Investment M&A puzzle pieces

3 Considerations for Investment Firms Pursuing M&As

Posted by  Debra Carbone

I regularly read news about the investment industry and have noticed the continued trend this year of mergers and acquisitions. With a stronger economic climate and firms’ limited ability to grow organically they turn to non-organic methods like M&As in order to extend reach, improve client base and increase revenue.

Although these transactions can provide a quick way to expand business, they do have a high incidence of failure or of not meeting expectations, so it’s important they are managed with a solid strategy and the right tools in place.

Below are a few important things from a technology standpoint to take into consideration when planning a merger or acquisition: 

1. Technology Integration

The success or failure of a merger or acquisition is built around how well resources are integrated including technology. The significance of systems integration can’t be under estimated. And, although front office components (sales, marketing and operations) are most likely to take precedent, it’s important to also keep back office operations (finance and IT) at the forefront. Too often they are overlooked, but both are critical to business functionality and success.

2. Speed of Execution

The longer it takes to merge two companies the more it will cost and this additional time will drain value from the transaction. You must be able to have systems talking together quickly.  A flexible ERP or financial system proves invaluable in these circumstances. When you have a platform in place that can easily work together with a wide range of front office and back end business applications, you’ll be ahead of the game with a structure that can import data and quickly provide solid reporting for better insight, improved decision making and greater control. 

3. Global Challenges

If you acquire or merge with an international company it’s important that your ERP or financial system can work with the language, currency and compliance requirements of that country. If your ERP or financial system isn’t set up to handle those divergent processes you’ll have difficulty realizing objectives. Manual processes will likely be needed to gather information for effective analysis slowing management’s ability to make decisions as well as the depth of information and is likely to be prone to errors.

These are just a few of many things to consider when merging or acquiring another company, but they are important ones and are often overlooked. With the failure rate of M&As high, it’s essential to put a strategic plan in place early and take into account all processes including the back office which can make or break the success of this major transaction.  

Deb at Unit4

Debra Carbone

Deb is the Marketing Coordinator at Unit4. She's interested in the financial services industry and event management.