Post COVID-19 M&A – The Springboard for a Stronger Market
May 27, 2020 | Industry trends
Simon Ratcliffe Principal Consultant, Advisory
In the current climate, economic turbulence is creating market volatility that is creating opportunities for M&A activities across many industries. M&A is a fact of corporate growth, enabling organisations to rapidly expand their services and market penetration whilst using market dynamics to their advantage. For some organisations the current market is the perfect opportunity to divest non-core elements of their business, for others it’s an opportunity for unplanned growth.
Speed of execution is, and will continue to be, a key function of successful M&A. This will now need to accelerate as more organisations see the M&A opportunities unfolding. To maximise the current market and its opportunities, organisations need a faster, more agile and effective approach, whilst still applying the appropriate level of due diligence.
M&A activity is not just for Private Equity.
It extends to many organisations who find themselves with a financial war chest and market opportunity. The heart of most companies is the underlying technology and people on which the core business is run. Successful acquisition and subsequent merger/divestment require a rapid and up to date understanding of the technology landscape and the impact the potential change will have.
The current climate sees many organisations with their aspirations for organic growth hampered and many will turn to acquisition to recover their preferred trajectory. These organisations will have built a growth-focussed war chest and will view the current turbulence as opportunity rather than threat. However, with the many restrictions still in place around the globe, opportunity for traditional due diligence activities are limited. There is a clear need for the aspiring acquirers to assess, evaluate and plan for initial merger activities in a highly compressed timescale.
Infrastructure, applications and IT teams are all core areas of today’s businesses. Failure to properly understand these components can result in inaccurate estimates of value or failure to capitalise on post-acquisition benefits.
Speed and accuracy are critical factors in the current climate.
Some organisations have sufficient resources to undertake due diligence with their internal IT staff but, for many, this is a big ask of often overstretched resources. Successful M&A is invariably predicated on the merger delivering a united, single business with a trajectory of short and long term business benefits. History is littered with examples of acquisitions that simply did not realise the original high expectations and many of these can be traced to an inability to effectively merge two sets of people, process and technology.
Gaining a deep understanding of the technology landscape of any acquisition is increasingly complex. It may involve carving out elements from existing systems, merging, re-platforming or consolidation of systems. It may involve systems such as mainframe, data centres or hyperscale cloud, in a complex web of interconnected systems and processes.
Effective acquisitions are invariably those that achieve rapid inter-business collaboration to drive new revenue opportunities or operational and cost efficiencies. Defining a combined technology roadmap, assessing and optimising skills and capabilities with an associated operating model to optimise operational costs, security and governance are key areas for success.
A flexible M&A framework
Ensono are a global infrastructure and systems Managed Service Provider. For many years we have been supporting clients on their IT journeys whilst remotely supporting their systems. We have developed a deep experience in rapidly assessing, novating and optimising technology environments, whilst helping re-design target operating models. We have launched a flexible M&A framework that can be applied to a wide variety of acquisition activities to deliver rapid, time-boxed engagements to allow organisations a comprehensive understanding of their target environment with a clear roadmap of benefits. Our framework can be applied pre or post M&A as its value is within its flexibility coupled with a clear focus on driving rapid results in a time bound 90 day engagement model. Our framework utilises the skills, resources and expertise we have been using for over 30 years to deliver success for our clients, to create a lightweight engagement model to support M&A activities.
If you find yourself with a window of opportunity, wondering if you can use your internal IT team to assist in scoping the situation, or would like to talk to an external business specialist with the expertise to assist you, Ensono would be delighted to have that conversation.