Key Role of Technology in M&A Evaluations


Technology has evolved so much over the last few decades, and in the last ten years specifically, it has worked its way into nearly everything we do. As such, it shouldn’t come as a surprise that the M&A world has been greatly affected by it. 

M&A is part of practically every phase of an M&A deal to some extent, and it’s used to execute some key tasks that would otherwise require an absurd amount of mental and physical work to do the old-fashioned way. 

Getting to know what role M&A technology plays in today’s business world is crucial for successfully sealing a fruitful deal. So, we’ve put together this guide explaining M&A technology, the roles it plays, and why it’s so important to understand it. 

The Major Roles of Technology in Mergers and Acquisitions

Again, technology is a part of nearly every step in an M&A deal. Including pre-process planning. So, there are a lot more than just a few uses for it.

Implementation of technology in M&A 2

First, we’re going to go over the absolutely essential roles where it makes the most difference, and later, we’ll go over some minor roles that support those key aspects of the process. 

1: Analyzing Synergies

Synergy is crucial for any successful M&A deal. If you look at the history of failed M&A, it’s almost always a lack of synergy that causes the deal to be a failure. Even when it sounds like a dream come true on paper. 

Unfortunately, the way modern businesses operate is a lot more complicated than it was 20, 30, or 50 years ago. For every company operating, several more, or even dozens more, are supporting that company in one way or another. This affects pricing, logistics, and basic operations in ways that simply can’t be ignored

Tracking those synergies isn’t something anyone wants to do manually. There are far too many factors at play that can make manual attempts fall short, produce errors, and lead to catastrophic results once the deal is completed. 

This is where tech does a lot of the heavy lifting, and it’s probably the most important role that tech plays in M&A. 

Technology can gather, organize, and compare data in an easily understandable manner within seconds. So, it becomes extremely easy to see how the two entities will meld together once they merge. Whether that’s how their pricing aligns, profits and cash flow align, or even how their daily activities will mesh together, tech can translate the raw data into actionable information.

2: Due Diligence

When two companies merge, there is a massive amount of money on the line. Any small mistake with the evaluation can lead to millions of dollars in losses for both companies. That’s not even considering intentional attempts to mislead another entity to make more money than is acceptable.

Could you imagine going through a $15 million transaction with someone on Facebook Marketplace, and the only assurance you got that you getting the exact item you’re looking at was the seller’s word and maybe a few sheets of paper?

You’d see that as absolutely insane. Well, doing your due diligence in the M&A sector is essentially the same thing. Without tech, you might get to visit the business you’re working with, talk to the other company’s leadership, and read through a few documents you have no way to verify. 

Tech allows you to quickly gather in-depth information regarding a company’s operations, financial health, reputation, and more. You can learn practically everything you need to know by using the right tech channels, and when the other side starts making claims, you can verify those claims in a reliable and practical fashion.

M&A technology used for company data collection

This sounds a lot like entering business deals without any trust to back them up, but it’s not meant to be that way. It’s simply leveraging tech to protect yourself against not only the potential for corruption but also against common mistakes like overvaluing a business due to one-off sales increases and similar situations. Both sides of the situation should take their due diligence to the highest level possible. 

Of course, tech only helps so much, and you certainly want to get a professional onboard to help. Even though you have tech to help with this step, a professional who helps facilitate deals has a lot of first-hand experience and insider knowledge that might not be available publicly. 

3: Organizing Evaluation Data

If you’re familiar with M&A advisors and you’ve gone through an M&A deal before, you know that you need up to 7 full years of financial data along with your performance reports and projects for the future before you can come up with a price for your business. If you’re acquiring a business or merging with it, the other side, or both sides, need all that data available to prove the value that they bring to the table. 

Even in its most basic form, just looking at your sales data is a lot to keep track of and go over manually. Think of all the reports you generate in a day, let alone a year, and then multiply that by ten. That’s just the tip of the iceberg. 

As such, tech helps out with this a lot. At least, it does if you’ve been leveraging it appropriately throughout your business’s lifetime. 

Instead of slouching over piles of tax documents, earnings reports, sales documents, future projects, stock reports, and inventory data, the software can consolidate all that information, as long as it is logged properly, and you can get detailed reports in a fraction of the time. 

Of course, this is still complicated data, and it’s still necessary to get an accountant on board to account for all the things you can’t just plug into a program and track, and they have valuable insight into smaller details that aren’t as tangible. 

Still, technology plays a major role in streamlining this process and ensuring that it’s not a long, painstaking, journey with plenty of room for error. 

Supportive Roles of M&A Technology

The following roles have less to do with facilitating the deal itself, but they directly affect your ability to make the deal successful going forward.

