We interviewed Australian corporate heads of M&A and identified key trends influencing deal activity and the expected impact of COVID-19 to their business in 2020. You can download our full The deal in focus report for data findings from our interviews and actionable insights from our M&A leaders.

Below, we share the highlights from our theme, Transform while transacting.

Key benefits of digital transformation

• Simplify business processes
• Enable business growth
• Create engine for future M&A
• Reduce run costs
• Enhance deal value

Transform while transacting for reduced risks, costs and speedier synergies

Transactions present multiple technology challenges. The transition and integration of an acquired company’s IT and digital platforms with M&A potentially alters an organisation’s DNA resulting in an outlook that is not fit for purpose. Therefore, strategic decisions around end-state technology solutions to support a rapid turnaround need to be made early.

Traditionally, companies facing M&A focus first on company integration, then, in some cases, on transforming the acquired company’s IT and digital platforms, usually with a multi-year staggered transformation program with phased synergy and business benefit realisation.

But we increasingly recommend companies tackle both at once to ‘transform while transacting’, with a flexible cloud-based solution across front, middle, and back office.

This approach can be deployed more rapidly and accelerate synergy delivery, reduce transaction risk and significantly reduce transaction costs by shortening timelines for transitional services arrangements.

Developing scenarios that show how bringing the transformational work forward will mean spending less money for the best outcome helps clients assess whether to accelerate a transformation during their transaction.

Another strategic approach we’re seeing corporates take is a ‘roll-up’ technique, where they acquire several companies specifically for their IT and operational digital platforms and transforming while transacting for immediate ‘best of breed’ technology.  The roll-up technique can quickly build a corporate into a digital powerhouse giving it an immediate edge in the market.

For those on the sell-side, pitching quicker synergies and a reduced operating cost base through a transformation is a compelling differentiator and will increase the value of the divesting asset.

This is clearly highlighted in the current crisis with those who’ve already invested heavily in digital transformations and cloud-based solutions proving nimbler and faring better than those who haven’t.

Read the next blog in our M&A series on Deal making and opportunities for M&A to survive and thrive.
Or download our full The deal in focus report for data findings and insights from our interviews with ASX200 M&A leaders.