M&A: Don't Overlook Technology

Right now, global mergers and acquisitions (“M&A”) are as popular as bleached hair in the 90s. Everyone’s doing it—pun intended.

In the first quarter of 2018, the value of M&A activity has increased by more than 60% year-on-year. The reasons for this are many, including market conditions and competitive necessity. Bankers maintain optimism that such activity will only increase, despite uncertainty around the regulatory environment.

A prime driver behind these pursuits is technology. Two months after the release of Deloitte’s M&A trends 2018, this position still looks accurate. Securing market access and “creating the largest provider of [insert product/service here]” remain strategic priorities. However, many tie-ups are proposed to increase technical capabilities. One example includes the newly-proposed (or, better, revived) deal between T-Mobile and Sprint, which would accelerate and scale the combined entity’s ability to deliver 5G data technology.

Many questions, only indirectly related to technology, tend to be asked during a merger, including:

—What are the ramifications for our respective employees?
—What will be the decision-making process moving forward?
—What are we communicating externally to stakeholders and to the media?
—What are the brand and identity implications for this transaction?
—What are we communicating internally to our employees, remaining and otherwise?
—How can we successfully operationalize this transaction?

While the above questions are undoubtedly important, we’d encourage decision-makers to reserve a seat at the grown-ups table for technology.

Why should company leaders, many of whom do not have technical expertise, hold a place for technology? One answer is that not everybody knows how to be a chef, but pretty much everyone knows when something tastes good.

The point? Conversations relating to technology, at a high-level, represent strategic imperatives upon which an M&A deal can either succeed or fail. Integration, not only of distinct company cultures but of distinct technology systems, should be addressed in the boardroom. Questions that cascade down involve scenarios such as:

—We have two separate human resources and recruiting platforms. What will recuitment and employee development look like in the future?
—We have one team that is utilizing Digital Tool A, and being evaluated against that use. How will we adapt for the other team, which is using and being graded against Digital Tool B? Will we choose one tool over the other? Why and how?
—We have different protocols for providing technology support. Will that change and how?
—We have an incredible volume of digital marketing assets and solutions for managing them. How will we combine them, evolve them, showcase them via an external-facing platform, and train our people to use it?

While all of the above are questions that we typically address with clients involved in M&A scenarios—as well as just day-to-day business operations—the last one is critical because of its internal and external implications. It’s also one that can be politically and emotionally charged, and has led us to develop an initiative to reduce risk, establish alignment, and support successful implementations during periods of transition.

Typically, we conduct a full-day collaborative work-session with members of both side’s marketing teams. Keeping strategic priorities in context, we isolate technical requirements—and explain them as simply as possible—and then rank them based on pre-defined criteria. This helps us to explore potential scenarios, allay concerns, create alignment, and clarify a forward-looking plan. Following the session, we synthesize the inputs, summarize our insights, and provide recommendations for next steps.

All relationships and circumstances are unique, so we tailor the approach and output to the requirements and preferred working styles of the participants.

What’s the takeaway?

Don’t overlook technology. You may not be supremely technical, but—with the guidance of a technology partner that can effectively contextualize and articulate relevant implications—you can understand and make informed decisions in support of your planned merger. We probably won’t recommend that you bring back bleached hair, but we can help you to plot a better-defined, less risky path forward while ensuring that—during a time of uncertainty—you can be confident about your marketing technology.

—Alex Berman and Michele Bianculli contributed to this blog post.