Let’s admit it: M&A is not easy and is not for the weak at heart. Every day we hear from teams that are struggling to organize their deals, frequently due to faulty or informal procedures and tools. For a long time, companies have relied on spreadsheets or emails as well as homemade solutions to manage their M&A process. While they may have worked as methods in the past. Today’s fast speed of change and competitive market requires a completely new method of doing business. “Good enough” is not an option that can be competitive and provide the results we want our deals to deliver.
It’s unfortunate that leadership coaching despite years of learning from M&A and mergers, we’re still getting poor results. The following chart, which is based on the study by Statista of 750 top executives, highlights some of the primary reasons for why M&A deals and the later integrations don’t produce the expected value.
A lot of the issues mentioned above can be solved by developing and implementing more efficient methods and tools to tackle the issues on both the deal and integration aspects of M&A lifecycle. The most frequent complaints we hear frequently from M&A teams are:
- The information is dispersed across multiple tools, resulting in multiple opinions about the facts
- Lack of communication between internal and external stakeholders
- Processes that are ad-hoc and inconsistent
- Insufficient visibility into the developments, risks, and issues, and the decisions required
- Insufficient accountability and management of workstreams and workstream inter and intra-dependencies
- One-off reporting is a distraction and absence of standardized tools
Recent article written by Nitin Kumar, who is a veteran in the field of M&A and M&A, revealed some significant insight. He interviewed more than 100 M&A integration experts about the factors that affect the final outcome of integration and the how value is created by the transaction. These are his findings:
Nitin then explains that:
“At $100 million planned synergies, each week of delay due to lack of decisions postpones realization of ~$2 million in EBITDA.”
Inflicted with a lack of modern and efficient instruments, M&A teams are ill-equipped to meet the ever-growing demands. Tools m&a advisory have become a burden to be managed, instead of being an enabler for the process. It’s time to adopt an approach that is more efficient.
Enter Purpose-Built M&A Software
There’s an old saying that is widely used that applies to M&A, “the longer it takes to integrate a company, the longer it takes to realize the value of the deal.” Closing deals and quickly integrating or divesting is the most important factor in creating value in M&A.
Companies that have a long track record of merging and acquiring businesses are aware that spreadsheets and email are hindering their ability to adapt and quickly move when it comes to M&A. This is why purpose-built M&A software is rapidly growing in popularity.
We’re often asked “when does it make sense to adopt purpose-built M&A software?” The answer is contingent on a variety of aspects:
- What number of deals do you expect to close each year?
- How complex are your contracts?
- How many participants are in the mix?
- What do you plan to do about the volume of deals over the coming years?
- Are inorganic growth and growth strategies a key element to your overall growth plan?
Even if you only do one deal, and it’s complicated then a custom-designed M&A software can certainly reduce the risk. Of a project aid in better analysis, more efficient decision-making, and will add value to the entire process.
M&A Software for M&A has been in use for many years, however it wasn’t until recent that people have. Become aware of the benefits and accelerated their the adoption. There are two main reasons : 1.) greater awareness of the benefits of these tools, and 2.). Increased pressure to effectively compete and boost shareholder value.
To them it’s the best way to compete.
To illustrate the current situation of M&A software industry. Let me make use of the graph below from Gartner it combines many popular curves. While Gartner hasn’t officially examined specifically-designed M&A software in its analysis but the majority of M&A CEOs. Of software companies indicates that we’re crossing the Slope of Enlightenment (just over 5% of adoption). Early adopters have used M&A software for a long time and have seen the benefits it brings to their business. This is backed by rapid growth of the software among the enterprise clients we serve. We also observe a high number of repeat customers from M&A executives who change businesses.