. With a strong sense of the key variables, you can quickly prioritise variables and get enough consistency of data to decide. As you cannot clean everything, knowing which data is most important to your decisions is vital.

3.     Clean data live

Live data cleaning is vital to increase the cadence of decision making. In agile teams, you want to have the relevant people in the room, and to keep them there until decisions are made. Any time people have to leave the room to check facts, energy is lost. Cleaning data live reduces the cycle time to achieve the decision-making foundation.

4.     Ensure auditability of all data changes

Maintain control by tracking all data changes: what change, who made it, when? What did the organisation look like before the data was cleaned, and what does it look like afterwards? Can we forward all the clean-up changes to the source system owners so that they can make the changes in their own system too?

5.     Hygiene factor: good governance to comply with M&A rules

Speed in the merger has to be compliant. There are legal rules in Due Diligence about what data can be shared; at the Pre-Merger stage, about how much personnel data can be seen by each side; at the Post-Merger stage about which countries’ data can be seen centrally. Seems obvious? Yes… but I have seen too many examples of unprotected Excel spreadsheets sent via email under extreme time pressure. Good security built into the M&A process can avoid painful data protection issues later.

6.     Aspiration: close cooperation between Finance, HR and the business

One team, one set of data. One way of measuring and reporting. Large companies going through mergers get benefit from speaking one language not only between the companies but also internally. Imagine if every future org model built by Finance also automatically had costs included. Imagine if each function or region’s headcount plan could be rolled up to a total headcount number and cost number. We have even seen companies where a merger benefit was to eliminate 3 out of 4 duplicated systems of headcount & cost reporting. Each side had previously had two versions internally, for HR and Finance. One version of the truth not only made significant savings, it was also more effective.

7.     Visualisation: bring it to life

You understand what you can see. Too often, the value of data is hidden in a mess of statistics. One of the powers of effective use of data in M&A is to show beautifully what it could look like – how the future can be shaped. So it will be critical to be able to visualise organisations, future processes, future decision making, future roles quickly.

So our highest recommendation for getting value from data in an M&A situation is an approach that builds in speed from the very start: in how it collects, governs and uses data. We encourage you to think about each of the 7 check points above to evaluate: how ready are you to use data at speed in the M&A process?

And the quotes from the top of the article?

“Speed is absolutely key to creativity. The more time it takes to create something, the less likely you are to create something.”  – Patrick Stump

“I feel the need, the need for speed” – Tom Cruise, Top Gun (!)

Next Monday, step #2 in the M&A key factors: realising quick wins