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Good data integration may make or break an M&A

Jun 15, 2023

In the world of M&A, you’re not just acquiring a new business — you’re also getting access to new business systems and data. Depending on the quality of the data and the architecture that’s in place, that could become a tremendous new asset or a dangerous liability.

An effective data integration strategy is essential to the M&A process. Don’t let data get lost in the shuffle. 

How to assess data quality

At the start of the M&A process, it’s impossible to establish an accurate company valuation without clear and trustworthy data. Buyers need to extensively review operational data before a deal is finalized.   That includes sales records, revenue trends and customer retention metrics, among other variables.

How do they know if data is good? “Quality data” is data that is:

  • Accurate: KPIs are clearly identified and reliably and verifiably tracked.
  • Consistent: Data is entered and maintained using stable, reliable patterns.
  • Available: Records and reports are accessible and easy to understand.
  • Secure: Processes are in place to prevent data leaks or cyberbreaches.

Look out for ambiguous record keeping, inconsistencies and gaps in the data. Although, in some ways, “bad data” is valuable, too. It alerts potential buyers to red flags, so they know to proceed cautiously.

Planning for integration

Before a transaction is finalized, buyers should start planning how they’ll integrate new data and systems. A cross-functional team of accounting, IT and finance professionals can help identify synergies between business systems, discrepancies in methodologies and strategies to bring everything together. This team can also reevaluate systems — almost like a new software selection — to make sure you adopt the best solutions for the combined company.

If the acquiring company’s data is in disarray, you’ll also need to evaluate potential risks. A cost/benefit analysis can help you determine whether remediations are available — or if the situation is beyond repair. For example, systems or data that are potential security risks may not be worth integrating.

Data sets and systems also need to be prioritized. Which systems are most critical? Do some data sets feed into or affect others? You need an accurate sense of how many integrations you’ll need to manage and how quickly. The timeline for integration should include phases for adding new data and for sunsetting legacy systems.

Modernizing the merger process

It takes time and expertise to get M&A integrations right. A managed data stack can simplify some of the transition and speed up time to value. It can also ease some of the burden associated with data integration, like data mapping, data inventory and extraction. Cloud-based data management tools are easier to standardize and scale, too.

Integration affects how quickly your company can start generating value from the acquisition. Plan to get it right.

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.

Author(s)

Brendan McGuire
Principal, Data Analytics
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