by Ari Salonen
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I recently participated in a M&A Leadership Council conference focused on realizing the return on investment (ROI) of M&A Software Solutions. The Council did not mince words; in fact, it boldly proclaimed at its latest webinar that if you are going to be an acquirer (corporate, PE, or any other kind), you need to build internal capability, and espousing a M&A software solution is one of the top critical components to doing this correctly.
The best M&A software providers have crafted solutions for all-case uses; however, many acquirers are still not effectively using them. Moreover, some acquirers are not utilizing a M&A software solution at all, instead working with data spread out across a variety of platforms, such as email and Excel spreadsheets. Below I discuss not only the benefits of M&A software, but also how to select the right one for your business, how it creates value, how to get stakeholders onboard, and why now is the time to invest in one.
What Challenges Does an End-To-End Software Solution Address?
The benefits of an end-to-end M&A software platform are immense, as deal challenges can cut across multiple areas of the deal life cycle or business. With this premise in mind, a software solution can address:
- Absence of a source of truth — tools today are often standalone and, therefore, lack a single point of truth; even the heavily utilized VDR is essentially a standalone tool if not linked to a larger platform. Standalone tools pose a variety of challenges associated with their failure to provide the all important single source of truth; progress monitoring is greatly weakened, which has ripple effects on communication, workflow, efficiency, and data analysis.
- Data challenges — similar to having one source of truth, you must consider both location and integrity of data; too often, deal data is scattered in different systems, and when data is in different systems, it is also generally in different forms and formats, making it nearly impossible to draw real conclusions.
- Lack of direction based on an overarching goal/deal thesis — the fundamental point of engaging in M&A is to create value, and often value is not generated because the deal thesis is not properly focused on during due diligence. I believe this is one of the key challenges a software solution, specifically Midaxo, addresses. If you define your deal thesis (or investment thesis) upfront, you then use the platform to prove the deal thesis and navigate through due diligence, carving out a stronger path to value. All stakeholders and team members must be driving toward the same goal; leveraging a software solution works to ensure this focus and allows for more proactive course correction should individuals veer off course from the thesis goal.
- Poor progress monitoring — M&A software, such as Midaxo, allows for clear visual progress reports, which means potential roadblocks and problems can be easily identified and addressed, resulting in your deal team taking a more proactive rather than reactive approach.
- Pipeline management issues — pipeline management is an essential for modern deal-makers. For instance, Midaxo’s software solution means you have all the data you need from pipeline management to due diligence through to integration in one highly-secure cloud platform. As a result, deals are completed faster, and targets are evaluated five times faster.
- Cumbersome management of due diligence — moving between emails and different spreadsheets and data points creates cumbersome and mistake prone communication during due diligence, but M&A software such as Midaxo streamlines due diligence management, which is especially beneficial if you have a larger deal team, as communication, accountability, and workflow can become unwieldy.
- Post Merger Integration (PMI) slowdowns — when PMI is slow and disjointed, there is a direct negative effect on synergy and value capture. With M&A software like Midaxo, a clear plan can be developed regarding how to drive synergies, and the established one source of truth and progress monitoring support this plan.
What Benefits Should Executives Realistically Expect By Leveraging M&A Software?
Executives should expect the aforementioned challenges to be remedied if they select a genuine end-to-end software solution created by M&A experts; this means they can expect predicted value to be delivered. In addition, M&A software solutions increase efficiency (the least amount of wasted time, money and effort when undergoing a project) and effectiveness (reaching the deserved result); both are critical to achieving synergies and capturing value sooner, enhancing ROI.
Based on my 25 years in this space, I can attest that other realistic benefits executives can expect are:
- Simplified execution of M&A strategy
- Significant process improvement
- Reduced risk and increased early warning signs due to heightened visibility
- Holistic approach to the entire deal lifecycle
- Powerful analytics
How do Executives Find the Best M&A Software Solution for Their Company?
I have found executives should keep the following considerations and action steps in mind to ensure they are getting the right solution for the right reasons:
- Begin by honing your own process; before applying technology, take the time to understand your own process and its strengths and weaknesses.
- Perhaps one of my biggest recommendations is as you begin your search, focus not on a feature comparison, but on picking an appropriate partner for your M&A journey. What does this mean? Quite simply, you want a provider that will offer a strong foundation and be a reliable, informed source of support; therefore, consider the provider’s credibility, experience, size, and scope. Specifically, how will they support you? Do they offer global help, 24/7 support….? At Midaxo, we pride ourselves on being an active and knowledgeable M&A partner and support system for our customers throughout the ups and downs of the deal journey.
