Dealing with data – get ahead of the mergers and acquisitions game to maximise your value

Navigating an M&A process can be an exciting if complicated experience, and one of the things that can cause a heap of headaches is data. Having your data in good shape can make a massive difference to how potential investors or acquirers perceive your company, and can even put you in the driving seat of the deal process. So let’s explore why preparing your data ahead of time is essential, and how you can do it effectively, without disrupting your day to day operations.

Telling your story with data

When it comes to M&A, numbers speak louder than words. Investors and acquirers want to see hard evidence of business value, and this is where your data becomes a powerful storytelling tool that can help you paint a compelling picture of your company.

Start by identifying the key value drivers that make your business attractive to potential investors or acquirers, and consider the data you need to back them up. This will allow you to identify the metrics that showcase your company’s strengths, and could cover anything from revenue growth and customer acquisition costs, to profitability and market share, or potential new business streams and expansion opportunities. 

For instance, if you’ve seen a steady increase in revenue, retention, customer acquisition etc over the past few years, make sure this data is not only accurate but also presented in an understandable format. Don’t just present raw numbers; provide context, explain why certain metrics have improved as well as projecting how they could continue to do so, and demonstrate how this positions your company for future growth.

Additionally, having a well-prepared data room can streamline the process. This is a secure place where all your critical data is housed to make it easy for your advisors, and any potential acquirers, to access and review. Your advisors can help you with this but it’s important that data is organised in a logical way – separate financial reports from operational data, and so on, to make it easier to digest and leverage this data to represent your company to the market in your most compelling light. The easier you make it for investors to tangibly quantify value in your company, the smoother the negotiation process will be.

By having this data organised and readily available, you’re not just telling potential investors that your company is valuable – you’re showing them, in black and white, why it’s a worthwhile and exciting investment.

Navigating due diligence with minimal disruption

The due diligence phase of an M&A deal can be intensive, but having your data prepared in advance can help you navigate this period with minimal disruption to your day-to-day operations. Due diligence involves a thorough examination of your company’s financials, operations, and technical infrastructure, so if your data isn’t well-organised or clean, this process can drag on and delay the transaction.

Here’s how you can get ahead of the curve:

• First, focus on data cleanliness:

  • Make sure your financial records are up-to-date and accurately reflect your company’s performance, including reconciling any discrepancies and ensuring that all transactions are recorded correctly. A clean set of financial records can prevent misunderstandings and foster trust with potential acquirers.

• Next, streamline your operational data:

  • This means preparing clear documentation on resources, processes, systems, and performance metrics. An easy-to-navigate overview of your operations can help prospective buyers quickly understand how your company runs and what it would take to integrate it into their existing operations (if that’s their strategy). It’s about showing them that your company isn’t just valuable, but also well-organised, efficiently managed and has the infrastructure in place to support the forecast moving forward.

• Don’t forget about technical data. 

  • If your company relies on, or offers, specific technologies or systems, make sure you have detailed records of these including software, hardware, and proprietary technology. Being transparent about your tech stack and its functionality can prevent last-minute surprises and give potential buyers/investors confidence in the underlying capabilities and differentiators associated with your business.

By preparing your data in advance, you not only speed up the due diligence process but also reduce the risk of interrupting your everyday business activities. When your data is clean and easily accessible, your team can focus on their regular tasks without being distracted by last-minute data scrambles.

The benefits of data driven dealmaking

In essence, getting your data in order before a transaction brings multiple benefits. Firstly, it allows you to articulate your company’s value more effectively, providing potential investors or acquirers with concrete evidence of why your business is valuable to them. Well-organised and insightful data helps make a compelling case for your company, which can lead to better valuation and smoother negotiations. Don’t forget, an investor or acquirer will have their own approval process to execute each transaction so the more data you can provide underpinning the investment thesis makes investment committee/M&A board approval easier to obtain and increase the deliverability of their bid. 

Secondly, by having your data prepared ahead of time, you minimise disruptions to your business operations during the due diligence phase. Clean, clear, and well-organised data ensures that the due diligence process proceeds without unnecessary hitches, keeping your daily operations running smoothly and allowing you to focus on what really matters – making sure your business keeps performing well. 

In short, investing time and resources into data preparation not only enhances your company’s attractiveness to potential buyers but also ensures that the M&A process is as seamless and efficient as possible. So, roll up your sleeves, get your data in order, and set yourself up for a successful process!