Data Analytics and Social Media in M&A
Since the introduction of the computer spreadsheet program over 30 years ago, executives have been able to drill increasingly deeper into data to inform decision-making. This analytic capacity is an essential component for almost any corporate project and not surprisingly, it is also a hallmark of the deal-making process. “We’re using analytics on almost every deal and in almost every stage, from customer and vendor analysis, to pricing realignment and even post-merger workforce planning,” says Marco Sguazzin, principal with Deloitte Consulting LLP.
With the advent of the Big Data era, in which spreadsheet cells can be analyzed alongside unstructured data such as social media postings, there is now a new frontier to be conquered: how to derive benefits from applying more powerful analytical tools to an overflow of data sources. From wikis, blogs and social networking sites to web-based tools that can tag and filter, there is no shortage of new sources of insight. The question is how can acquirers leverage these opportunities in a practical way to become more effective deal makers?
Although the long-term view of how technology may transform M&A is still emerging, the transformative power of technology and how it can be applied to dig for trends and insights, influence customer decisions, improve brand perception, foster communications and collaboration and enhance productivity is undeniable. “The adoption trajectory is likely to be similar to the evolution of cloud computing,” says Kathleen Neiber, partner with Deloitte & Touche LLP. “Five years ago, most executives were skeptical due to initial perceptions that it could present security challenges; now, cloud computing is mainstream.”
Currently, about 40% of survey respondents report using technology-driven analytics in M&A and 17% say their companies are considering it. While the term “analytics” can cover a variety of meanings, in the context of deals, survey respondents say they are most often used to scrutinize the customers and markets of target companies. They are also used frequently to evaluate the potential synergies of a deal, as well as the target’s workforce and compensation schemes.
There are many sources of unconventional, non-spreadsheet data that a company might consider incorporating into its forecasts and modeling, but the constant flow of information from social media channels is certainly one of the most alluring. Two commonly-cited uses for this realm of data are target identification and due diligence.
For information about the Corporate Development survey report, please contact Chris Ruggeri, M&A services leader, Deloitte Financial Advisory Services LLP.
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