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The big data game plan in mergers and acquisitions

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Over the last few months, the billion dollar acquisition has made a comeback. According to Dealogic, mergers and acquisitions (M&A) activity is off to its fastest start since 2007, with deal volumes nearing $1.3tn in the first four months of 2015. 

In fact, these deals are being largely driven by a number of “jumbo” deals, or mergers that are greater than $5bn in value, which account for 43 per cent of all activity – the highest proportion since 1999. We’ve already seen multi-billion dollar deals across a range of industries, such as Expedia acquiring its US rival Orbitz and BT buying EE for example. 

With M&A activity showing no sign of slowing, I wanted to take a moment to explore some of the factors that help to make mergers and acquisitions a true success, specifically the growing importance of data analytics. Here are some of the key opportunities open to those who understand the value of data analytics during a merger and acquisition:

1. Choosing the right move

Every merger or acquisition is different and each comes with its own set of challenges. But the basic principle is the same: two companies joining together to bring measurable synergistic gain. While each acquisition may be unique, the first step is nearly always identical; it requires a well thought out game plan, so that the best possible target can be picked.

Thorough market research, number crunching and due diligence is naturally required for this to occur, meaning data analytics has a critical role to play while a merger or acquisition is being targeted. Using data analytics while planning an acquisition can help stakeholders to visualise the wider playing field, allowing for comparisons, combinations or cutting of duplicate resources to be made to help maximise revenue and minimise costs. 

Data analytics techniques can also be used, throughout the buying process, to see how the market will likely respond to the deal being made. As a result, this type of specific analysis offers the security required to justify such an important move.

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2. Moving nimbly

The reality today is that businesses of all sizes are drowning in data. Data is doubling in size every two years, yet only 22 per cent of it can be effectively analysed. In fact, roughly only 25 per cent of an organisation’s staff use BI tools for decision-making because either the tools are too hard to use for the everyday employee or they do not meet the needs of the business or of the users.

This is a challenge that clearly needs to be overcome, yet it is also one that becomes even greater during a merger or acquisition – ultimately, there is twice the amount of data to be put to work. 

When merging with another company, data is inevitably stored in different silos, customer data remains separate to financial data which remains separate to HR data for example. There is an opportunity amongst employees to quickly analyse disparate data sets. After all, in today’s fast moving business environment, having access to actionable data that is contextually relevant, and delivered in real time, is critical to being nimble, proactive and allowing all business users to make better decisions.

3. Creating the right culture

It’s of no surprise that when one organisation acquires another, there is often a clash of personalities, minds and therefore cultures. It’s worth keeping in mind that the most successful organisational cultures are defined by enabling all employees to use company data to make better informed business decisions.

Whilst going through the M&A process, there is no greater opportunity to build upon employee interest and encourage the training of a wider skillset so that every employee possesses the analytic skills needed to thrive in this data-driven economy. Businesses will be able to improve the speed and confidence in all future business decisions if – and when – armed with a full repertoire of analytic technologies and mind-sets. Building a common cultural bond into the organisation, by creating a data-driven approach, will allow success to be in sight. Through taking this approach, each answer to every business decision will be made clearer.

It’s crucial that all employees are able to use and digest company data to make better informed future business decisions. How quickly this process can be managed is what defines a successful acquisition. What many organisations aren’t aware of is how effective and intelligent data management and analytics can help drive M&A victory. 

No matter how a business utilises the silos of data in its possession, there is no doubt that today, an enterprise lives or dies based on its ability to make decisions in an accurate, timely and effective manner. With the availability of so much data and the capability of modern analytics tools, the opportunities that big data has to offer throughout the M&A process makes for success to be in reach.

Brian Gentile is senior vice president and general manager at TIBCO.

Image: Shutterstock

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