1: Post-M&A Problem Solving

Even if two businesses are perfect candidates for a merger on paper, there are always complications that occur during the end phase of buying and selling a business. There’s simply too much going on for two companies to come together without any sort of conflict in daily operations. 

Unfortunately, that has been a major player in many historical M&A failures. Largely due to CEOs getting caught up in the opportunity and not acknowledging cultural differences or other glaring differences that produce logistical and operative problems.

Operative problems shown through M&A technology

Tech can’t stop a CEO from getting overzealous and developing tunnel vision, but it frequently helps overcome the obstacles that companies face when they merge. Whether that’s determining where problems are occurring, planning out solutions, or reorganizing personnel and equipment, tech is essential for correcting those issues and getting everything back on track. 

Even when both sides of the equation knew there would be a few road bumps and planned solutions to get around them, tech is typically the focal point used to execute those plans. 

2: Employee Onboarding and Personnel Management

Very rarely do two companies join forces and decide to fire everyone from the company being bought out. Building an entire untrained workforce from scratch is a hefty task, and moving existing employees to the other company’s establishment is usually not possible. 

The reality of it is much messier. Usually, some personnel are let go from either side, some are reorganized to different departments, new employees are brought in to fill new roles, etc. 

That’s a process that can’t take too long. Every day the company operates without proper personnel to handle everything, productivity is diminished, and sometimes, the company’s reputation can take a hit. Technology greatly helps with this phase by making it easy to onboard new staff members, see where specialists are needed, and generally get the disrupted workforce back on track. 

What would be a logistical nightmare to do manually or by traditional means, is a streamlined process when you leverage tech. Not only for you but for your target demographic, as well. When you’re able to appropriately manage personnel after such a chaotic event, customers have a better experience, and your newly formed company starts off on the right foot. 

3: Planning for the Future

After the merger or acquisition, what happens next? You’ve pulled off a major business deal, you got your staff and daily operations reorganized and optimized, and the difficult work is done, but what are you going to do with this newly found opportunity? 

Tech can help with that in various ways, but we’ll lump it all into the “future planning” category.

Future planning with M&A technology

With tech, you can streamline the process of forming projections, planning your next big move, and simply planning day-to-day operations that will help you get to your next big goal such as cash flow management. 

Why is it Important to Leverage Technology for Mergers and Acquisitions?

 All of the tasks we talked about can be handled with less tech-intensive methods. They were before the internet invaded every part of our lives, after all. So, why is tech so instrumental in the modern world? 

There are 3 main reasons for this, and we’ll briefly go over all of them. 

1: It’s A Part of Life Now

First and foremost, it’s important because everyone has leveraged it, now. 50 years ago, the standard process for handling these situations was far different, and people simply did everything the way they knew how to.

The same is true now, but we use tech. It’s the natural evolution of the business world and society in general. Suddenly backtracking and not leveraging tech to the fullest extent would leave anyone doing it at a massive disadvantage.

2: Accuracy

In all of these roles, tech is simply far more accurate than anything one could do by sitting down and doing it manually. There’s still room for major human errors, but that risk is dramatically reduced when tech is involved.

When millions, or even billions, of dollars, are on the line, that high level of accuracy isn’t optional. It’s crucial to avoid losing business-destroying amounts of capital due to small errors. 

Now, human error mostly comes into play when there’s a less tangible factor to consider, or when mistakes are made with logging data for tech to use. Not because of problems with the tech itself. 

3: Streamlined Processes

Beyond being accurate, tech also streamlines the whole process. Let’s use the evaluation process as an example. Consider the amount of work that would go into gathering every earnings report, contract, future projection, inventory value assessment, etc by hand, and then going over it and consolidating it into an overall asking price for your business.

Considering you have to do that for up to 7 years’ worth of data, the amount of work is tremendous. 

With tech, that’s streamlined, and you get actionable data quickly. You still have to put some work in, but it’s like the difference between hand-machining a stove or stamping out the parts. The laborious part is minimized, and you simply focus on the meat and potatoes of the process. 

That goes for every role of technology in M&A. 

Get Assistance Finding the Right Tech Solutions for Your M&A Needs

We’ve talked a lot about how M&A technology helps with the overall M&A process, but we haven’t mentioned specific tools or methods used. That’s because the exact needs of any given business are unique and based on a multitude of factors. 

Instead, you need some guidance to help you find the right tech solutions to meet your needs and help you overcome the challenges of M&A in a streamlined manner, and Final Ascent is here to help. 

At Final Ascent, we guide companies through the entire M&A process. That includes everything from determining whether it’s a good solution, all the way to planning your post-deal goals. Of course, we also help point you in the right direction for the tech solutions you need. 
If you’re a middle-market company looking to enter the M&A space for growth, to partner with another company, or to make your exit from the business world, contact us today.