3 minute read 3 Mar 2022
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Three ways a data clean room can help you realize M&A synergies faster

Authors
Khalid Khan

EY-Parthenon Principal, Quantitative Strategies and Solutions, Ernst & Young LLP

Harnesses the power of data and mathematics to drive purpose-led, sustainable transformation for clients. Avid traveler. Proud father.

Derron Stark

EY-Parthenon Managing Director, Strategy and Transactions, Ernst & Young LLP

Driven to leverage science to help people lead healthier lives. Supply chain strategist. Husband and father. Passionate about soccer and cooking cuisine with international flavor.

3 minute read 3 Mar 2022

In this record-setting M&A market, every dealmaker scrutinizes data, but few take full advantage of the time between deal sign and close.

In brief
  • Boards and c-suites can accelerate M&A synergy capture by months with a clean room augmented by third-party experience.
  • Tools allowing for deep data analysis, in a clean room structure, can expand merger and acquisition synergies.

Buyers and targets can use a clean room to share information, unlock synergy potential closer to Day One and hit the ground running during M&A integration. Clean room teams can swiftly build a harmonized view of the risks and value drivers in combining two disparate businesses by exchanging sensitive data within antitrust and confidentiality guidelines.

Realizing M&A synergies can require months of analysis and detailed planning. You may be leaving money on the table when you don’t get started in a clean room, pre-close.
Derron R. Stark
Principal, EY-Parthenon
What you gain in accelerated synergies can be exponentially greater than the investment in a clean room.
Khalid A. Khan
Principal, EY-Parthenon

Three main benefits to using an M&A deal clean room

1. Accelerated synergy timeline

Realized synergy value over 24 months can be accelerated by at least 90 days with a clean room, in our experience. Companies that deploy an M&A synergies clean room two to three months before close can build an aligned view of the combined business products, customers, vendors and supply chains sooner in order to quickly uncover hidden value, reveal operational opportunities, identify cross-functional dependencies and assess supply chain resilience.

2. Bigger synergy opportunities, with greater confidence

Advanced data mining, data analysis and visualization tools used in a clean room inject more quantitative rigor to synergy identification. These tools test top-down deal thesis numbers that are based on P&L information and industry comparisons. And they challenge entrenched thinking and uncover trends hidden in the data.

A clean team has access to a rich set of supplier, customer, product and other data that can be analyzed to isolate the commercial and operational pockets of the business with the largest synergy impact and estimate the revenue and cost synergies in the go-forward business.

3. Objective synergy opinions

Boards tend to discount stated synergies out of concern that the acquirer doesn’t have a full picture of its target. A clean-room structure with a third party provides an objective view of deal-specific synergies grounded in the advisors’ sector expertise, data from years of advising on deals and early access to critical data sets from both entities.

Summary

With an independent advisor who has been through complex deals, a clean room for data can help mergers and acquisitions deal teams mitigate risk and accelerate synergy realization. The data clean room can help executives pivot more quickly to execute on the deal’s strategic vision.

About this article

Authors
Khalid Khan

EY-Parthenon Principal, Quantitative Strategies and Solutions, Ernst & Young LLP

Harnesses the power of data and mathematics to drive purpose-led, sustainable transformation for clients. Avid traveler. Proud father.

Derron Stark

EY-Parthenon Managing Director, Strategy and Transactions, Ernst & Young LLP

Driven to leverage science to help people lead healthier lives. Supply chain strategist. Husband and father. Passionate about soccer and cooking cuisine with international flavor.