How rethinking technology can yield new private equity value

Is your private equity (PE) firm leaving value on the table in the mergers and acquisitions (M&A) deal cycle? Chances are, it is.

Historically, the technology part of these deals has been viewed as a cost line item and source of risk. When you rethink technology as a value creation lever, you uncover a powerful competitive edge.

As competition for deals intensifies, technology can take a deal from good to great. It just needs to be handled the right way.

The truth about tech maturity in PE

When it comes to technology value creation, PE firms are facing a gap between expectations and execution. PE leaders tend to think their technological capabilities are mature, when in fact, they have a way to go.

In our survey, 58% of PE leaders rated their technology capabilities as advanced. The reality begs to differ: Only one in three projects meets its initial goals and is delivered on time and within budget.

There are many reasons for this gap, including:

• Existing playbooks don’t address technology strategy and related issues.
• Due diligence is handled in a siloed manner, often as an addendum to an unrelated mandate.
• External advisors who help with pre-deal tech due diligence are rarely held accountable for transformation post deal.

In the full report, you will find a more detailed look at specific factors that hold PE firms back.

Five ways to use technology effectively pre- and post-deal

PE leaders who successfully guide their teams to greater value assess the applicable technology value levers in the pre-deal phase. Continuing that focus throughout the deal phase drives business efficiencies and top-line growth, from a reduction in complexity to scalability.

A focus on technology levers throughout the deal cycle drives efficiencies and growth.

Proven guidelines for technology programs in M&A include:

• Value first: Perform a synergy and value case driven transformation.
• Accelerated execution: Prioritize, using an Agile approach, with fast releases and quick adjustments.
• Cloud based: Use standard cloud-based platforms to accelerate implementation.
• Fit-to-standard: Introduce global processes to avoid complexity.
• Required capacity: Ensure that people with key capabilities can focus on the program.

Cloud platforms and 360-degree partners make things easier

Thanks to the tools available today, obtaining the full value from technology is easier than ever. First, digital now comes “in a box.” Cloud-based core technology platforms like Salesforce and Workday offer advanced digital capabilities with little upfront investment and quick adoption. And second, end-to-end partners like Accenture can support deals from due diligence to implementation and realizing value.

When SUSE Software Solutions was sold to investment company EQT Partners, it was the perfect time to start fresh. Free to leave behind the old ways of working and challenge the status quo, SUSE could build on its strong brand to create a new, standalone company—purpose-built for growth.

To learn more about technology as a value creation lever for PE firms, including the main reasons for missing out on maximum value and the factors we see contribute to success, download our report.