Acquisition Accuracy: How can procurement play a role in Mergers and Acquisitions?
Mounting procurement as the point of convergence prior to a Merger and Acquisition can enhance the benefits, reduce time and improve overall results in the midst of such a flurry.
Companies around the globe have been looking at M&A to record an immense footprint in new markets and expand their reach. In such situations procurement does draw a lot of curiosity since companies aim to minimize their total cost to operate more efficiently.
Let us take a closer look at how technology can help streamline mergers and acquisitions:
- Business Perspective of M&A
The benefits availed from an M&A isn’t limited only to share-holder value, revenue or precipitated cost cutting. The long term benefits can be streamlined from various sources. Some studies have shown that companies adjudge several factors to drive a successful M&A strategy, namely:
- Expansion of customer base in the current market scenario
- Savings in operating costs after two companies that complement each other’s strengths.
- Venture into new markets
For striking impeccable mileage, effective integration is of umpteen importance, for which companies require a robust IT infrastructure and engagement.
- IT perspective of M&A
Improving business value is the incentive behind most mergers & acquisitions but at the same time defining the role of IT in M&A activities is pre-eminent since it is a complex undertaking. Augmenting integral processes is the prime objective of any M&A.
IT should allow efficient integration management which in turn allows the best use of time and money along with framing appropriate policies for project management and vertical integration. End user satisfaction and avoiding disruption helps in providing quality information for corporate-wide access and effortless usability.
- How can IT create value in M&A
“Technology integration is among the most important parts of an M&A transaction,” says William Kucera, co-chair of the M&A practice at law firm Mayer Brown. Mergers look great on paper. In reality, integrating corporate IT systems can not only be a headache for the IT department, core business functions can be compromised including financial reporting or other tasks crucial to effective corporate pliability. IT has been traditionally recognized as the key to business optimization and supporting various integral processes that add to an organisation’s value. With automation becoming more pervasive, prevalent and pivotal to business operations, it is imperative for investors to include technology considerations early into the transaction lifecycle, particularly in the due diligence phase. This helps avoid potential erosion of deal value and reveals additional opportunities to realize operational benefits. For many new companies prudent use of information technology feeds into their business model and could be the deciding factor between knife and edge.
While companies are increasingly laying their dependency on IT to synchronize transactions, coordinate operations and be able to pursue new market opportunities, the importance of IT in M&A is vital. Organisations with a clear understanding of the importance of IT in M&A can sway over their competitors and be able to complete mergers effortlessly.