Using Data and Analytics in Mergers and Acquisitions
Updated: Jul 21, 2019
The use of data and analytics to support the Mergers and Acquisitions market has seen a big jump in recent years. As a modern day Corporate Finance Consulting Firm, we certainly look to leverage the power of data to gain a competitive advantage for clients. Gaining access to the right data points and understanding how to analyse this with appropriate analytical tools has given some medium and larger organsiations a real advantage in improving their own digital portfolios.
Recent research form Accenture indicates that up to 78% of executives agree that a different approach is needed when it comes to digital M&As.
Digital transformation and deregulation of the industry has contributed significantly to the growing M&A activity. We are seeing a big increase in medium and larger organisations looking at M&As to increase their digital capabilities and remain ahead of their competition.
The world-wide M&A market has been on the up with 41 percent of companies indicating that they are likely to pursue acquisitions within the next 12 months. Bloomberg research indicates that in the Middle East alone we have seen an increase in the value of deals to $33.7 billion last year, the highest level since 2007.
In Southern Africa we have also seen an increase in digital areas, specifically in Fintech, Telecommunications and Agriculture. As the trend towards the digitalisation of traditional banks has gained pace together with an increase in new financing technologies for small and medium sized businesses, a vibrant market looks to further strengthen the opportunities of acquisitions. The agricultural sector across Africa is also benefiting from an influx of technologies which provides further exciting opportunities to modernise and optimise agriculture.
Digital acquisitions are quite different to those happening with traditional businesses. Both the approach of due diligence, the selection of teams, the use of valuation and cost models and the approaches in determining future value are all quite different in digital acquisitions.
Increasingly we also see that the use of data and analytics play an important role in the decision-making process. Corporate finance advisory firms are looking at big data and advanced analytics processes to support and create M&A prediction models, while emerging technologies coupled with advanced data collection and analytics tools are transforming M&A decision-making and being used to derive profitable insights.
As the availability and access to data increases we can support business leaders with stronger data insights at every stage of the transaction cycle, providing more transparency, stronger negotiation terms and an overall improvement of post-deal integrations.
So where exactly can the use of data and analytics support you in identifying and executing real value adding acquisitions for your business?
Identifying Acquisition targets
Lets start at the beginning. The first step of an M&A is to determine a potential target. A solid portfolio strategy would identify the value of potential targets in terms of future revenue streams, disruptive technologies capabilities, customer purchasing power, and a definitive competitive advantage.
Using Data and Analytics, we help business leaders develop a better understanding with stronger visual support with which to compare targets.
Less is More
One of the key challenges of using data and analytics in identifying and assessing potential targets is data overload. In assessing the viability and organisational fit of a deal you need to ensure that you are looking at the right data, instead of simply collecting all potential data you have access to.
Speed and richness
Acquisitions can be both time intensive and in some instants time sensitive. If you have identified an attractive target with a strong management team, chances are that your competition might have done the same. On-time insights are essential for effective decision making and for accelerating integration execution strategies. Using the right analytics tools can ensure that you have access to the right data in time to make the decisions you need.
Today, analytical tools for M&A are built on sophisticated platforms with advanced analytical techniques. With the right support and access to the right tools, organisations can really leverage the power of data analytics, to enhance due diligence processes, increase returns on investment and ensure that the risk of over-valuing or acquiring the wrong target company is minimised.