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TECHNOLOGY IS CHANGING M&A

  • New Accenture Strategy research shows large companies are now pursuing more mergers and acquisitions to gain digital capabilities. With digital fueling new business growth, they are supplementing their organic digital growth with inorganic deals.

  • As companies consider the acquisition of other organizations for their digital prowess, a second layer to the digital deal conundrum reveals itself. It is not enough just to acquire or merge with digital savvy. Companies must then spread that digital savvy across the broader organization.

  • The true victors in M&A will be those who apply digital technologies to their own processes, giving them a competitive advantage from strategy to playbook, for both digital and traditional deals.

In mid-2017, Accenture Strategy surveyed 1,100 C-Suite executives representing 13 industries in seven countries. We explored strategic areas and opportunities where companies are harnessing technology to increase business value.

Accenture Strategy research shows 84 percent of respondents indicate their firm acquired another company in the past two years, while a third acquired five or more companies.

The rush for digital capabilities is a major contributor to recent increases. Nearly one-third of companies logging M&A activity described themselves as traditional companies acquiring digital companies or assets. And of the most active companies―those who completed five or more deals in the prior two years―more than half of their acquisitions were related to gaining digital capabilities.

Digital needs are fast rivaling traditional reasons in spurring M&A events.


READ THE REPORT [PDF]

Of the companies most active
in #MandA, more than ½ of
their #acquisitions were related
to gaining digital capabilities.


What typically triggers an M&A event for your company?


43% acquire new digital capabilities
42% expand into new geographic markets
42% need for next-gen technology
42% expand into new industries

A TRADITIONAL M&A APPROACH DOESN’T WORK FOR DIGITAL

Three out of four executives (78 percent) agree or strongly agree that companies cannot rely on their current M&A capabilities for digital deals and must hire digital leaders into their M&A organizations to succeed.




61%

use a different pre-deal team and evaluation criteria


56%

follow different valuation and cost models


49%

use a different playbook

In addition, 58 percent say technology is already allowing them to achieve targets and capture value faster in their M&A deals.


VIEW THE INFOGRAPHIC [PDF]

INTERNAL DIGITAL CAPABILITIES AS THE SWISS POCKETKNIFE

If the traditional M&A toolbox is no longer sufficient for digital deals, it must be expanded and changed. But, applying digital to the ins and outs of a deal is only part of the equation for success. Companies must become more digital themselves to integrate newcomers as rapidly and effectively as possible—doing so provides them all the benefits of digital in a Swiss pocketknife effect.

Many acquiring companies are undergoing their own digital transformations, but most have not digitized completely. For instance, 57 percent say they have a platform in place to enable new businesses and systems to rapidly integrate, as well as digital expertise to support the integration.

Surprisingly, it is often M&A that pushes companies to digitize more broadly; 85 percent of executives surveyed agree or strongly agree M&A activity has forced their company to develop a data strategy.

AN EMERGING SCIENCE

Digital technologies help C-suite leaders transform M&A from an art to a science, to increase its capabilities as a driver of innovation and business growth. Leaders are already making some important changes:


TREAT DIGITAL DEALS DIFFERENTLY
Leading companies develop a distinct process that best suits digital investments. From target screening to valuation, discovery and negotiation, leaders see a modified playbook as an advantage.


SPREAD THE JOY
Successfully acquiring a digital disruptor is just the starting point. Leading companies spread that digital savvy across the broader organization to help scale new business growth.


GREENLIGHT DIGITAL INTERNALLY
Forward-thinking companies leverage analytics and applied intelligence to vastly improve their end-to-end capabilities for all acquisitions―both traditional and digital.

Successful M&A teams already bring art to the deal in a way only humans can. Complementing that art with the science of analytics and applied intelligence only bodes well for the future of M&A.


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