For a Better MA&D Process, Start with the Data

Syniti’s Kevin Campbell offers insights on how to enhance MA&D processes by starting with the data. This article originally appeared on Solutions Review’s Insight Jam, an enterprise IT community enabling the human conversation on AI.

Salesforce’s recent $11 billion bid for Informatica might have fallen apart, but the fact that Salesforce even considered this move is truly noteworthy. It speaks to the critical importance of data in today’s business world. It’s the lifeblood of organizations today and yet, too often, it remains distressingly overlooked. And yet, it is the thing that can make or break your company where mergers, acquisitions and divestitures (MA&D) activity is concerned. Today, every business challenge is a data challenge. 

For leaders who may be looking at one of these events soon, there’s no better time to take a closer look at your organization’s data. Data has always been foundational to the success of MA&D, from due diligence to synchronizing data sets to finding financial synergies. In fact, data can be an important competitive differentiator – and you don’t want a deal to die because your data or that of the acquiree is bad. But that’s what can happen when companies don’t pay attention to the quality of the data they’re acquiring. 

In parallel, high-quality data creates advantages like negotiating better terms, finding synergies or improving visibility into acquisition targets. The bottom line? Evaluating data quality has to start early on.

Data = Time to Value 

Due diligence for an MA&D event must include determining how aligned each company’s data is. Begin by understanding what data you need to operate your acquisition or, if you’re the seller, which data you need to provision and share. A typical error is to think that you’re simply transporting data from one location to another. But actually, your goal is to get value from that data as soon as you can.

Changing your residence is a useful metaphor here. You don’t indiscriminately throw things in boxes; you sort what you own and take with you only what’s still of value to you. Then you make a plan for what how to move those valuable items. Without the steps, you will waste time, energy and money moving things you don’t want or can’t use. In the same vein, your data migration needs up-front attention and planning to be successful.

It’s also important to ensure that the seller’s proprietary data doesn’t get shared unless it’s an aspect of the divestiture. The buyer wants everything necessary to run the business. Oftentimes, there’s a transitional service agreement (TSA) in place whereby the seller gets paid to run parts of the business (such as certain divisions, departments or systems) until the acquirer can do it. That impacts the time to value, which means the clock is ticking.

Data Complexity and Its Challenges 

How complex the selling and acquiring companies are determines the complexity of the data. This is true not only in terms of volume but also the various kinds of data, possibly stored in different places and/or formats. That often creates load validation or deduplication challenges. Then there is the possibility of legal issues such as competitive sensitivity and individual data privacy. All these elements make data management more difficult than it initially seemed. If you’ve got a global integration across markets, the data challenge hits especially hard. 

The first step in uniting or segregating back-end business systems is migrating data from one or more systems to a new system. On occasion, there’s a second phase in which the acquirer takes over and integrates systems with their main systems and processes. This convergence requires two more steps: deduplication and the standardization of both the business processes and the data needed to support them. 

Converging two separate business systems, each with its own data language, is difficult. So is divesting part of a business and integrating it into a different company. These actions are complex by default, but imagine the added pressure of a public MA&D and the insistence by both parties to quickly finish the transaction and begin adding value. 

Start with Data Management  

It should be clear by now that data cannot be an afterthought in the MA&D process. Data management must be the central focus from the start if you hope for a rapid time to value. High-quality data produces the advantages noted earlier, and bad data and/or bad data management produce serious challenges – so serious that they can slow down or even ruin a deal. Putting data first will put you on the narrow path to success.