Data and its role in Mergers and Acquisitions

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Recent data shows that 7.5 million small businesses will no longer exist in a few months. Governments around the world are putting measures in place to stem the economic casualties. Even companies like Microsoft are lowering their efforts on SMB for a time due to concerns over the number of small businesses that may not exist or will have negative year-over-year growth for a while. With this in mind, there is the potential for mergers and acquisitions as organisations try to survive or perhaps even find opportunities to acquire other organisations. In this environment, what does the role of data have to play in acquisitions?

I spoke with an executive of an organisation recently, who was interested in my thoughts on whether to acquire another company (Names and details removed for anonymity). The executive’s concerns focused on the data of the organisation, and whether it was worth pursuing the acquisition of the organisation. The state of the current organisation’s data was not good, and there was a concern about the data in the potential target organisation. There were a few questions, including: how could data sources be aligned? What about duplicate data sources? Which data should be the version of the truth: the acquiring company, or a combination of data from both companies? If so, how could the information be joined up? How could technology be aligned? What about the impact on teams from both sides? After all, data is the lifeblood of organisations, and any changes will fundamentally resonate throughout both organisations.

The ‘why’ of the acquisition was there, but, where data was concerned, not the ‘how’ or the ‘what’. Fundamentally, the role of data and its quality was a considerable concern for the acquisition process, and it was clear that it was a potential blocker for the acquiring company.

My initial response was simply to listen and read back so that I was sure I understood the issues and the ‘question behind the question’. In my experience, sometimes people will ask you a general and rather stupid question, but you have to dig around to find out what they want to know. They only tell you what they want to know when they start to trust you. To gain trust, you have to show empathy and an understanding of the situation.

For me, I could make a difference by demystifying some of the ‘how’ which helped to validate some of the ‘why’. Here is a summary of the advice that I gave:

Form a Cloud Centre of Excellence

My first suggestion was that the organization could proceed to combine data by forming a joint ‘Cloud Centre of Excellence’ between both organizations and start a program of moving data to the cloud. This action would save much work on trying to join the two organizations together at the network level, and although it would be a job to do in Azure Active Directory, a move to the cloud would simplify the process of connecting the organizations at the network level. A Centre of Excellence would centralize expertise in a joint team which could then be decentralized out to other departments. Members of both companies should participate in this Centre of Excellence.

Separate Technical and Data Debt Budgets from Cloud Migration

Technical Debt and Data Debt are the accumulation of every suboptimal decision that the organization has made. Like a credit card payment, the organization needs to pay back the debt.

Cloud migrations do not always go as planned because they inherit technical and data debt as part of the process. It is essential to separate the debt from the migration. To do this, the organisation has to have a clear ‘as-is’ of the technical and data estate. Marissa Mayer once said, “With data collection, ‘the sooner, the better’ is always the best answer.” Meyer is right, and I would extend her comment to apply to data understanding, too.

Early Visibility and Managing Expectations

Humans do not like change, and we do not like to be changed. This applies to how we work with data. Transparency and managing expectations are crucial to the success of any data project, and particularly so when organisations are changing.

The suggestion here was to choose a data visualisation technology such as Microsoft Power BI in order to demonstrate joined-up data early on in the process. Again, early visibility itself is crucial to managing properly, but the ‘win’ is that you eventually earn trust.

Summary

To conclude, data has a real role to play in mergers and acquisitions. In light of the coronavirus situation, it is commonly accepted that many small businesses will no longer exist in a few months, and organisations are looking at what comes after the current coronavirus situation is over. I expect to see that more acquisitions will take place, and if it keeps people’s livelihoods going, then that is not a bad thing.

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