Weathering the M&A Storm with Automation

by Steve Smith

Operational efficiency and health are crucial both before, during and after the completion of a deal.

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After a record-breaking year for M&A activity in 2018, the M&A landscape is only set to grow in 2019. According to global consultancy Deloitte’s 2019 M&A trends report, The State of the Deal, both M&A executives at U.S.-headquartered corporations and M&A leaders at domestic private equity firms expect the number of deals they are set to be involved in to increase over the next year.

It goes without saying that for merging institutions, there are myriad considerations that must be managed. Cultures, people, logistics, processes, systems and, of course, customers are all going to be affected by the changes the deal will bring. Cultures have to be aligned; people have to be brought together in order to work alongside one another; logistics will have to be managed in order to establish who will do what, where and how; customers need to receive the same services and the same level of service throughout the transaction and beyond; systems and processes have to somehow run in step in order to ensure that all customers are getting the same experience; and, ultimately, business has to continue as usual.

When it comes to systems and processes, this is where the biggest hurdles can appear for merging firms. In particular, combining processes, software and ERP suites can throw up complex obstacles that will take time to overcome. And time, of course, means resources, one of your most valuable assets during a merger or acquisition.

Without a cohesive platform in place to ensure the merging firms’ systems and processes can be brought together effectively, there is a significant risk of things becoming extremely messy, highly complicated and somewhat misaligned. Outcomes can include a lack of visibility, decreased productivity, and confusion among both staff and customers. All of this means running the risk of not only losing customers, but damaging your reputation, along with your standing in the market. 

In the financial sector there is the added complexity of regulatory and compliance responsibilities. Whether during a merger or acquisition, or the running of everyday business, there is no margin for error when it comes to meeting your compliance obligations. Since the Great Recession, banks and others in the financial sector have grappled with moving on from a traditionally siloed approach to collecting and storing documents and data, to the more centralized and transparent approach regulators now expect. 

However, during a merger or acquisition, the risk of silos is heightened. Trying to bring two institutions’ document processing and storage systems together in such a way that business can continue as usual is challenging, especially for institutions already managing what is often a heavy compliance burden.

As such, a good starting point for managing this is making data and documentation as easily accessible as possible, as well as manageable. If the merging firms are not working on the same ERP system, manually combining systems and merging all the data contained therein can be hugely challenging. Having order-to-cash (O2C) and purchase-to-pay (P2P) cycle documentation easily accessible and reportable can be of benefit here.

Trying to merge the data within different ERP systems is a complex task that can often lead to higher costs in terms of staff training (or even hiring), along with bottlenecks or, worse, mistakes or omissions. As you go through your merger or acquisition, it may well be worth considering automating such processes. Areas that can be aligned via automation include the O2C and P2P cycles, as well as document delivery. And when done successfully, it will enhance the customer experience from start to finish by streamlining all elements of their journey, even during a complicated merger or acquisition. In addition, implementing an ERP-agnostic automation solution to handle the workload that accompanies these processes injects much needed visibility into the multi-ERP environments that are often created following a merger or acquisition. Mitigating the headaches that merging ERP systems causes and ensuring that time isn’t wasted is invaluable and can even take a burden off of the IT teams struggling to combine all of the different systems that an organization needs to function properly. 

Collaboration and transparency are also much more apparent via automation and will help you continue to provide your customers with the hassle-free end-to-end customer experience you want to provide. During a merger or acquisition, when there is so much exposure to the risk of duplication, neglect, misinformation and simple confusion, automating such systems can offer a single pane of glass for you to function from that provides streamlined cash flow management, real-time visibility into order processes, and decreased costs.

Financial institutions that are ahead of their game when it comes to automating their systems are the ones who will likely handle a merger or acquisition best. Operational efficiency and health are crucial both before, during and after the completion of a deal. The risk of leaving yourself exposed to the potential chaos that comes from continuing to utilize multiple manual processes is too great to leave to chance in 2019.

Steve Smith is U.S. chief operating officer at Esker.