Hub & Spoken.

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In this episode, Jason talks to Graeme McDermott, a long-standing authority in Data Leadership who is currently Chief Data Officer at TempCover, a leading provider of temporary insurance cover. Together, they discuss the importance of having data available for mergers and acquisitions (M&A) activity, while also considering other factors of a M&A that directly impact your organisation’s data team.

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One big message

M&As require a rapid response from everyone involved to ensure that the company making the enquiry can be informed as possible. Keeping certain records updated and on hand can greatly shortcut this process. 

01:30 Introduction to M&A from the data team’s perspective from Graeme’s 9 acquisitions

03:30 The two types of due diligence

07:40 The purpose of due diligence

10:03 Preparing for due diligence

16:21 How to prepare your data team ready for a M&A

21:11 What performance metrics to keep track of in the event of a M&A

26:11 Positioning your company in a way that is appealing to the acquirer while still being ethical

32:30 How to navigate the direction of a data team after a merger

Due Diligence in Mergers and Acquisitions

Due diligence is a critical process in mergers and acquisitions that involves the thorough review and analysis of a target company’s financial, legal, and operational information. The purpose of due diligence is to identify any potential risks or issues that may arise after the merger or acquisition.

Data underpins a large amount of information that is required for a successful merger or acquisition, as it allows potential buyers to thoroughly evaluate the target company and make informed decisions about the potential transaction. Due diligence typically involves reviewing financial statements, contracts, employee records, and other relevant documents, as well as conducting interviews with key personnel and visiting the target company’s facilities.

It is essential for companies to conduct thorough due diligence in order to minimise risk and ensure a smooth integration after the merger or acquisition is completed.

How to prepare for due diligence

As a data leader, one of the key ways to prepare for due diligence is to explore a number of scenarios and anticipate the types of questions and concerns that may arise. This may involve creating detailed financial projections, identifying potential risks or liabilities, and developing contingency plans. It is important to think ahead and consider how the target company may be impacted by different market conditions or external events.

Another key aspect of preparing for due diligence is to have access to a large amount of detailed data. This may include 5 years or more of financial statements, contracts, employee records, and other relevant documents. It is also helpful to have a comprehensive understanding of the company’s operations, including its business model, revenue streams, and key partnerships.

In the post-pandemic world, it may also be important to be able to explain the company’s history and how it has navigated through challenging times. This may involve keeping an encyclopaedia of what has happened, including key decisions that were made and the reasons behind them. It is important to approach this process objectively, rather than preparing storytelling that may be perceived as biassed. Instead, focus on presenting facts and data to support your case.

Always keeping track

Keeping track of key metrics is important in any business, but it is especially crucial in the context of mergers and acquisitions. When a company is considering a merger or acquisition, it is essential to have relevant information on hand so that potential buyers can understand the value of the target company. One key metric that is often closely scrutinised in M&A deals is customer lifetime value, which is a measure of the total value that a customer brings to a business over the course of their relationship with the company.

By keeping track of customer lifetime value and other key metrics, a company can be upfront about what it can provide to a potential buyer. This not only helps to build trust and credibility, but it also enables the company to negotiate a fair price for the transaction. Additionally, having a clear understanding of key metrics can help a company identify areas of strength and weakness, which can inform strategic decision-making and help the company improve its performance over time.

What happens after a merger

There are a number of potential outcomes for a data team after a merger with another company. One possibility is that the data team will be integrated into the larger organisation and continue to work on projects for the combined company. In this scenario, the data team may be responsible for providing insights and analysis to support decision-making across the organisation.

Another possibility is that the data team may be dissolved or restructured as part of the merger. This could occur if the two companies have overlapping data capabilities, or if the combined company decides to streamline its operations. In this case, some members of the data team may be laid off or reassigned to different roles within the organisation.

It is also possible that the data team will remain largely unchanged after the merger, with the exception of some adjustments to align with the overall goals and strategies of the combined company. In any case, the specific outcome for the data team will depend on the needs and priorities of the merged organisation.

Despite this, it is always important to keep in mind that there are humans involved. If you are a leader it is your duty to ensure that everyone is taken care of and there is transparency in the process. 

Conclusion

In summary, due diligence is a crucial process in mergers and acquisitions that involves the thorough review and analysis of a target company’s financial, legal, and operational information. Preparing for due diligence requires exploring a number of scenarios, having access to detailed data, and being upfront about what a company can provide. The outcome for a data team after a merger with another company can vary, depending on the needs and priorities of the combined organisation. Overall, the success of a merger or acquisition depends on careful planning and the ability to identify and mitigate potential risks.