The world of mergers and acquisitions (M&A) has changed. Now, mindsets are catching up. CEOs no longer see technology as a cost of doing business in M&A. Rather, our research found that 74% of CEOs say technology is a growth enabler or source of competitive advantage.
Given this shift, it is striking that only one in four CEOs report conducting technology due diligence for most of their deals.
The perception? Technology is crucial to M&A success. The reality? With deals closing at a rapid pace, there is pressure to move quickly, and resources are scarce.
Focusing on technology early on is worth it, though. A staggering 96% of CIOs have seen technology due diligence uncover major issues or opportunities in their M&A deals.
Why technology is more than a question of integration
In many deals, technology is still regarded as the problem child. Something to deal with as opposed to one of the best ways to create value.
A merger or acquisition is an opportunity to cover significant ground in a short period.
It’s all about value at a faster clip. Companies that treat it as such, from a technology perspective, reap the benefits.
There is one action we see, again and again, contribute to success. The best serial dealmakers don’t just create the M&A vision. They share it broadly across the C-suite to align all areas of the company.
This way, the CIO organization has a clear view into desired end states and can optimize for the best synergy scenarios. With this guide in hand, they can make selective bets on where to make fundamental changes in the tech architecture to be frontrunners in the industry.
We’ve emphasized technology as a value creator and growth enabler in M&A. There are also efficiency and risk lenses that deserve attention.
Technology is a key driver in minimizing and avoiding Transitional Service Agreements (TSAs).
One private equity buyer cut its TSA period in half by implementing a greenfield, cloud-based IT system. In the process, they created more strategic freedom while reducing costs.
Getting to value quickly
Technology is often seen as the “longest tent pole” in M&A.
However, business value can be delivered much sooner. For example, a full technology integration might take 12-24 months. Yet integrated analytics capabilities can often be set up within two months.
Approaching cybersecurity proactively
Cyber due diligence is listed as a top challenge in M&A integration.
A modern, multi-pronged approach helps leaders keep their focus on optimization and value creation versus handling unforeseen risks down the road.
Guiding talent along the journey
Technology is a powerful tool, but it’s the people that make it work.
Listening closely to the workforce. Making sure people have the required skills. Facilitating collaboration across teams and functions. These are steps leaders can take to help ensure people embrace technology and use it to full value.
A holistic approach to technology is essential to maximize value in today’s deals. That means making technology part of your M&A DNA. Increasingly tech-savvy boards expect no less. Read the full report for more on how you can lead with technology in your next deal.
of deals that outperformed sector averages saw dealmakers place significant emphasis on technology.
of CIOs agree that M&A can accelerate in-flight tech initiatives.