More and more businesses are now enhancing their capabilities through mergers and acquisitions. But these deals have to be completed faster than ever before – and this poses tough challenges, particularly during the due diligence phase. The solution? Advanced analytics technology that enables acquirers to accurately and efficiently process today’s huge data volumes fast.
M&A: Gearing up for Success in a Fast-Changing World
A growing number of companies from a variety of sectors are now shaping up for the future by acquiring other enterprises. This strategy holds considerable promise. But in today’s ever-changing business and technology environment, M&A transactions have to be completed faster and more efficiently than in the past.
And that’s only part of the challenge. Data volumes are also rising at a breathtaking pace, fueled in part by the plummeting cost of data storage. (Consider that 90% of data now on the Internet was created in the past four years!) As a result, achieving the accurate, high-speed data processing necessary for robust due diligence can be a major headache.
Big Data: a Key Challenge for Due Diligence
Before committing to an acquisition, companies must carefully analyze the target’s data to identify synergies, pinpoint potential issues, and generate reliable prognoses. But the all-important due diligence phase now covers many more disciplines than in the past.
Besides zooming in on key financial metrics and legal aspects, acquirers have to scrutinize areas such as human resources, IT, environmental impacts, regulatory concerns and compliance, intellectual property, customers, and operations. And that means a corresponding increase in the amount of data involved.
The scale of the challenge is reflected in recent research conducted by Accenture, which found that 78% of executives polled believed their existing M&A capabilities could no longer deliver reliable results. But help is at hand – in the form of advanced analytics solutions.
Disruptive Tech: Boosting the Speed and Accuracy of M&A
Back in February’s blog, I looked at what I call “transformational tech M&A”. To briefly recap: What makes this approach novel is that it deploys state-of-the-art digital technologies to accelerate successful M&A deals – delivering synergies faster and more efficiently than conventional methods can ever hope to.
Advanced analytics is one such transformational technology: Powered by the latest developments in AI, solutions of this kind not only significantly accelerate data processing; they also deliver far more accurate results. By taking care of the essential but intrinsically uncreative chore of number crunching, advanced analytics frees up humans to handle the creative tasks at which they excel.
AI-powered analytics apps enable M&A teams to scrutinize the details of today’s gigantic data sets. What’s more, they pack the processing power required to evaluate multiple potential scenarios at unprecedented speeds. Back in the day, M&A specialists had to wade through vast data-packed spreadsheets to arrive at actionable conclusions. Now, advanced analytics solutions can deliver almost instantaneous 360-degree visibility into synergies and savings.
A Wealth of Invaluable Insight
One way in which data analytics tools can lighten the load on M&A experts is by processing raw transaction-level data to generate invaluable insights into the target’s revenue and margins. In addition, these tools can deliver information on important factors such as the acquiree’s customer base and its product mix.
Advanced transaction analytics solutions achieve this by making the most of the selfsame big data that presents such thorny challenges for traditional M&A approaches. Alongside the target’s data, these solutions tap into third-party data, statistical algorithms, and quantitative analysis to generate deep insight and streamline decisions.
Just How Fast Is Fast?
But what does that mean in practice? Just how much can cutting-edge analytics accelerate the due diligence process? While it’s scarcely possible to put a reliable general figure on time-savings of this kind, the following example gives some idea of what is achievable.
Recently, Accenture Strategy helped a large life sciences company divest part of its business. The engagement was especially challenging in view of the large volumes of intellectual property stored in the divestiture’s systems.
Leveraging AI, the M&A experts were able to identify which IP belonged to the divestiture and which belonged to the divesting company. They completed this mammoth task, which would have taken months using conventional methods, in under one week.
Innovate and Conquer
In light of the constantly changing M&A landscape and the steadily rising tide of data, it is imperative that companies contemplating mergers embrace innovation. Advanced AI-powered analytics solutions not only accelerate the overall M&A process; they also enable potential acquirers to zoom in on and analyze critical information more accurately.
If your organization is currently considering an M&A deal, it makes sense to start sounding out how this tech could help you master the associated challenges – because companies that put advanced analytics solutions into play now will stand to gain considerable competitive edge going forward.