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Adding Business Value: Integrating Systems

25 Jul Adding Business Value: Integrating Systems

Mergers can be a hairy monster. Attempting to bring together the ideas, management and strategy of two differing, and sometimes competing, organizations can be extremely difficult and costly to time and other resources. But doing so is often a critical component of business valuations as calculating “synergies” helps to see where both entities can compute the elusive 2+2=5. Here are a few ways where cost-cutting synergies can ultimately prove a fruitful part of your company merger.

Software/Systems Integration

Differing software systems running between two separate entities can prove extremely time-intensive and ultimately costly for any organization. Running such systems in silo tandem for the foreseeable future is not a healthy option either. Here are a few important components and ideas to consider when integrating software systems for a corporate merger scenario:

  • Determine the application with the best hang-time. Some systems are dead before you begin. Find the solution that has staying-power and do what it takes to transition databases and personnel over to the best system. 
  • Often the application which will have the greatest impact is not included in the current options. In short, do you homework. Look into other systems and solutions which may solve the problem with less cost and greater functionality and flexibility.
  • Drive change quickly. Like a band-aid, systems integration in a merger situation needs to be done as rapidly as possible. Like a band-aid, it can be more difficult to pull things off slowly.

Few managers and companies like change, but adaptation is the name of the game in merger consulting. Integrating current applications for future success is critical, especially for “keeping everything organized.”

Management Integration

This could also be referred to as employee management and even integration retention management. The merger team suddenly doubles as human resource experts in integrating all the aspects of differing styles to form a conglomerate of the two separate entities. In some cases, the integrating company works as a firefighter, solving HR issues. And unfortunately in many instances, managers must keep some employees at the expense of other highly-trained and capable managers. Employee retention and management in M&A is often a zero-sum game.

Part of the value-add we bring to the table is the ability to take two competing and/or related firms and bring them together to create holistic synergies. Once complete new entities are often valued at more favorable multiples. Such corporate roll-ups are strategic and where value is added, it can often be extracted and more of it given to the seller when the deal closes. It’s a case of the whole being greater than the sum of the individual pieces. Integrating systems is just a small piece of a larger strategy in M&A consulting. By strategically integrating systems in a merger scenario, significant value means significant upside potential both short and long-term.

 

 

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
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