Essentially , the two following methods can help to evaluate the asset :
• Value contribution through top-line growth : Determine additional impact on the company ’ s top-line based on expected incremental sales and margin growth , e . g . through an extended product and service portfolio , new sales channels and customer access with a significant cross-selling potential .
• Value contribution through synergies and operational valueadd : Evaluate top-line and bottomline improvements for both the acquiring company and the digital asset , e . g . through shortened time to market processes , increased cost efficiencies or best practices in digitalized sales , such as improved conversion rates and marketing tools .
Integrate digital asset with tailored PMI approach
Given the nature of the targets , not only the valuation method but also the integration approach for digital assets
THE AUTHORS
ROBERT SANNIG Partner
MARVIN WÖLK Manager
differs from traditional frameworks and concepts . We see five crucial elements to be considered :
SUCCESSFUL DIGITAL PMI : 5CRUCIAL FACTORS
01
0
0
Evaluation and leveraging of digital best practices
Integration execution during the first 100 days
Cultural integration and evolution
THE AUTHORS
Instead of fully integrating and therefore dismantling the digital asset per default , the tailored PMI approach requires a thorough review of synergy potentials ( e . g . top-line measures , process optimization ) and a well-targeted execution . By doing so , companies ensure sustained digital value creation overtime , andavoid anyincreaseof organizational andoperational complexity ( e . g . parallelprocesses , legacysystems andtools ).
Define PMI strategy and outline the future operating model and technology landscape of target . Decide on optimal degree of integration ( i . e . arm ’ s length vs . full integration ) toensureimpactandsynergyrealization from digitalassetfrom dayone .
0 Thorough integration planning Develop customized PMI roadmap . Enable effective PMI interfaces for both , buyer
2 and target . Assign an experienced integration lead with the “ right ” profile ( e . g . decisionmaking authority , digital transaction experiences , digital mind- and skill-set ) and add furtherspecialists toPMI work packages .
3
4
Use the momentum and execute the developed PMI roadmap carefully . Implement checkpoints to enable an iterative and agile PMI journey . Ensure that the appointed integration lead serves as gatekeeper channeling requests from the parent company , and facilitates support needs from the asset at the same time . Review the integration progress regularly and gradually leverage digital capabilities , know-how and benefits across theorganization .
Create a sustained impact from digital asset by gradually developing and shaping a new organizational culture ( i . e . digital mindset , openness to technologies and innovation ). The cultural and organizational empowerment is crucial to enable digital value creation .
0
5
Dedicated communication strategy
Open and transparent communication with employees and customers throughout the PMI process is essential to avoid potential scepticism . Internal communication should facilitate integration and value capture while strengthening the knowledge transfer .
CONCLUSION |
Current economic developments have once again exposed the lack of digital maturity in companies . As a key driver , digital M & A facilitates the required digital transformation activities for these companies . Due to limited insights from traditional |
approaches , adjusted valuation concepts must be applied to identify and analyze promising assets and their value-add . A clear integration strategy and concept with dedicated digital capabilities and competencies is required to |
ensure a sustained synergy impact . This is the only way companies will benefit from digital deals in order to accelerate the company ’ s overall digital maturity and to improve its future viability . |
|
|
|
© goetzpartners , 2021 |