Since 1985, more than 325’000 mergers & acquisitions transactions have been announced with a known value of almost 34’900 bil USD. Typically, M&A activity derives from a strategic business decision based on a perceived opportunity for expanded growth, addressing competitive positioning, or as an effort to maximize business efficiencies.
Economic circumstances drive different forms of M&A activity, with growth and competitive strategy-driven M&A occurring during a strong economy, and efficiencies are driven activity during an economic downturn. However, regardless of the drivers behind M&A activity, certain core integration risks remain common during any merger or acquisition.
So how does a CEO, and their management organization, address the risks for an opportunity, both from acquirer and acquire perspective? How should organizational and infrastructural risks be mitigated or addressed during the tumultuous period of a corporate merger or acquisition? The traditional way is to have smart, experienced people, usually with outside consulting help, review financials, integration points, and subsequently develop a merger plan. These merger plans attempt to encompass everything from organizational structure to company infrastructure, but the process is usually painstakingly manual and, very often, critically overlooks or discounts the challenges of merging sophisticated technology infrastructure and processes.
Pitching the Deal
From a public perspective, most such deals are pitched as 2+2=6, but, in reality, the equation is more along the lines of n=(2+2)-((x*y)*time), with “x” being infrastructure rationalization costs and “y” being organizational challenges. Even in today’s technology-driven world, the question of how to merge complex, often disparate, line of business systems is very often left to guesswork that will be addressed only after a merger is in progress. These issues represent the bulk of business-critical risks in a merger or acquisition since these systems are the foundation of any modern enterprise.
How does an organization manage these opportunities and their inherent technological risks?
At Crosscode, we believe a large part of the answer is found in our new, easy to use, rapidly deployable, cloud-based dependency management platform. Our platform, Panoptics, can gather and organize the critical detailed data that pertains to application and infrastructure relationships.
Centralized Impact and Remediation Analysis allows companies to understand the software infrastructure they rely on to run their business and can be used both before, during and after a merger or acquisition. This provides comprehensive additive value, beyond just the immediate needs of M&A activity. The information provided by Panoptics is critical in removing the guesswork about what assets exist within an organization, and how appropriate such systems might be for integration and subsequent operational cost savings (or lack thereof).
From the firms that facilitate M&A activity to the companies pursuing an M&A strategy, having Panoptics available to determine the real state of systems and the complexity of their relationships and dependencies, provides a vastly more accurate view of the underlying value of each company, along with the risks involved to both organizations. Such tools enable decision-makers and planners in-depth data to drive decision making, which in turn can provide a far more accurate assessment of the real financial risks and rewards involved with M&A.