4 Reasons The Cloud Helps With Mergers And Acquisitions

 According to various studies, the long-term failure rate in mergers and acquisitions is between 70 and 90 percent. Given that number, companies should have a lot of confidence in overcoming this trend.

 

Of course, not all M&A transactions are the same and not all have the same probability of success. In particular, companies that use Managed Cloud Services technologies such as Amazon Web Services and Microsoft Azure are more likely to achieve a successful merger. This article explains four reasons why the cloud and M&A should go hand in hand.

1. Simpler integration

Bringing together your IT infrastructure and environments can be a big challenge during an M&A deal and is one of the key factors in the success of the transaction. 71 percent of US companies agree that technology integration determines the outcome of a M&A deal.

The good news is that IT integration is much easier when you are already in the cloud. For example, virtual private networks (VPNs) can be merged by joining one account, interconnecting existing cloud networks, or combining them into a tiered account of a parent company and a subordinate company.

Azure Blob Storage and AWS Simple Storage Service (S3) are public cloud offerings that allow users to transfer database files and snapshots between companies that host various cloud services. In addition, the central repositories or data warehouses of the acquired company can be easily backed up and restored in local environments for exploration planning and integration.

Additionally, planning large IT mergers often involves making tough decisions about storage and analytics platforms. With the cloud, you can expand your data lakes once an M&A deal is closed, and then decide which storage and analytics platforms are best for the business in the future.

Thanks to cloud computing, implementation teams are no longer geographically restricted to specific locations when integrating the systems of different companies during an M&A deal.

2. Easier collaboration

When two companies become one, it is imperative that both are on the same page as quickly as possible. However, aligning your goals and your people is much easier said than done.

One of the biggest advantages of cloud computing is the ability to access resources anywhere, anytime with a single Internet connection. During an M&A deal, potential partners can leverage the cloud to start sharing and collaboration as soon as possible. Access to VPNs, data sets, and analytics and reporting systems can take place immediately and provides companies with valuable research results and insights before articles are even colored.

3. Faster completion

An average M&A deal can take several years to complete, which is understandable when two highly complex entities are merged into one organization. To have the best chance of success, you need to go through all the standard processes: deciding on a growth strategy, due diligence on the financial condition of both parties, planning the integration, getting approved, and finally executing.

The longer the deal takes to close, the riskier it becomes and the more likely it is to be canceled. Furthermore, unfinished agreements do not offer any value to companies or their stakeholders.

Fortunately, cloud computing can help significantly reduce the time it takes for an M&A deal from negotiation to execution. The benefits of the cloud, such as portability, transparency and accessibility of resources for critical routes between companies, help M&A partners move faster and make fewer mistakes.

4. Higher probability of employment

The cloud can also be an important part of the M&A negotiation process, helping potential buyers separate the wheat from the chaff. For example, startups can use the cloud to show exactly how their products and services offer added value and to conduct demonstrations and proofs of concept.

In general, your business is more attractive to buy when your data and analytics are hosted in the cloud. This is mainly because the lines of business development are clearly moving in this direction. According to IT research and analytics company Gartner, more than half of new business intelligence and analytics software licenses will be for cloud products by 2020.

Being in the cloud prior to an M&A deal not only provides startups with the benefits listed above, but it also saves the M&A partner from worrying about a time-consuming cloud migration project.

conclusion

Cloud computing removes many of the typical IT barriers to successful mergers and acquisitions. Moving from an on-premises to a cloud-based solution before or during the merger significantly increases the chances of success in an already difficult M&A landscape.

Need some advice on how the cloud should play a role in your next M&A deal? Datavail's team of highly skilled cloud computing experts can advise you on your business needs and goals. Contact us today to find out how we can help you with your cloud strategy.