Cloud-based solutions to streamline mergers, acquisitions, and divestitures

Why most mergers fail

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.)

How to stack the odds in your favor

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:

• Transition IT spending from CapEx to OpEx. Infrastructure, hardware, and even code increasingly “live” in the Cloud. By embracing cloud-based solutions, IT teams no longer need to spend large chunks of budget on new hardware (cloud providers handle that). Instead, IT spending becomes an operating expense based on affordable monthly service fees based on consumption or subscriptions.
• Access to cutting-edge technology. Among the unique selling points of cloud providers is their ability to improve the technological agility of their client base continuously. Cloud providers constantly implement the latest advances in AI, security, and collaboration to improve customer experience.
• Ideal for hybrid environments. Before the Cloud, M&A often meant physically linking or moving hardware between physical data center spaces. Now, the Cloud streamlines and simplifies the process of merging each layer of each company’s technology stack. What’s more, employees can work and interact from any time zone with cloud-based unified communications solutions (which can significantly speed up the overall timeline of an M&A).
• Improved security. Not only is the Cloud faster than legacy equivalents, but it is also inherently more secure. Cloud security experts have greater visibility into the emerging threat landscape and next-gen tools to stamp out those threats as they arise. Cloud tools also aid in securing supply chains.
• Highly scalable. In the past, adding a new application to a workflow meant installing it on hundreds, if not thousands, of individual computers or devices. Today, an IT team can batch-install apps via cloud admin controls, or employees can simply log in to cloud-based platforms. In the Cloud, security, patching, and vulnerability  management services scale up or down as necessary.
• Speedier technology integration. The most critical benefit of cloud-based solutions in an M&A scenario is that it speeds up the integration of technology workflows. Vital systems such as e-mail, scheduling tools, directories, and contact centers can rapidly sync and integrate, especially if both parties are already cloud-enabled.
• Blended communication and collaboration. Cloud collaboration tools like Microsoft Teams Voice and Webex Calling can be merged with traditional telephone systems to create a more efficient, collaborative, and secure comm system across the newly merged organization.

Also read: CBTS application modernization services bring your company into the digital age

Potential obstacles to cloud migration

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.

Securing supply chains

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:

• Identifying and closing security gaps (proactive approach).
• Deploying a robust Disaster Recovery as a Service (DRaaS) system (reactive approach).

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.

Learn more: Seven tips and tricks to manage disaster recovery solutions for the Cloud

Managing cloud migration or optimization during M&As

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.