More than ever, technology matters in your M&A

In recent years, the Mergers and Acquisition Divestment (M&AD) landscape has been nothing short of a roller-coaster, marked by periods of explosive growth swiftly followed by retreat. As we look ahead in 2024, the M&AD outlook appears cautiously optimistic, writes Peter Van Den Berg, Consulting Partner for Energy, Resources, Healthcare and M&A at 塔塔咨询服务公司 .

M&A Outlook

As the outlook continues to evolve, adaptability emerges as the key to success. Recognizing the evolution of customer preferences, harnessing cutting-edge technology, and ESG commitment are strong themes to drive action. However, it's vital to note that having a robust M&AD strategy is just the starting point; it's the effective execution of these strategies that delivers concrete results. In this context, technology plays a central and intricate role.

In 2024, the keys to value creation in the M&AD lie in speed, a focus on talent, and an openness to embrace bold approaches.

Why fail?

Technology as afterthought fails M&AD in four ways:

1. Speed - the complexity and effort in a transaction typically lies not in critical operational technology but treating shared enterprise systems and data. Everything is interconnected, especially to preserve business continuity.
2. Certainty - without a clear technology ‘target-state’, the roadmap to complete the transaction is unclear, including the options to accelerate transformation. The result is business disruption, perpetuating technology debt for buyers and loss of transaction value.
3. Synergy - achieve alignment of technology to strategy drivers, including simplification of the IT landscape and driving down IT costs should be table stakes. Failing to achieve strategic ambition means the technology foundation for growth is compromised.
4. Reputation - The optics of M&AD are obvious. Strategy without adequate discipline to deliver ultimately sends the wrong message - internally and externally. While execution reliability can enhance assets values and transaction success, poor execution will have the opposite effect.

What should organisations focus on?

Organisations use M&AD as a tool to achieve strategic objectives. Yet, a common pitfall is the short-sighted, tactical approach towards technology integration. This often stems from inadequate planning and hurried design, resulting in band-aid solutions. Such an approach not only undermines the transaction intent but also erodes value, burdening the organization with lingering technology debt and hindering growth. Instead, M&AD should be viewed as a unique opportunity to ‘reset’ your technology environment, laying the foundation for future execution of business strategy.

For the CFO

You may have a deal strategy, but technology will typically be your most complex and risky challenge.? M&AD will touch every technology, system and service used by the business. Literally thousands of decisions are made during a transaction cycle, many of which have consequences for business continuity, or cost or synergy. It’s critical to front-load this process. As every transaction is unique, experience is critical to drive discipline and meet the tension between speed, transaction expectations, and business risk.

For the CIO

Propel your team's focus beyond mere tech to tangible outcomes, particularly weighing the business ramifications and associated risks. Beware of procrastinating on addressing strategic dependencies. Each transaction unfolds through interconnected workstreams. Ensuring dedicated, seasoned resources for swift decision-making and project management becomes pivotal. M&AD and BAU do not make good bedfellows.?

For the CEO

Elevate technology to a primary role in your M&AD blueprint and demand people-first approach (see below).? Embed strategic technology expertise early in the cycle, even better pre-deal, with your transaction team. This will add a vital lens to strategy, drive ambition through the transaction and ensure you don’t compromise on quality or continuity.?

Finally, M&AD lives and dies on change leadership. As CEO you set tone for true transformation, providing sponsorship for the engagement and collaboration of all stakeholders in the technology transition and transformation process.? ? ?

Peter Van Den Berg is Consulting Partner for Energy, Resources, Healthcare and M&A at TCS ANZ https://www.tcs.com/who-we-are/worldwide/anz

For more insights on M&A see here https://www.tcs.com/what-we-do/services/consulting/mergers-acquisitions