According to McKinsey, 10% of mergers and acquisitions (M&A) are canceled yearly. Additionally, numerous studies show that between 70% and 90% of mergers fail in the long term. It’s apparent why. The task of merging cultures, finances, and growth philosophies is difficult enough. Factor in the challenge of combining technology stacks, and the obstacles seem insurmountable. A survey in the Harvard Business Review found that 71% of company leaders found technology integration a determining factor of the success of M&A.
Despite the risks, many organizations take on the odds of a merger or acquisition to become more efficient, resourceful, and, ultimately, profitable. Up to date, cloud-enabled systems can be an attractive prospect for potential buyers, and conversely, legacy infrastructure can be a sticking point. Mid-merger, some companies may discover security vulnerabilities or incompatible systems. Should an organization go through the divestment process, it must do so safely while protecting the sensitive data of all parties involved.
Cloud-based solutions solve these core issues of M&A in several essential ways. Technology integration is streamlined once both companies operate in the Cloud. Security, storage, and collaboration can all be seamlessly tied together.
This post will explore the role of the Cloud in mergers, acquisitions, and divestitures. (Note that this article uses the term M&A to represent mergers and acquisitions, and divestitures are implied when this abbreviation is used.)
The Cloud is key to overcoming the technological obstacles that stand in the way of a successful merger or acquisition. Some of the advantages of cloud technology, as it relates to M&A, include:
Merging or divesting operations have many moving pieces. Overburdened and newly restructured IT teams may be overwhelmed by the sheer amount of work that needs to get done in a cloud migration in general and when melding IT operations specifically. Modernizing mission-critical applications, identifying and securing vulnerabilities, and debugging integrated workflows are just a few of the tasks they must accomplish in a relatively short timeframe and on a limited budget.
Each vendor represented among the supply chains of the two companies that are joining (or divesting) represents the risk of a data breach. The slightest overlooked vulnerability can result in a catastrophic ransomware attack with the potential to cascade through both newly linked supply chains.
Combatting the risk of data exposure is comprised of two main strategies:
The proactive approach involves implementing next-gen security tools to seek and destroy malware threats, as well as good security hygiene, such as following password best practices. Additionally, implementing security protocols—like zero trust networking access (ZTNA) in conjunction with SD-WAN or SASE tools and encrypted storage solutions such as data lakes—provides maximum defense for your organization and each company linked to yours via supply chains.
The reactive approach ensures that your systems can be back up and running as soon as possible in case of a successful malware attack or natural disaster.
While cutting costs during an expensive process like a merger can be tempting, businesses that navigate technological integration without expert guidance soon become overwhelmed. The odds are already against a successful acquisition. Seeking out experienced cloud professionals can help your organization stack the deck in its favor.
CBTS has 30+ years of experience managing data centers and developing cloud environments. Our engineers and project managers have successfully guided hundreds of organizations through the cloud adoption and optimization process. The team offers customized cloud offerings from communication to security to application modernization.
Get in touch to learn how CBTS can smooth the technology transition in an M&A process.