CIO Insider

CIOInsider India Magazine


Accelerating M&A Deal Success through Digitalization

Dharmendra Singh, CEO, MergerWare

Dharmendra is a seasoned M&A professional with a wealth of experience spanning over several decades.Passionate about catalyzing business transformation and optimizing M&A performance, he boasts a remarkable track record of leading successful change initiatives. Dharmendra's unwavering commitment to leading change ensures the prosperity of organizations. Armed with an INSEAD management degree and years of expertise in the M&A realm, he brings both knowledge and a foundation of excellence to every endeavor.

In an interaction with Keerthana H K, Correspondent at CIOInsider Magazine, Dharmendra provided insights on successful M&A integration, emphasizing digitalization benefits, KPIs, change management, and real-time tracking through tailored dashboards for efficient decision-making and planning. Below are the excerpts from the exclusive interview –

What are the strategies to ensure a seamless integration of two companies?
The integration of two companies is a complex process with a 90 percent failure rate of creating value after the deal. The complexity starts right before the purchase decision, emphasizing the critical need to align the right people and execute timely integration. In this case, the challenges encompass acquiring the right skills and processes, meticulous planning and assembling a skilled team. Many companies struggle with these strategic moves, often compromising the value of their acquisition. After all, preserving company culture, seamless communication and aligning the acquired company with the existing structure are monumental tasks.

Essentially, a well-planned, skillfully executed integration is the linchpin for realizing the true value of an acquisition. A successful integration strategy is contingent upon having specialists who possess a deep understanding of both the business and the intricacies of the integration well in advance. When the key elements are in place, the likelihood of achieving a successful integration and profitable acquisition significantly increases.

How does digitalization help accelerate M&A deal execution, in your opinion?
The process of deal-making entails substantial manual effort in managing key performance indicators (KPIs) and establishing internal M&A processes. Often, these procedures are manual, with individuals dispersed across various regions updating necessary information. For instance, consider a scenario where a legal department head is tasked with overseeing a global deal. Coordinating efforts becomes challenging due to the intricate and labor-intensive workflow, particularly when team members are scattered across different regions. Amidst these challenges, digital tools emerge as invaluable assets, not only streamlining the evaluation of potential acquisition targets, but also amplifying efficiency, enabling more informed and strategic decision-making.

Digitalization revolutionizes mergers and acquisitions (M&A) by automating repetitive tasks and M&A processes through playbooks. This simplification of complex operations facilitates seamless collaboration among geographically dispersed teams. The shift towards digital transformation significantly reduces time and effort traditionally spent on manual tasks, often by up to 50 percent. This journey not only expedites deal closures but also enhances decision-making accuracy, fostering collaborative work environments. By eliminating ambiguity in traditional deal-making, digitalization ensures alignment with company goals and promotes harmonious teamwork.

How should one prioritize initiatives for maximum value and growth in the combined entity in an M&A context?
In the context of prioritizing initiatives for maximum value and growth in the combined entity following an M&A, KPIs play a crucial role. KPIs are essential metrics to identify synergies and assess the added value of

mergers or acquisitions, while enhancing cost and revenue. Throughout the deal-making process, KPIs are meticulously monitored from initiation until seamless integration.

A critical KPI measures the success of the deal by setting specific goals to justify the acquisition. Post-acquisition, performance monitoring becomes paramount for achieving these goals and ensuring sustained financial support.

After the acquisition is completed, a focused approach to high-level KPIs is imperative, often falling under the oversight of a financial controller or a comparable role in larger companies. Individual departments are tasked with meeting predefined targets, both on day one and during the critical initial 100 days post-acquisition. This phase is particularly sensitive, witnessing potential significant changes in staff, customer base, and synergies. Retention rates and attrition are scrutinized during this crucial period.

By aligning initiatives with these meticulously monitored KPIs, the combined entity can prioritize actions that contribute to maximum value and sustained growth in the post-M&A landscape.

What are some of the key KPIs for M&A integration success and how does digitalization enhance them?
In the context of M&A integration success, KPIs at the deal level play a crucial role in defining specific metrics that must be achieved post-acquisition, with a focus on company development. The conventional post-acquisition reporting and monitoring process is often manual and cumbersome, involving individuals who manage using Excel sheets containing vital data. This inefficiency stemmed from challenges like time zone differences, data chase, and last-minute updates.

Digitization holds the potential to revolutionize this process significantly. By enabling stakeholders to securely access data, digitization ensures that only authorized personnel can modify information. This streamlined approach eliminates data inaccuracies, addresses time zone challenges, and ensures real-time updates, resulting in more reliable and timely reports. In a way, digitization empowers those responsible for KPIs by making data more accurate, up-to-date, and readily accessible. Reports can now be generated on-the-fly, guaranteeing that everyone involved in data input takes ownership of its integrity. This digital transformation enhances the overall effectiveness of the KPIs and contributes to the success of M&A integration.

Digitization and AI can help streamline M&A processes by providing accurate and comprehensive intelligence that drives deal success.

How do organizations address change, people, and skill challenges in integration, and how does digital M&A help?
Navigating change, people dynamics and skill challenges during integration is a critical journey for organizations immersed in deals and acquisitions.
Picture this: when a company moves from acquisition to integration, it's like orchestrating a symphony of changes—new processes, revamped sales strategies, and upgrades in their IT systems. To orchestrate this symphony seamlessly, companies enlist change managers. These professionals play a pivotal role in preparing employees for the impending changes and ensuring a unified understanding across different organizational segments.

Now, if we think about skill development then, acquisitions bring forth a mix of opportunities and potential job losses. However, the silver lining is that employees get a chance to acquire new skills and transition into different roles, fostering significant professional growth. Companies are committed to finding alternative roles for those affected by job losses, creating an environment that boosts overall skills and capabilities.

Enter digital M&A—the unsung hero in this narrative. It streamlines the complexity of planning and deployment processes, acting as a digital ally by making the entire transition more manageable. Moreover, it serves as a centralized hub for knowledge and best practices, providing a seamless avenue for everyone to access and adapt to changes.

In essence, organizations should navigate these challenges with a strategic fusion of change management, personalized communication and skill development initiatives. Now, imagine digital M&A as the master conductor of this symphony, orchestrating a seamless integration process. These digital tools are not just facilitators; they're the architects of efficiency and effectiveness, transforming the integration journey into a well-coordinated and forward-looking endeavor.

How do leaders track M&A progress and how does digitalization facilitate real-time updates?
Leaders in M&A track progress through a dynamic process that evolves as the deal advances. Initially led by key figures like the Chief of corporate development, the team expands to include stakeholders and investors in supporting roles. Enter digitalization, a game-changer in this arena. It revolutionizes progress tracking by offering a customized dashboard, providing real-time access to critical information, especially crucial for international teams. Knowledge management is a linchpin in the integration process, and technology ensures swift adaptation for new team members.

From high-level deal tracking to detailed analytics, technology streamlines the entire information process, facilitating planning and decision-making. Digital software platforms go beyond mere tracking; they offer valuable insights into past and present deals, projecting revenue growth, guiding investments and supporting efficient decision-making. This digital approach transforms the landscape of managing M&A deals, optimizing efficiency, and fostering strategic planning.

Current Issue
Datasoft Computer Services: Pioneering The Future Of Document Management & Techno-logical Solutions