- As you continue your search based on the premise of picking a valuable M&A partner, not just a product, begin to look at public track records of these providers and talk to users of these platforms; then review the providers’ websites and things such as G2 reviews. As I like to say, this process should echo the old Toyota commercial: “ask someone who drives one.”
- Thoroughly investigate security certifications and features; creating value is nothing if your information is at risk. Namely, a platform must be ISO 27001 certified; ISO 27001 is an internationally recognized security management standard that specifies security management best practices and comprehensive security controls. I am proud of Midaxo’s proven robust security as we have potential clients hire consultant groups to try to hack our system, but those efforts have not only been unsuccessful, but have also confirmed the authenticity and effectiveness of Midaxo’s security profile.
- As you narrow down your list of potential partner providers, you then begin to examine features and benefits; does the M&A software solution have the functions and features you need - not only for today, but also for tomorrow? Obviously, this circles back to Step 1 and understanding the problem areas your current practices have that you want to address.
- Finally, review your company culture and ask if the solution you have identified has the potential to not only be adopted, but also vigorously embraced by your employees.
How To Execute M&A Software Adoption:
Of course, identifying the right solution is meaningless if your stakeholders and employees do not wholeheartedly adopt it. This is where ground level change management practices must come in. One of the main reasons people resist a platform is they believe they are too busy (and often overworked) to consider a new approach and move away from the familiar tools they have always used; therefore, it is critical when presenting M&A software that you help them cultivate a long term vision. How will the business be hurt in the long run by not leveraging the features and benefits of M&A software? For instance, think of the evolution of the cell phone; where would we be if we did not adopt the cell phone? The messaging must be clear: in mergers and acquisitions, small improvements make a big difference. Moreover, I believe highlighting what I like to call the “individual stick and carrot motivators” is essential in securing employee buy-in. Simply put, when employee work becomes easier, faster, and more rewarding, there will be buy-in. Finally, at Midaxo, we believe a best practice mantra is, “if it isn’t in Midaxo, it didn’t happen” - this keeps everyone accountable.
How Using Midaxo’s M&A Software Breeds Success:
- Midaxo customers benefit from having an experienced and reliable M&A partner that offers consulting experts and a comprehensive support network.
- Midaxo customers benefit from the ability to evaluate five times more targets using Midaxo’s end-to-end solution.
- Midaxo customers benefit from up to 50% shorter due diligence periods and, in turn, less legal spending (just ask HP who has created and delivered 20 billion dollars of shareholder value).
- Midaxo customers benefit from up to 40% faster integration.
- Midaxo customers benefit from improved deal visibility and, therefore, reduced risk and stronger risk management.
- Midaxo customers benefit from utilizing a platform that allows them to execute their strategy; Midaxo offers many customizable features so work is tailored to each specific deal.
Perhaps most importantly, the above examples of efficiency, control, visibility, and early warning risk signs all fight against value erosion, which has the potential to occur at every point in the deal lifecycle; this is why Midaxo focuses on the entire lifecycle.
Overarching Best Practices When Considering A M&A Software Solution:
- Proceeding without a software solution is not an option; it is an “eat or be eaten” world; although the best time to have considered M&A software was probably about three years ago, acting now cannot be delayed.
- Pick a partner for your M&A journey; there will be ups and downs, but when selecting a provider, consider it an integral partner in your M&A journey and understand how this partnership will benefit your business and deal practice.
- Talk to people in your industry; you probably know people in other companies who have used or who have researched M&A software companies - ask them about their findings.
- Include and involve your key stakeholders; include not only those who are onboard, but also those who are doubters because if you can get both on board, you will derive the most value from the solution.
- Provide support for your stakeholders and users; have a point person and network of support.
- Look at the total ROI; what is time and efficiency worth to you? Look at the big picture, look at the situation holistically.
- M&A is one of the highest risk and highest reward initiatives that any company can undertake; you can either continue to use hand tools that are not integrated (they are often readily available and perceived as “free,” but the cost of these tools is living in spreadsheet hell with the accompanying risks and challenges), OR you can use a purpose built integrated tool that can reduce risk and reduce time to creating value.
Without a doubt, small improvements can be the difference between a mediocre career and a great career, a mediocre business and a great business. M&A Software, such as Midaxo, yields faster and better outcomes, as well as empowering clients to create a highly repeatable process, tailored to each individual deal, that focuses on efficiently extracting maximum deal value.