Do you know who you are getting into business with?

June 19, 2019

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Ermelinda Beqiraj

Ermelinda Beqiraj | Partner
Profile | Email | +44 (0)7872 005508

 

Mark Anderson

Mark Anderson | Partner
Profile | Email | +44 (0)7770 921256

 

A merger or acquisition doesn’t create value by accident. It takes hard work – and much of that should take place before the deal is even signed. A report we have recently published, in conjunction with Mergermarket found that more than half of acquiring companies underperformed their industry benchmark in the two years following a deal. Our research shows clearly that the great differentiator is planning for value creation in the months and weeks running up to the deal; organisations that prioritise value creation outperform their peers in the months and years after a deal by as much as 14%.

Due diligence needs revisiting

Due diligence, of course, is essential – but many business leaders are willing to admit that it’s not always as thorough as it could be. According to our survey, 80% of companies say their last transaction taught them to do a better job of due diligence to validate their pre-deal hypothesis and assess whether a potential acquisition will help them pursue their strategic priorities.

Due diligence isn’t just about managing risks and protecting value; the same skills can identify upside gains – such as in creating the best possible environment for a value-creating deal. The smartest buyers carry out sophisticated due diligence but then go one step further to analyse value-creation opportunities far more deeply. This might include technology due diligence, for example. But there are many other, intangible elements to a successful deal where detailed insight is enormously helpful – such as culture, customer sentiment and brand perception.

Culture: a vital ingredient for a successful deal

And that’s where Deals Intelligence fits in. As the pressure increases on acquirers (and divestors when they are looking inwards to prepare an asset for sale) to maximise the value of deals, Deals Intelligence can help organisations glean as much value as possible from a deal. Deals Intelligence applies an investigative skill set and open source intelligence tools to generate outside-in qualitative insights about the target, its customers and markets throughout the deals cycle; it includes reviewing social media.

Deals Intelligence goes beyond typical due diligence to uncover and analyse the vital ingredients of a successful deal, helping companies know and understand what’s ahead, well before the deal is signed. This might mean providing insight about culture, commercial sentiment, consumers’ view of the respective brands, or potential new markets. Everyone knows what to expect, and can work out how to tackle it – but also where the potential for valuable collaboration might lie. The buyer can plan ahead to make sure that integration, for people and for the business itself, is as smooth as possible.

You can learn a lot from what people think and say, and it can all be found in the vast volume of data that is generated every day on social media and internet forums. We use sophisticated tools to harvest and analyse this information, creating enormously valuable insights that are fed into detailed value creation planning. Deals Intelligence, through this type of analysis, brings detailed and valuable insights into one of the most critical elements of any deal – the integration of organisational culture.

If you understand the culture of each party, you can plan effectively to integrate them – early, before the deal is signed, and hit the ground running from day one. HR and culture teams will have something concrete to work from, with clear areas to address. They can spend their time working proactively rather than firefighting.

We explain more about the importance of culture and how Deals Intelligence can help in our next blog. You can also read our Creating value beyond the deal report; the ability to bring cultures together stands out as one of the key factors in deciding whether or not you should do a deal.

Ermelinda Beqiraj

Ermelinda Beqiraj | Partner
Profile | Email | +44 (0)7872 005508

Mark Anderson

Mark Anderson | Partner
Profile | Email | +44 (0)7770 921256