Rapid innovation and the slew of disruptive forces are compelling organizations to take the M&A route to strengthen their market position and safeguard their product offerings. While M&As offer a great way to stay relevant and drive higher value, merging corporations need to understand the significance of portfolio optimization – before, during, and after M&A and how it can be streamlined with an M&A Consulting Services provider.
Why is Portfolio Optimization Important?
COVID-19, ongoing conflicts, and constant economic disruptions have jeopardized the investment landscape. Given the volatile market, investors need to be prepared for a variety of economic scenarios.
When investors think about their portfolio holistically, they are in a better position to increase the aggregate value of the company’s holdings over time, and more than the sum of its parts. Investing in companies that are strategically sound and resilient can help businesses participate in attractive markets, effectively compete with peers, and capitalize on innovation opportunities.
An optimized portfolio can help in enabling better ROI while also allowing investors and asset managers to:
- Gain a deeper understanding of their portfolio’s opportunities and vulnerabilities
- Achieve expected returns while also minimizing costs and financial risks
- Understand how different economic scenarios impact the portfolio
- Make data-driven investment decisions that reassure clients
ROI Optimization
Building and maintaining an optimized portfolio often means dealing with complex data, making trade-offs, and making tough choices, which delays timelines and weakens returns. If you want to optimize ROI before, during, and after M&A, here’s what you need to do:
Before M&A
- Carry out in-depth M&A due diligence: This allows acquirers to perform in-depth research on the target to ascertain problem areas before transaction terms and integration plans are set. Since reviewing large sets of poorly structured data is labor-intensive and time-consuming, having a checklist in place and embracing digital technologies can enable you to cluster large content sets, extract key data points, and reduce the timeframe by a large margin.
- Complete detailed technology assessments: Teams must consider the firm’s technology capabilities’ adequacy, benefits, and risks. Understanding how the target company’s technology strategy aligns with its growth strategy and areas where investments are being directed to are key to improving operational efficiency and ROI.
- Involve IT early on: Doing so early on (and throughout) the process is essential for effective execution and the subsequent realization of benefits, such as deeper operational insight and significant findings across performance, synergy, and revenue.
During M&A
- Streamline program management: Time-consuming M&A activities such as planning, program management, and reporting can be made efficient using cloud-based solutions. These solutions can enable global teams to easily capture key data elements and provide cross-functional status in real-time. Streamlined program management can also lead to better workflows, allowing teams to conduct deeper root cause analysis and furnish findings via dynamic reports.
- Conduct risk management and control: Teams must identify potential risks, issues, and dependencies that could affect merger outcomes, and establish robust change management strategies to avoid potential risks and hazards. They also need to support continuous collaboration to bridge team and departmental silos, enhance visibility and keep the merger running smoothly, both during and after the deal.
- Ensure data accuracy: Having a complete and correct picture of the underlying data is essential for successfully integrating acquired assets into the merged organization. Accurate integration and consolidation of data from disparate enterprise systems can strengthen business relationships and correlations across disparate datasets and form the basis for the creation of the new data-driven enterprise.
After M&A
- Enable thorough post-merger integration: Teams need to ensure all the boxes of their IT integration strategy are ticked once the integration is completed. They also need to consolidate legacy applications, combine networks, and build out infrastructure to support the operations of both the merged entities and streamline the user experience.
- Maintain productivity levels: Most corporations face challenges stemming from employee attrition, lack of ownership, and low employee morale. In the long run, there is added pressure on the newly created organization. By investing in digital platforms that offer a single source of truth and simplify accountability and oversight through dashboards, investors can maintain productivity and efficiency levels while also embracing automation to streamline workflows and enable greater transparency and visibility.
- Establish governance: An essential component before, during, and after a merger, strong governance can pave the way for successful and effective change management. Those with the right governance frameworks and controls are more likely to handle risks in time and ensure business continuity, high levels of employee satisfaction, and organizational stability.
Your Portfolio Optimization All in One Place
Moving into new markets, expanding the customer base, increasing market share, extending product portfolio, enabling cost savings, or acquiring key talent – the rationale for M&A are many. Regardless of the motive, all acquisitions share some common objectives: adding value, realizing synergies, and boosting ROI. But despite the promising prospects, many M&A transactions fail to deliver desired benefits, leading to painful write-offs for acquiring organizations and colossal losses for investors.
Achieving maximum ROI from investments requires you to carefully assess the performance of your portfolio companies and streamline integration activities before, during, and after M&A.
If you want to enable effective portfolio optimization, we can help! Synoptek’s M&A Consulting Services will not only help in overcoming complexities around meeting integration timelines but also in maintaining (and strengthening) business continuity.
Embrace these steps today to build an optimized portfolio, drive growth, and enable long-term shareholder value creation.
