Mergers & Acquisitions (M&A) are set to explode in a post-COVID world, as valuations become disconnected relative to assets, and as companies look to add capacity to their supply chains
M&A is trending less toward capturing the value of capital goods and more toward capturing the value of data and relationships: customer information, market information, supply chain information. It is no longer simply about buying capital goods; companies are often purchased for their data.
Conexus can speed up every M&A integration and save many that will otherwise destroy value.
The Hidden Price Tag
One of the hidden costs, and substantial risks, of M&A is the integration of the data systems being acquired. There is an upfront cost of evaluating the assets, additional costs of integrating the assets, and then an ongoing cost of correcting the endless errors that will appear from any mismatched system.
Investors hate surprises. Unpredictable data failures can destroy shareholder value and can even end careers as they add unexpected costs and delays to enormous deals. There are three substantial risks that seemed unavoidable before Conexus:
1) Can I 100% account for all of the data of this asset? Is it in the form and condition
consistent with the price being offered? (17% asset discount)
2) Can I 100% guarantee the timing of the transfer and integration of data into my systems
to create the value that was represented in the purchase price? (13% asset discount)
3) Can I 100% guarantee the time and cost involved in the ongoing work needed to keep
the systems integrated in a way that reflects the purchase price? (6% asset discount)
The Conexus Solution
When Empower Retirement wanted to sell a portion of their business, we addressed all three of
these problems—resulting in a higher purchase price for the seller, and faster and smoother integration and use of assets for the buyer.
We expressed data migration declaratively as a CQL program. CQL provided the unique power, using data, to predict operational and personnel conflicts in the integrated company, before the
two parties had even agreed to a purchase price. (i.e., Conexus proactively identifies business rule conflicts).
One of the largest information failures in M&A was eliminated entirely. Empower could bring hard data to the negotiating table about questions that, in any M&A before CQL, were hypothetical or unanswerable.
Among the operational risks and the financing risks is the very real cost of integrating companies. These transactions are often shareholder value-destroying and even can be career-ending because the surprises in costs are, by definition, impossible to predict. If the technology has now changed such that this risk can now be mitigated, it has become irresponsible to allow this risk to exist.