As businesses begin to emerge from the uncertainty of recent months, many are looking to tackle backlogs of mergers and acquisitions. With interest rates at a historic low, now is an ideal time to kick-start tech M&A initiatives. But for organizations seeking to complete multiple deals fast, traditional approaches are not an option. By industrializing their M&A, these “serial acquirers” can achieve the speed, efficiency, and cost-savings they crave. And that’s where the TechM&A Factory comes in.
The Challenge: Achieve Higher M&A Volumes Faster
Following the sharp downturn in M&A transactions due to the pandemic, companies are now starting to feel increasingly confident and are aiming to step up not only the pace but also the volume of their acquisitions. Thanks to interest-free loans, many are now in a position to address the M&A logjam that has built up over the past year or more. In fact, market observers expect mergers and acquisitions in 2022 to outstrip the previous highs seen in 2018.
The current financial climate is especially favorable for large organizations looking to make multiple acquisitions within a tight timeframe. However, the bad news is that traditional M&A approaches can’t hope to meet the challenges associated with these transactions.
That’s not all: Conventional methods simply can’t deliver the repeatability needed to successfully tackle the sheer number and pace of M&A transactions of this kind. And in light of increased market interest in the outcome of mergers and acquisitions, success is of the essence.
The Solution: The TechM&A Factory
Businesses with ambitious tech M&A plans can master these challenges by leveraging what I call the TechM&A Factory. As the name suggests, this is essentially an industrialized approach to M&A, comprising a variety of standardized, repeatable, semi-automated components that intermesh tightly to deliver reliable results – time and time again.
The foundations of the TechM&A Factory include standardized processes, playbooks, and blueprints, plus reusable tools and templates designed to accelerate resource onboarding. These combine to accelerate deals and deliver consistent solutions across multiple transactions, ultimately reducing the number of resources required and lowering costs.
Shared Expertise and Governance
Let’s look a little closer at the key components of the TechM&A Factory. Standardized playbooks and blueprints deliver 360-degree insight into the services and deliverables handled by the factory, enabling fast, efficient execution. And because they only have to be developed once, they also reduce costs.
Playbooks and blueprints provide greater transparency into future M&A activities, enhancing planning considerably. This not only enables more effective deployment of specialists, like application and data architects; it also allows valuable resources to be shared across various M&A projects, as required, preventing costly underutilization.
Another central feature of industrializing M&A is governance across multiple initiatives. This shared approach provides access to wider leadership support, improving governance as a whole. And with better governance, companies engaged in M&A can expect to see significantly higher returns on their investment.
Greater Scalability Plus Standardized Processes and Tools
When it comes to fluctuating demand for resources, the TechM&A Factory boosts agility, enabling organizations to respond faster and more effectively to changing needs. Resources can be rotated and rebalanced far more rapidly than would be possible using a traditional approach.
Finally, the standardized delivery model of the TechM&A Factory is tailored to the company’s specific requirements right from the get-go. Throughout initiatives, existing installed tools and environments can be reused. In addition, this standardization makes for more rapid mobilization while allowing integration of new technologies.
Many of these technologies have been codeveloped with universities and research institutes to ensure they’re based on proven input. One example of this is provided by process-mining tools like Celonis (www.celonis.com), which enable organizations to immediately capture process gaps and allow approaches to bridging these to be immediately integrated into the TechM&A Factory.
The Right Approach for Your M&A?
But is the TechM&A Factory a good fit for your planned mergers and acquisitions? Industrializing tech M&A can be a major commitment, so before taking your first steps on this journey, you should make sure your company meets the following criteria:
· You aim to complete multiple acquisitions with similar characteristics in a tight timeframe.
· The scalability of your processes and architectures hasn’t yet been road tested.
· You have limited resources for transaction execution, or your resources lack experience in integrating organizations.
· You intend to embark on a series of acquisitions or want to fundamentally reorganize your product portfolio.
Faster, More Efficient, More Cost-Effective
If your organization matches this profile, setting up a TechM&A Factory could help you achieve significant benefits in terms of speed, efficiency, and cost savings. Adopting a fully industrialized approach can fast-track the realization of IT synergies thanks to accelerated execution. This not only frees you from the counterparty sooner (for example, by letting you exit transitional service agreements); it also releases your experts and project resources for other tasks earlier.
As regards efficiency, industrializing your M&A enables you to execute projects at scale, with greater capacity for individual tech initiatives. What’s more, experience gained in numerous M&A transactions shows that optimized approaches can deliver efficiency increases of some 25% compared to traditional methods.
And last but not least, by sharing experts across projects and making highly skilled professionals available as required, you stand to reap significant cost savings. Plus, by establishing framework agreements with third parties at an early stage, you can respond flexibly to changing demand by tapping into additional resources quickly and cost-effectively.
Does the TechM&A Factory sound like an answer to your M&A challenges? If it does, and if you’d like to find out more about this approach and its benefits for ambitious mergers and acquisition programs, feel free to reach out to me. I’ll be happy to take a deeper dive into the topic with you.