Aces high: know your hand to avoid chancing your arm in a deal

29 September 2015

by Matthew Linehan Manager

I recently attended a data and analytics networking evening at our Embankment Place office. Throughout the evening I found myself describing the deals environment to colleagues and guests from different areas of business. The link between the deal process and business change was a consistent theme. A transaction is a period of substantial, rapid change from business as usual. Depending on whether it is embraced or rejected, change can be either a benefit or a challenge. For those who meet it unprepared, change can represent uncertainty, risk and disruption.

Effective planning is the key to success. The expression, ‘put your own house in order’, resonates here. We see the value of preparation when working with organisations’ data. In the so-called ‘era of big data’ we might assume that data would be consistent, embedded throughout organisations, and complete. But this is often not the case. In many organisations the business is disconnected from the IT function, and access to trusted, insightful data can be limited.

Sellers with access to high-quality data can better understand the story of their business. This will provide a degree of comfort through the deal process. Investors increasingly employ advisors to conduct detailed analysis of a seller’s transactional data. Modern data and analytics technologies can make short work of large volumes of data under tight timeframes. Leveraging the data to understand strengths and potential pitfalls before entering the deal process can reduce the element of surprise. This puts management on a stronger footing in negotiations. Articulating the strengths of a business accurately will help the seller command a better price.

Transactions rooted in trust are smoother and more robust. Investors who uncover inconsistent narratives about a business are more likely to lose faith in the deal. In contrast, sellers who maximise consistency and minimise uncertainty will inspire confidence in their business. A straightforward data preparation exercise helps the seller lay solid foundations prior to the deal. This increases the chances of attracting the most suitable investor for the business.

I opened by considering what change can mean for those who are unprepared. Management teams which fail to prepare their data risk uncertainty during the deal. But businesses which plan effectively, and understand which aces they hold, can stack the deck in their favour. For those who are ready to embrace it, change represents an opportunity for growth and development. This can still be disruptive but challenging ourselves is no bad thing. In a rapidly evolving market which demands agility, preparation is key to staying ahead of the game.

If you would like to discuss these issues, or the impact of emerging technology or data and analytics on your industry, then contact our Data & Analytics team.

by Matthew Linehan Manager