The M&A boom and technology

Ben Potts

MD at Novidea

Views 336

The M&A boom and technology

26.10.2018 10:30 am

The M&A boom continues apace. A report by Deloitte has predicted that the number of M&A deals completed in 2018 will exceed that of previous years. In the insurance sector alone, deals have already been valued at $26.8 billion and there’s no sign of it slowing down. As a result, many insurance firms are either looking to grow their business or get to grips with newly merged operations.

Regardless of the level of market activity, the pressure on firms to make M&A deals a success remains as high as ever. The process can be a complicated one, but that doesn’t stop those at the top wanting a return on their investment as quickly as possible. To achieve this goal, businesses need to deliver a smooth transition to preserve value and maximise efficiency. Fortunately, technology can help. 

The top down approach

Following a deal, there are immediate and pressing decisions the board needs to make. There’s no time to waste if management is to preserve value and capitalise on its investment. Questions like where to focus resources, what the business objectives should look like, and how to restructure operations all need quick and efficient answers. On top of this, the board needs to proactively manage the merging of two different cultures to keep employees and customers happy and engaged.

If all of this can be achieved, the deal stands every chance of success – but only with strong and decisive leadership. Management needs easy access to all the information to plan properly and plot the right course for the business. Unsurprisingly, technology can play a huge part in putting this data at their fingertips, giving teams real-time insights and a 360-degree view of the business to support the decision-making process from the outset. 

It’s all about data

After M&A activity has been concluded, the newly combined business will naturally have access to considerably more data than pre-deal. The insurance sector is known to be particularly data heavy, but with a lot of legacy systems still in place, firms often fail to turn this information into actionable insights. 

Having the right technology in place allows the consolidation of data from across the business, breaking down silos and allowing executive teams to conduct performance benchmarking – both of which are key to making an integration as successful and profitable as possible. By applying analytics in this way, firms can identify where operational improvements can be made as well as spotting growth areas in the new business. 

Protecting revenue

Adding scale and realising synergies are two common reasons for businesses to agree on M&A deals. Ultimately, though, the success of any business is determined by its ability to generate profit, so it follows that companies need to keep track of their current revenue streams and what made them successful as individual entities. 

Post-merger, it’s tempting to focus solely on new prospects and further growth, but this makes the board susceptible to overlooking opportunities the existing customer base still presents. To avoid this pitfall, companies should regularly be conducting profitability analyses on their customer base. 

By determining the cost of doing business with each client and comparing it to commission and fees, management can see who is the most profitable and why. From there, they can decide where to invest more time and effort to generate the greatest revenue. Profiling the best customers also means that firms can target similar businesses whilst cross and upselling products across their book.

Sealing the deal is only the first hurdle when it comes to M&A. Board members are under huge pressure to make it a success, and it can be hard to know where to start. Investing in the right technology simplifies the whole process, allowing firms to cut through the noise with a 360-degree view of the business and easy access to actionable data. This helps provide transparency across the business and enables growth via cross and up sell as well as a quantified focus on business development. 

With this information to hand, leadership can make quick and effective decisions to keep the business objectives on track throughout the integration. Technology is essential for navigating vital post-merger activity and ensuring the deal delivers on its original promises. 

 

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