Business Process Integration and Assimilation in a M&A and How to Accelerate Synergy Savings.
The number and volume of M&A deals in Q1 of 2023 fell 25%, while aggregated deal values fell by 47%, compared to Q1 2022. This was in light of elevated inflation, interest rate hikes, geopolitical instability and compounded by the SVB crisis and the sale of Credit Suisse.1 Nonetheless, there were some large deals that were announced in Q1 of 2023 including Pfizer’s acquisition of Seagen for $42.8B, Goldman’s acquisition of SVB’s securities portfolio for $21.5B, Silverlake’s acquisition of Qualtrics for $10.4B, CVS’ acquisition of Oak Street Health for $10.4B, Apollo and Abu Dhabi Investment Authority’s acquisition of Univar for $8.2B and several others.
While industry experts believe that deal flow could brighten up in H2, the focus could also pivot to small-medium sized deals via alternative funding and an increased emphasis on creating value from a deal.2
Value creation and synergy savings is of course front and center in business process management.
Value Creation in Business Process Management
A large grocer in South America with global revenues of more than €10B Euros had recently acquired a local supermarket chain. In addition, it was modernizing its technology landscape from a legacy ERP to a cloud ERP. This created opportunities for the combined organization to utilize process management solutions to create aligned and synergistic business processes while incorporating best practices from a modern ERP stack. All this resulted in the acceleration of time to value and further efficiency savings and synergies across both organizations.
In the logistics and transportation industry, a global shipping company with revenues of more than $10B had grown through multiple acquisitions in recent years. As a result, its business processes had gotten misaligned and decentralized, leading to process inefficiencies. Using a single process management platform, it was able to identify opportunities to reduce the time and effort for managing outstanding demurrage by almost entirely. The shipper was also able to achieve process improvement benefits in invoice management, cut-off operations and booking management.
Deeper Value Creation
Going deeper in value creation for M&A requires an intense focus in strategic repositioning and perhaps some novel techniques. Digitization, business model innovations, and small-medium sized deals are all levers an executive has at its fingertips to create value from a deal. But, to accelerate synergy savings, executives have to be willing to look to a newer and broader set of tools that allow organizations to achieve process and administrative efficiency savings through process simplification, process mining, and process collaboration. Business process mining and intelligence solutions allow an organization to model and simulate the design of improved processes to create a single source of truth and identify wasteful process variants – this may perhaps be the key to unlocking a transaction’s full potential.
Sources:
1S&P Global. Global M&A by the Numbers: Q1 2023. (2023). https://www.spglobal.com/marketintelligence/en/news-insights/blog/global-ma-by-the-numbers-q1-2023
2PWC. Global M&A Industry Trends: 2023 Mid-Year Update. (2023). https://www.pwc.com/gx/en/services/deals/trends.html
