The M&A market remains strong, but high valuations mean loftier deal prices. Total US deal value in the first half of 2021 was the highest ever, according to a PwC analysis of Refinitiv data. U.S. private equity deal value also is well ahead of the record pace of 2020. In this environment, creating value in deals is more challenging.
One big hurdle is realizing the true value of unprecedented amounts of data. Many companies are still trying to turn disparate bits into actual insights and actions — to effectively leverage data to drive growth. In the PwC survey Building digital trust, only four in 10 respondents reported realizing benefits from data monetization.
Put simply, relying on how due diligence was done yesterday – financial statements, revenue forecasts, facility inspections – doesn’t cut it. With higher prices, it’s critical for acquirers to fully understand data in play, and for sellers to market those assets supported by the data available. And for all to be able to do the same for their next deals.
Going Beyond Tools
Everyone seems to have a tool to supposedly better manage and analyze data. But the key to getting measurable value is thinking beyond a particular tool for a particular transaction. Creating a connected, interactive experience allows teams to reveal actionable insights, make decisions with confidence and extract value to win in a competitive environment. By investing in connectivity, collaboration and communication you can create a digital ecosystem that invites people into a single, shared space.
“Ecosystem” sounds complex, but the right digital approach can solve complexity and bring simplicity. Instead of spreadsheets on dozens of laptops, you have real-time interaction and data visibility that can enable better-informed, faster decisions. Instead of endless e-mails and lack of version control, you can have central dialogue, no silos and a clear, shared workflow.
Consider one tech company that was going through an M&A integration and also planned to spin off a business. And leaders wanted to do it in seven months – aggressive for a company still integrating. By using a single platform to gather data from several hundred source files, they gained consistency and transparency that enabled not only the divestiture but also future reporting needs. Along with meeting its deadline, the company gained insight to support strategic and operational plans going forward.
Where to Invest
The above example is still more an exception than the rule, and you need to assess your expertise and invest as needed in key areas.
One is data fluency. The increasing diversity of datasets available during due diligence require a deeper understanding of data structuring and blending techniques. Bringing data together in one place allows cross-functional teams to collaborate around key focus areas. That results in insights aligned to the deal hypotheses that help create a competitive edge.
Another is advanced data science. As datasets multiply, techniques for harnessing the data and extracting insights aligned to the investment thesis are crucial. Advanced platforms can enable data extraction and visualization so teams can focus on outcomes and scenarios.
The prospect of deriving actionable insights from mountains of data can be daunting. But in the end, the question is if you’re willing to invest in a strategy to dominate data for your advantage, or if data will dominate you.