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Did you know that companies spend more than $2 trillion on acquisitions every year, but many still fail? The good news is the 2023 outlook for Mergers and Acquisitions (M&As) is still significantly brighter that you might think.
M&A Trends & Outlook for 2023
To that effect, a 2023 global M&A industry trends report from PwC, states that although M&As tend to slow down during times of uncertainty and market volatility, those can actually turn out to be attractive times for valuations and bring opportunity knocking. A few key metrics and trends to consider include:
- While overall deal volumes in 2022 were below the record-breaking 65,000 deals in 2021, they still remained 9% above pre-pandemic levels
- As firms continue to seek growth opportunities through strategic partnerships and acquisitions, the outlook for M&As in professional services for 2023 is positive
- 73% of corporate leaders are pessimistic about global economic growth, but 60% still said they were not planning to delay deals in 2023
Why? Because despite economic uncertainty, companies are still looking to grow and M&As continue to present an attractive way to reposition themselves against competitors, accelerate growth, and more broadly reinvent themselves overall in a rapidly changing market.
The (Curable) Trouble with M&As: People, Technology & Process Challenges
The hard truth is {that)despite the powerful potential benefits of M&As, many deals fail to achieve their intended objectives. In fact, the M&A failure rate is between a whopping 70% to 90%. This is often due to three key factors: (1) people, (2) technology, and (3) process challenges associated with integrating two companies. All of this leads to challenges in integrating and aligning technology systems; lack of trust between parties; and difficulty identifying co-selling opportunities.
Let’s examine these three main M&A challenges in more detail and learn how Introhive can make the difference between a deal gone wrong and a deal gone all the way right.
CHALLENGE #1: Integrating and Aligning Technology Systems
Professional service providers often have unique processes and systems that they use to deliver services to clients. When two firms merge, it can be challenging to integrate these, which can lead to inefficiencies and delays in service delivery (i.e., a poor client experience). This can look like sales reps selling against each other at the same customer and failing to build trust due to lack of visibility across shared relationships. Who wants that?
Integrating client relationship management data is one of the most challenging tasks associated with M&As, and a costly one at that. Failure to effectively integrate client data across firms can result in reduced productivity, increased costs, and missed opportunities for growth. Here are real-world scenarios we’ve come across with our own customers going through an M&A:
- Separate CRM systems
- One CRM system and one spreadsheet system
- Same CRM system, but disparate fields and reporting
Achieving a single client view across many regions and business units is already a highly complex project without adding in the complications associated with disparate data. As you can imagine, this becomes even more challenging during the rush to combine two businesses into one.
CHALLENGE #2: Lack of Trust Between M&A Parties
Professional service firms often have unique cultures that are built around their service offerings, clients, and employees. When two firms merge, there may be cultural differences that can lead to conflicts, misunderstandings, and a lack of trust between employees. This can then lead to a serious complication where although the firm has become a single global entity from an ownership standpoint, both companies continue to operate as though they are two distinct entities.
This is an extremely unfortunate circumstance, as research has shown that when partners collaborate across practice areas, there are a number of benefits to both the firm, and the individual— from earning higher margins, to gaining a competitive edge, and inspiring greater client loyalty.
What’s worse, when not handled properly, employees from the two firms may start to feel like they are competing with each other for clients or resources which ultimately leads to inefficiencies and a lack of collaboration between teams. These are issues that are bound to become obvious to clients and erode trust. Cue challenge #3…
CHALLENGE #3: Identifying Co-selling Opportunities
While every firm who has just undergone an M&A strives to foster a culture of collaboration and have all parties involved act as One Firm, many fail to achieve these desired and success-critical outcomes. This stems largely from challenges #1 and #2 described above, and all of this—namely no global view of existing client relationships between the two entities that merge and a lack of transparency and collaboration—creates a perfect storm that makes it incredibly challenging to identify co-selling and cross-selling opportunities.
Further, without the appropriate technologies, processes, and change management in place, there may be duplication of efforts between the two firms, with employees from one firm not realizing that the other firm is working on a similar project or initiative. These “collisions” between partners can also erode trust with clients as they sense the firm may be misaligned or disorganized.
Given these and many other challenges, it’s no surprise that M&A deals—despite holding a great deal of opportunity—are [most often] risky ventures. There is hope though! By leveraging technologies like Introhive’s Client Intelligence platform, companies can greatly mitigate these risks and increase their chances of success.
The Solution to your M&A Woes
With Introhive, companies can streamline their data integration processes, reducing the time and resources required to consolidate their client data across disparate systems to realize a comprehensive view of customer and prospect data across both companies. This will go a long way in swinging that pendulum away from failure and into success. Here’s how.
First, Consolidate Those Client Datasets
When companies merge, they usually undergo a decision making process to either migrate to a single CRM instance, or maintain the two, but in either case, they’ll require a single client view and consolidated data set in order to be effective. Introhive can be used to facilitate this by creating a firm-wide collection of known contacts across the two entities, so they can harness a complete, enriched client data set, either across the two CRM instances, or upon deployment of their new global instance.
Then, Create Combined a Relationship Graph to Power More Seamless
& Profitable Deals
Not only does Introhive empower firms with complete visibility into the known network of contacts across the two entities, it also harnesses AI to create a dynamic relationship graph of the combined organization and their connectivity to these contacts. There are a number of benefits that firms can realize with this global view of the firm’s collective relationships.
For starters, with a deeper understanding of their customers and prospects, firms can streamline their sales and marketing efforts and identify co-selling opportunities, where both entities have open opportunities with prospective accounts. We’ve found that this can lead to larger global engagements that represent increased contract value. What’s not to love?
With the help of Introhive, firms can also identify cross-selling opportunities with existing accounts where one service line or practice area has a relationship that can represent a warm (and therefore far more effective) introduction to an additional service line.
Yet another benefit of a single client view is that it can improve the client experience by enabling the newly formed firm to bring the full breadth of expertise from the combined organizations to the client. Plus, with complete visibility into client engagement across both entities, firms can also reduce the risk of crossing wires and stepping on toes which goes a long way in building and maintaining customer and prospect trust and satisfaction. It’s a win, win.
Learn more key strategies to set your M&A up for success and how Introhive can play a role. Then, sign up for a guided tour of our no adoption, low time-to-value software to see for yourself.
