The powerful role of data integration in an M&A
By Brendan McGuire, Principal at Wipfli LLP, Data Analytics
In the realm of M&A, the acquisition of a new business entails more than just gaining ownership. It also involves obtaining access to new business systems and data. The significance of this data and the existing architecture cannot be underestimated, as it can either become a valuable asset or a hazardous liability, depending on its quality.
An effective data integration strategy is vital throughout the M&A process to ensure that data doesn’t get lost in the shuffle.
Steps to assess data quality
Clear and trustworthy data is indispensable for accurately valuating a company before finalizing a deal. Prospective buyers must meticulously review operational data, including sales records, revenue trends and customer retention metrics, among other variables.
So, how can one determine if the data is reliable? Quality data is characterized by four key attributes:
- Accuracy: Key performance indicators (KPIs) are clearly identified, and tracking is reliable and verifiable.
- Consistency: Data is entered and maintained using stable, reliable patterns.
- Availability: Records and reports are easily accessible and comprehensible.
- Security: Robust processes are in place to safeguard against data leaks or cyber breaches.
Be cautious of ambiguous recordkeeping, inconsistencies, and data gaps. While bad data can raise red flags, it may also provide valuable insights to potential buyers. What is crucial is to proceed cautiously.
Plan for integration
Proper planning for integration is essential before finalizing the transaction. Buyers should assemble a cross-functional team comprised of accounting, IT, and finance professionals to identify synergies between business systems, discrepancies in methodologies and strategies for seamless integration. This team can also reevaluate systems to ensure that the combined company adopts the most suitable solutions.
Evaluating potential risks is necessary, especially if the acquiring company’s data is in disarray. Conducting a cost-benefit analysis can help determine the feasibility of remediation or whether some systems or data present security risks that may not be worth integrating.
Prioritizing data sets and systems is also key. Identifying critical systems and understanding how data sets interact with each other helps manage the integration process effectively. The integration timeline should be carefully planned, including phases for adding new data and phasing out legacy systems.
Modernize the merger process
Implementing a managed data stack can simplify the transition and accelerate the time to value. Cloud-based data management tools offer standardization and scalability advantages.
Successful M&A integrations require time, expertise, and meticulous planning. Prioritizing data quality and integration strategies enable companies to derive value from their acquisitions more quickly and efficiently.
How Wipfli can help
Our M&A and digital teams can help you manage data and systems pre- or post-M&A so your data becomes a reliable and valuable asset. To learn more, see our M&A transaction advisory services page or our data and analytics services.