Mergers and acquisitions (M&A) is a general phrase used to describe the combining or consolidation of assets or companies through various types of monetary deals and transactions. These can include the process of acquiring, merging, consolidating, tender offering, buying of assets, and managing acquisitions.
In recent years, there have been plenty of technologies that helped make the process smoother and easier for parties involved. Here are some ways technological advancements have helped turbocharge deals in recent years.
Because the process of M&A often involves manually sifting through thousands upon thousands of files and contracts, which can take up a considerable amount of resources and time, the idea of using artificial intelligence (AI) to help analytics can enable decision-makers to make faster and more informed choices. All the parties involved in these transactions have a right to know the details of the deals they’re planning to sign on to, and they will benefit greatly from knowing if the contracts need to be renegotiated or terminated altogether to reach a mutually acceptable result — one that justifies the price for both sides.
Contract clauses, when not examined more closely and thoroughly, can be costly. And without the help of AI, key players would have to manually take a gander at the extent of opportunities and potential liabilities that are hiding in the shadows of the contracts. That takes up so much time and resources, elements that may not necessarily be present when parties are preparing for an M&A deal. Thankfully, advances in cognitive technology can help enable faster identification and extraction of essential provisions through a thorough review — all within a weeks’ time.
Another task that was always performed manually is the financial due diligence, which is the reviewing of documents to look for supplier contracts and determining key provisions such as renewal dates, fixed fee amounts, take-or-pay requirements, and other elements. In the past, pricing information was often scrubbed or redacted from contracts when the process of due diligence was taking place. Assignability provisions were summarized and aggregated manually by the teams handling the due diligence.
Thanks to special software, this data can now be pulled and organized into a visualized format to show the acquirer the financial costs and exposure that are associated with the contracts that come with the M&A deal. The software makes the process far quicker and more detailed and accurate than a manual review. What used to be a task that took months can now only take weeks and for much less money, if the acquirer brings in the right consultant to leverage technology for their due diligence.
Better integrating capability
Since the process of M&A involves integrating and merging two, sometimes more, companies into one, there are a lot of challenges that may present themselves. From technological to financial integration, there needs to be an organized system that can help facilitate the process smoothly and properly. One example of this is creating an integration roadmap, which usually starts with the integration of networks, followed by emails, collaboration systems, intranet access, and finally but most importantly, adherence to the buyers’ service standards.
The M&A team in charge of the integration process moves the acquired company’s servers into its new infrastructure environment, then eventually to the cloud. This is an especially difficult task for companies that are cloud-heavy, and it needs the attention of IT specialists who are able to deliver the networks into their new home with the required compliance and security.
For example, when an audiology practice is sold, health information technology (IT) may be employed to efficiently manage the necessary information about the hard-of-hearing patients’ health, making the transition easier for all parties involved, especially the patients. Health IT refers to all electronic systems used by health care providers and patients to record, analyze, and share pertinent health information.
Artificial intelligence, or cognitive technology, presents an authentic opportunity for companies undergoing the M&A process. Cognitive computing, in general, can provide a lot of excellent opportunities for firms across the board, as it can provide the ability to reason through given information and data, establish connections between data sets, and conduct thorough due diligence — making it an extraordinary resource for companies who are looking to grow through merger and acquisition. It’s a valuable resource that the business world cannot afford to neglect.
While no technology will truly be able to replace human eyes, at least for now, humans and machines can work together to achieve greater accuracy at a faster pace.