5 ways private equity and venture capital firms can leverage ERP for smoother mergers and acquisitions

With valuations expected to rise across the board after a huge spike in private equity mergers and acquisitions in 2021, many private equity and venture capital firms face a world of opportunities.

But opportunities are never without adversity. Companies involved in M&A transactions face a range of potential challenges at the strategic and operational levels.

In particular, when two merging entities are running on fundamentally different financial systems, managing the resulting compliance, security, and management issues can become a real barrier to both initial due diligence and ongoing reporting.

At Unit4, we believe that the right ERP platform can make a huge difference to both the likelihood of success of M&A projects and in maintaining business continuity.

Standardizing your firm’s processes on a single technology stack (backed by a system like our own cloud-based Unit4 ERP) allows not just for a smoother ride and unified KPIs, but carries distinct advantages across the following 5 major areas of interest:

Click to read How to win the service game with ERP Gated

1. Providing improved due diligence through better insight into business capabilities.

Due diligence is always a leading concern from the very outset of an mergers and acquisitions project, and due diligence requires data visibility, accurate reporting, and real-time access to information. All difficult commodities to come by as operational complexity increases in the wake of rapid large-scale business transformation brought about by COVID and its aftermath.

Because ERP can encompass such a wide array of business processes and operations – especially when it’s designed like Unit4 ERP for simple and seamless integration with other systems – the kind of visibility you require to make due diligence efficient and effective is easily achievable.

2. Positioning exits for optimal return through up-to-the-minute data visibility and intelligent forecasting

Simplified access to financial performance reporting – combined with robust AI and machine learning backed forecasting tools – make it possible for you to not just see how a portfolio company is doing now, but predict how it might be doing 1, 2, 3, or 5 years in the future.

These systems can also be leveraged to allow you to perform scenario planning and “what if” analyses of any potential future situation. Allowing you to recast your entire business based on potential acquisitions and portfolio performance trajectories and make plans that account for every possible outcome.

And with system-controlled alerts that can often help you predict potential problems before they occur, and role-based dashboards that can be used to “push” information to and from the system as it becomes available, you’ll be much better positioned to plan for the best possible exit for your firm.

3. Standardizing business processes across your entire portfolio

Implementing the same ERP system across your portfolio of companies can bring endless gains by ensuring that the entire portfolio “speaks the same language.” With a unified structure for reporting and forecasting, you’ll be in a position to put finance teams in the driving seat. Allowing them to support you effectively in making strategic decisions more quickly.

4. Supporting carve-outs with simpler viability checks and multiple data perspectives

A modern ERP cloud system allows your organization to quickly interrogate data from multiple perspectives. This function can provide the insight you need to know if a potential carve-out project is viable, how quickly you can expect it to scale, and what resources you’ll need to invest to ensure the project is successful.

5. Supporting quicker and more manageable expansions

A unified platform for core operational processes that can rapidly scale up or down to meet business needs is vital for any expansion activity. A cloud-based ERP solution supports this kind of flexibility – allowing staff across different regions and functions to view key business information and perform core functional activities quickly and seamlessly without requiring any changes to your system’s architecture or disruptions to day-to-day productivity.

How can Unit4 help you?

Unit4’s industry-leading Enterprise Resource Planning (ERP), Human Capital Management (HCM), and Financial Planning & Analysis (FP&A) software solutions are designed specifically with skills-based and service-based businesses in mind, with a view to removing the burdens associated with routine administrative tasks such as data collation and consolidation, report creation, and forecast development so that your people can focus on higher-level strategic tasks with greater confidence.

To learn more about how we can help private equity and venture capital firms simplify operations across an entire portfolio for greater efficiency and profitability, click here to start a conversation or click here to book a demo.