THE EXPERT VIEWPOINT

Industrial Restructuration Avoiding the M&A Nightmare

The expert viewpoint Alexander Kopriwa

Copyright © 2016 datonix SpA

Today many sectors face overcapacity with shrinking markets and margins and hyper competition. This prompts cost cutting and a frenzy of mergers and acquisitions (M&A). Stakeholders seek to drive ROI and maximizing future financial shareholder valuations. However, when looking underneath the M&A “engine hood”, most mergers fail to add value. According to Harvard Business Review, research (2011), findings indicate that between 70 and 90 per cent of M&A don’t deliver sustainable added value, caused by “data complexity” and subjective C-Level “opinions” instead of factual and quantitative (objective) data insights.

Mergers are complex processes, with multiple interdependent causality reasons, including a lack of management foresight, the inability to overcome practical challenges and loss of revenue from poorly managed day-to-day operations. For example quantitative complexity analysis can (and should be) measured prior to engaging talks, and during M&A integration to warn about synergies or incompatibility. M&A advisory processes are driven by success a fee’s only defeating the purpose of “success”.

How long time available to analyze and report?

23%Not enough time to extract meaningful C-Level Dashboard insights.

More then 77% of the controller effort is spent for data acquisition and preparation

77%For these reasons, substantial gains can be realized by modernizing the tools, and the methodologies, for use in data preparation.

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On the contrary, a break up or de-merger, known as LBO (leveraged buy-out), provides opportunities to raise additional equity, unlock hidden shareholder value and sharpen management focus. De-mergers can occur by means of divestitures, carve-outs spinoffs or tracking stocks (a.k.a. such stock "tracks" the performance of a business unit or operating division of a company).

Both M&A and LBO Cause Data Complexity! The benefits of mergers and acquisitions (M&A) include, among others:· diversification of product and service offerings · increased plant capacity· larger market share· leverage operational know-how and R&D· reduction of financial riskHowever, C-Level execs frequently face stumbling blocks after the deal is consummated despite due diligence. There is the risk of brand dilution, too high assessment of synergies and poor understanding of the target firm can destroy shareholder value and lead to decreasing stock price after the transaction. Enterprise culture and turf wars can prevent proper post-execution and the longer it takes the worse it gets as staff need strategic guidance. In addition companies always have different management cultures, use different systems and processes.

The expert viewpoint Alexander Kopriwa

Copyright © 2016 datonix SpA 3

However, if a merger is well executed, the new company value appreciates as investors anticipate the future synergies, creating cost savings and/or increased revenue for the new entity. Only when data is unified and quality assured, then the analytics become fully meaningful for strategic decision making… and M&A strategies can be implemented better.

ConclusionOrganizations must address M&A complexity as early as possible; success is achieved earlier with optimal data accuracy. This is difficult to achieve manually as ERP and transactional data base systems are fed by humans, it requires data management infrastructure like analytical appliances or Cloud processing facilities. As business velocity and rapid change effectively challenges organizational restructuring teams should use near automated data restructure tools audits to help perform better M&A execution.

DATA SOURCE

ActiveDashboard

Operativie KPI’s Reporting

C-Level Integrative Reports TBD

DISCLOSE

FIX AND ADJUSTMENT

DATA MINING

SOURCE SCAN

CLEANSED DATA

REVIEWED DATA

FigureM&A MDM and Reference Data Analysis

The Datonix SolutionDatonix data governance framework, resolves most analytics challenges. It is a powerful framework to ready and improve DQA, including key ERP definitions of suppliers, customers, SKU (stock-keeping unit), BOM (bill of materials) and MRP (material requirements planning) and more. Management can quickly identify, correct, unify and validate such data to avoid unproductive complexity costs. In addition Datonix FDA (fractal data guardian) ensures solid fiduciary audit trails of information assets which cannot be falsified after sign-off validation.

ERP users DQA initiatives must be performed on a periodic basis (monthly/quarterly), as well as, before and after ERP application upgrades or modifications.

All of Datonix periodic reporting and procedures can be fully automated to help clients save time. Monthly tasks like procurement purchase balance reporting are easily augmented with insightful graphical reporting configured to customer preferences both for desktops, tablets and smart mobile devices. In addition popular dynamic data journalism tools caters for Dynamic-PDF, Dynamic-WordPress, Dynamic PowerPoint formats and custom formats can also be implemented.

The Datonix solution can process detailed granular data-points with offers user-friendly methodologies to intervene to speed-up mining and data classification tasks.

The analytical process consists of three simple steps:· Scan and correct relevant data-points from accounts and off-book records· Review, adjust, consolidate all relevant resource usage consumtions· Publicize and disseminate all analytical report findings to the target constituents

The datonix solution

The expert viewpoint Alexander Kopriwa

Copyright © 2016 datonix SpA

BiographyAlexander Kopriwa, provides advisory services for organizations seeking competitive and strategic business advantages. Mr. Kopriwa has lived and worked on five continents and is fluent in five languages. Passionate about introducing innovative technology to organizations eager to become market leaders, he is also vice president of international expansion for Ontonix. A former research director for Gartner Group (and META Group), he is a proficient handler of global accounts and excels at applying modern digital methodologies to help clients define disruptive business processes.

Mr. Kopriwa has more than 30 years of experience helping organizations focus on what matters for expansion and economic survival. Trained in international economics, IT architectures (Sweden) and change-manage-ment consulting (Austria), his expansive know-how covers an array of enterprise constraints in cross-cultural and international environments, including Mainland China, the United States, Europe and Southeast Asia.

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