Digital Value Matter in M&A

Digital Value Matter in M&A became a strategic consideration for most of post COVID-19 next normal, digital capability and asset did matter. Digital revolution and how much the digital value or capability a company possesses become one of the new M&A deal considerations. The more digital transformation the company is, the higher the digital value or capability, and the extent affected by COVID-19 and the more likely to possess long run business continuity, compare with those legacy and traditional company who continue to undervalue digital transformation and the potential for it for the speed, scale and scope.

Lot of companies are affected badly due to high fixed costs that depend on the high volume of constant predictable demand, or in high cost of loan to operate efficiency is all falling due to COVID-19 global impact. The focus on the core competency and comparison with diversified portfolio, the value of diversified is again, show you the benefits for being able to sustain more likely in the current and future condition.

More and more companies look for M&A targets that possess digital value, digital assets and possess IT & digital teams, so they can help to accelerate or jump-starting digital transformation in the post-close phase. Digital value drives from possessing the skills, capabilities, and technology and knowing how and capable to execute digital transformation for the organization. Some of the values include software platforms allowing creating and marketing digital products online or enhancing customer digital experience. The strategic goal is help organizations to gain speed, scale and scope, no about invest heavily in legacy technology, but capable to align digital technology to accelerate the business, with less dependence on the physical, manpower and more on the process automation. Digital customer facing and sales channels that allow companies to do more business with the customer they serve in as hassle as possible, and potential to scale and expand across a broader client base after the merge and acquisition (M&A).

Of course company need to balance risk in the form of large-scale IT projects that require capital funding committed for years into the future, the long it is, the higher risk will be, due to changing technology is happen in the real time, new generation of technology always replaced old legacy technology overnight, so the focus in on ready to execute and rolling digital value, no potential value that look nice in the paper, we want it can be immediate can be use and roll out that matter, as the market do not wait anyone and any company to be ready. So your competitor will not wait until you are ready. So as well for the market.

Post M&A technology-integration is also one of the big areas to look into, where it can bring synergy and where duplicate costing, beside the organization restructuring of the manpower and elimination for the redundant. Bigger and more established technology heavily invested in the past may or may not be the opportunities for the future, you need to look whether it aligns with the current and future need for speed, scale and scope consideration.

E-SPIN in the business of consulting, supply and maintaining corporation and government customers enterprise ICT solutions, since 2005, across the region E-SPIN do businesses. Feel free to contact E-SPIN for the involvement of the pre- and post M&A either point or end to end enterprise ICT project related to consolidation, modernization for digital transformation initiative.