The Key To Successful M&A Is an Intelligent Data Integration Strategy

The economic uncertainties the world faces today have inevitably dampened the mergers and acquisitions (M&A) outlook and Asia has not been spared. In 2022, deal value and volume fell from record peaks the year before, according to Norton Rose Fulbright (NRF). The descent to pre-pandemic levels raises the issue of whether the activity will stabilize or drop further amid shrinking growth. However, NRF predicts that not all hope is lost and that 2023 could yet be a good year, adding that a strategic vision and ready access to capital can be foundations for seeking out valuable opportunities.

These sentiments are echoed by the TMF Group, which predicts the appetite for post-pandemic growth to be the main driving force for the region's M&A transactions. The consultancy firm also sees national policy changes to transform local economies, greater private sector commitment to environmental, social and governance (ESG) initiatives, and visibility over supply chains as other drivers.

Meanwhile, EY states that M&A activity acts as a vehicle to transform businesses but that a changing geopolitical landscape has increased intraregional activity. The research house also reveals that M&A activity in the region is increasingly seen as a means for acquiring the digital capabilities and scale needed to succeed.

While M&A activity can undoubtedly enable businesses to have more resources to navigate disruption, it can likewise bring about new challenges that reduce agility.

Barriers to M&As

Transitioning from distinct companies to an integrated business entity is hardly a walk in the park. The typical M&A involves many digital actions, and holding onto poor legacy technology will negatively impact the business. According to PwC, nearly 50% of deals in the Asia Pacific have destroyed value and/or underperformed in terms of Total Shareholder Returns (TSR). Though various challenges — from differing stakeholder needs and variable sector maturities — can scupper success, combining existing technology can alleviate these downsides.

Inevitably, when there is an imbalance between the companies' stacks, all data-related processes are potentially guaranteed to be inconsistent, regardless of whether they are housed on-premises or in the cloud. The result is organizations grappling with low-quality, siloed data that comes in disparate formats. This, in turn, significantly raises cost and time inefficiencies, hampering the potential benefits of the M&A in the first place.

Pivoting away from outdated, legacy technology is crucial, or these problems will persist. For instance, the notorious difficulties with migrating Enterprise Resource Planning (ERP) software is one pain point that can saddle the business with humongous project run-off costs.

Why an intelligent data integration strategy is critical

Achieving a single view of the new organization — and, therefore, cohesion — hinges on connecting essential business applications. Under no uncertain terms, this facilitates information sharing across the recently formed organization.

For this reason, a clear post-merger integration plan will include ways to maintain business-critical applications, IT systems and data so that normalization and translation from multiple systems can occur.

Even more so, with the cloud's growth in Asia Pacific — which Forrester characterizes as a battleground for cloud providers. For a newly formed business entity, the question will be how to glue together these cloud applications. At the heart of that is making data accessible while providing the proper governance. All stakeholders must know the value of harmonized data management and the grave consequences should integration fail.

These various data sources are also critical to overcoming IT complexity and breaking down silos. This requires all involved to access raw data from a single platform, which can facilitate consensus on an approach to drive the business forward. An integration-platform-as-a-service (iPaaS) is often touted as the solution, but can it really generate the requisite cohesion?

Getting ahead of disruption

At deal close, more often than not, the business applications may not be in their ideal end-state. However, they can be quickly configured to correct this and connect data at sufficient speed. Here an iPaaS that delivers low-code development can alleviate technical debt while enabling enterprise-wide connectivity through data amalgamation and management. It also provides a central hub that offers 360-degree visibility across the newly merged enterprise.

Such a platform significantly mitigates the risk of being outshone by rivals by allowing the business to streamline connectivity between people, processes and data across the new business.

As a result, large and diverse teams of multiple people with varying skill sets can all learn how to use visualization tools because advanced developer skills are not a prerequisite. While those who do have those skills will be freed to carry out tasks that create additional sources of business value. At the same time, by enabling a broader pool of people to participate, an integration platform raises agility.

While seamless unification in M&A transactions can be a monumental task, an effective post-deal integration plan can ensure the business hits the ground running by being lean and nimble. An iPaaS equipped to handle high-volume traffic and transactions with straightforward configuration and minimal customization will address these nuances. At the end of the day, this will enable the entity to overcome disparate systems and processes, unlock profitability in record time and stave off the competition.

Hon Chew Seetoh, director of Asia at Boomi, wrote this article.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Image credit: iStockphoto/nespix