Most executives use big data and analytics to identify growth and value.
As well as being a driver of today’s deal marketplace, big data and analytics are being adapted as an enabler of a more robust and sophisticated deal process for companies.
Transaction analytics uses data, technology and advanced quantitative analysis to drive more speed and precision than before. This enables better questions to be asked during the diligence process. As companies need to look at more targets, often in unfamiliar industries, deal teams are using data and analytical tools to identify areas of growth and related potential targets, aligned with their strategy.
Q: How do you use analytics and big data for executing your M&A process and strategy? (Select all that apply.)
Understanding customer behavior becomes a key ingredient for successful integration
Executives encounter a growing number of complex challenges across a broader set of integration issues.
Historically, securing synergies across operational functions and IT would have dominated the integration agenda. Today, preserving the customer and sales channels being acquired are strategic objectives on an equal footing with the traditional issues. This rebalancing of front and back-office considerations will accelerate in future.
In order to ensure full strategic value is maximized, identifying and accurately quantifying all types of synergies is critical. That is far from straightforward when integrating within an industry — cross-sector convergence through M&A adds a whole new layer of integration complexity.
Q: For acquisitions completed recently, what was the most significant issue that contributed to deals not meeting expectations? (Select all that apply.)
The changing nature of work is compelling companies to reskill
A more technology-driven environment is changing the skills required of workers. Companies are being compelled to bring their workforces up the curve in order to operate in this new environment. More than two-thirds of executives acknowledge that a transformation is underway in how people will work in the future. This skill shift will require new ways of thinking, as humans move further towards managing robots. As machines become workers, this transformation will be unlike anything the labor markets have witnessed before, even in this era of disruption.
Q: How do you think that advances in technology will change your employment or talent strategy? (Select all that apply.)
Innovation and technology seen as most disruptive, but regulatory pressure is a growing challenge
A perfect storm of accelerating innovation, sector convergence and changing customer behavior is disrupting business models. The rapid rise of new ways of doing business, predominantly through digital channels and with innovative ways of utilizing labor, is changing operating models. Companies are responding by reimagining their value proposition and reorganizing themselves to take advantage.
At the same time, greater industry regulation is adding a layer of complexity to corporate strategy. As companies increasingly operate across geographies, they are having to comply with varying standards and levels of oversight from regulatory and competition authorities. Many companies now find themselves operating different models in different geographies, forming alliances with local partners or, in extreme cases, withdrawing from certain countries altogether.
As ever, companies with a mindset that disruption is more of an opportunity than a threat will be best positioned to compete and thrive.
Active portfolio optimization is a corporate imperative
The majority of executives are actively reorganizing their portfolios to better capitalize on the disruptive forces affecting their business.
In such a fast-paced, ever-evolving environment, many executives are looking to mergers, acquisitions and divestitures as a means to thrive. These companies find that a well-tuned, resilient capital allocation structure must be built around transactions, including a proactive wish list of acquisition targets and a watch list for potential divestitures.
Companies are balancing both organic and inorganic routes to higher growth
Amid this low-growth environment, many executives are taking a judicious view on where the sources of their growth will come from, balancing both organic and inorganic routes. Downward trends in productivity and profitability are compelling companies to redefine their core operations to accelerate profitable growth.
This balanced organic and inorganic approach supports a positive outlook for dealmaking. In addition, executives are maintaining a healthy outlook for JVs and alliances. In many cases, such arrangements are the first road companies pursue. These alternative deal structures may be the fastest way to take advantage of rapid transformation in a sector or to access innovative business models or new ways of working.