Merger and acquisition activity has transitioned from a frenzy in 2021 when pandemic restrictions were lifted to a slowdown in the latter half of 2022 as storm clouds blanketed the economy, leading to a downpour of higher inflation and rising interest rates.
Even with these strong economic forces in play, 2022 merger activity was relatively strong, on par historically with other years, not including white-hot 2021 activity.
Technology and Healthcare-related Industries Lead Merger Activity
Mergers in industries, like healthcare, have continued full steam ahead. In 2022, the combined revenue of healthcare M&A partners was more than $45 billion (yes, with a B), which blew past the previous high of $44 billion in 2017. Yes, there were fewer consolidations overall transactionally, but when four of the seven mergers are defined as “megamergers” by Kaufman Hall, in which the smaller of the two partners itself has annual revenue above $1 billion, that’s big-time M&A activity.
“The M&A market is not going to stop. It just doesn’t work that way. What it does is it evolves,” said Christopher Auld, head of leveraged finance at investment firm Stifel Financial Corp.
Duplicated Systems, Disparate Teams and Workflows Slow Merger ROI
Today’s mergers are frequently driven by an attempt to purchase a gap in features or functionality, through technology. That makes it especially ironic that 70% of integrations fail early on. Laurin Parthemos, principal at Kotter, a management consulting firm, goes as far as to say if a merger doesn’t allow a fast integration, it probably isn’t worth the purchase. That’s how vital ecosystem connectivity between people and systems has become.
“Integration offers a unique opportunity to change a combined organization’s destiny, but the failure rate goes up as time drags on.” -Bain & Company
A Bain & Company statistic emphasizes this: 50%+ of business synergies are powered by technology. If the tech stack is not working together, the natural conclusion is those synergies are lost. But integrating two complex tech stacks with wholly different configurations, security, protocols, workflows, permissions, branding, and just about everything else isn’t a quick change. It can take years and millions of dollars, making it too easy to lose the merger’s desired benefits if technology integration bogs it down.
So what’s plan B to realize merger advantages when the timeline to integrate technologies is pushed out, IT is stretched managing separate, siloed systems and employees from both organizations sit in functional silos right alongside the customers they serve?
Mergers and acquisitions have a generally negative effect on customer satisfaction, particularly among service industries.
What happens to the bottom line and to the customer experience if organizations can’t get their merged tech to work together quickly to provide a smooth customer journey?
Orchestration Layer Connects Systems Post-M&A
Realize benefits inside the new, merged organization sooner than later even if tech stack integration is years away using an orchestration layer to bridge systems and customer information together, ensuring a streamlined, fully visible customer journey.
Because the customer experience is often subpar during M&A when everyone is focused on back office operational issues, a middleware solution like CXMEngine can solve for both CX concerns, data aggregation, and omnichannel communication, leveraging conversational AI (using a suite of tools from GPT-3 to HuggingFace and others) and intelligent automation.
CXMEngine® is the first customer experience management platform that connects all of an organization’s separate, siloed legacy platforms and third-party partners inherited through a merger. It pulls greater value from these existing platforms, from CRMs, call center solutions or ticketing systems, all the way to external third-party partner platforms. But it doesn’t just uncover this data - it offers real-time back-and-forth syncs, so companies can see and manage customer interactions in the moments they occur, wherever they occur in the journey, to ensure frustrations don’t lead to lost relationships during this vulnerable period. Customer information is aggregated and shared to a unified view visible to every team member, inside and outside the company, who supports the customer.
In addition, its Journey Builder tool and Conversational AI module are both drag-and-drop features that give companies full control over designing ideal customer experiences and then providing both teams and customers with the knowledge they need on-demand in the channels they prefer. They can see what’s their status, what’s next, who’s responsible, and anything they need to know to move ahead, leading to reduced friction and frustration. And that’s led to dramatic business outcomes for CXMEngine clients, usually in less than a year.
Support costs and attrition drop in months, and revenue and share of wallet jump by double digits. Satisfaction scores from both employees and customers skyrocket - critical during an unsettled M&A period.
An ideal orchestration and data connection middleware, like CXMEngine, should be no-code/low-code, making it a simple data mapping exercise that takes a few days vs. waiting for years for custom development, consolidations or worse - ripping and replacing of core systems.
“A future-ready, connected organization will have the capabilities to quickly respond to market signals and pivot to capitalize on opportunities as they arise. Future success means being connected to customers, to market dynamics, to employees, to channel and business partners and aligning across the front, middle and back offices.” -KPMG
Orchestration Offers Both Speed and Valuable Time to IT Teams
Speed to data aggregation, greater customer visibility, collaboration and communication aren’t the only reasons to leverage a middle aggregation layer, like CXMEngine, during a merger and acquisition. The other reason is the opposite…. It gives more time.
Leveraging an orchestration layer over the top of disparate systems to bring them together post-merger extends time to IT teams and C-suites to fully understand the dual organizations’ disparate systems, the data housed within them and how to best move forward long term so the new organization’s IT infrastructure is future proofed, efficient and agile. Without the need to make more rushed decisions in the short term. Merged organizations get one true shot at building essentially a new infrastructure from the pieces of their existing systems, and it takes time to get that right.
Learn more about how a no-code journey orchestration and ecosystem connection platform like CXMEngine was built to help M&As accelerate time to value while protecting customer experience during mergers.
