How Industrial Companies Can
Industrial companies know too well the value of cutting-edge tech, even as many find that it can be challenging to organically build the capabilities they need fast enough to compete. Mergers & Acquisitions (M&A) offers a shortcut. Rather than competing, industrial companies look beyond their own operations and acquire competitors and small companies who can advance their capabilities. Despite this, many companies fail to realize the value they hoped for from their mergers. Industrial companies must rethink the deal process so they can truly maximize value.
The New Digital Deal
Digital growth is now a key motive for M&A. Acquiring new technology is now an equally important motivator as compared to traditional triggers. As many as 86 percent of companies have acquired or contemplating acquiring a digital business to gain access to new technology.
Despite this, many companies leave their digital acquisitions as standalone businesses after closing. Integrating diverse cultures and skills can be challenging, but it is critical to digital acquisitions. Successful companies merge the two businesses, bringing together the best of each.
Out With the Old
In addition to accelerating M&A, technology is retooling the entire process. Companies that succeed at this process have fully or partially digitized M&A, saving time and money. Digital tech helps companies generate faster insights, run a more streamlined process, and measure potential value. The right applied analytics can help human analysts sort through vast sums of data, slashing due diligence and providing more actionable reports. Sixty-one percent of industrial businesses say that technology has already allowed them to reach their M&A targets faster.
Our team at NuVescor use automated multi-directional surveys to collect strategic fit factors to better match buyers with sellers. Also, integrating the surveys, emails, phone calls, automated contact cadences, and web traffic information into our salesforce database, we are able to quickly process a large quantity of buyers and sellers.
The Importance of Digital Leaders
To optimize outcomes, the right leadership must be in place from the get-go. That means hiring digital leaders who know how to promote success. The majority of industrial executives say that the CIO must participate in the M&A process for it to succeed.
M&A teams must include leaders who can guide businesses on a journey of digital transformation. They need to understand the digital capabilities of each company, and the approaches necessary for the acquisition to succeed.
Spreading the Wealth
Tapping into the power of thriving small companies offers a potent opportunity to those who undertake the process thoughtfully. Industrial companies should consider the following steps as they embark on digital acquisitions:
- Decide on the appropriate level of integration for new growth. The more acquisitions a business undertakes, the more necessary a holistic integration approach becomes.
- Devise a new process for digital mergers that includes valuation, target screening, and negotiation. The playbook that has been modified for the digital merger offers a key advantage.
- Capitalize on analytical and artificial intelligence to optimize end-to-end capacities for all purchases, both digital and traditional. Companies that can generate better and faster insights streamline the process, enabling them to extract greater value from the M&A process.
The world is changing, and so too is the M&A process. Companies must get rid of their old M&A biases and adopt a digital-first approach. The businesses who get ahead in this process first are better positioned to win.
About NuVescor Mergers & Acquisitions
At NuVescor, we align the interests of investors and business owners to enable the personal and financial goals of our clients. For over a decade, we have helped founders and owners of companies in the manufacturing sectors achieve maximum value for their companies. Together, we can provide business valuations, financial analysis, investment guidance, and business transaction advice for middle-market companies with revenues from $5 million to $500 million.