3 Key Ingredients of M&A Success

Many companies have mergers and acquisitions (M&A) on their radar in 2020. Robynne Sisco, co-president and CFO at Workday, identifies key factors for M&A success based on our own experiences acquiring Adaptive Insights and Scout RFP.

Robynne Sisco February 21, 2020
Image placeholder

Mergers and acquisitions (M&A) are on the radar for many business leaders in 2020 as they look to grow their revenue and product offerings. According to EY’s "Global Capital Confidence Barometer," 52% of respondents are planning to actively pursue M&A in the next 12 months.

While M&A can be a powerful accelerator to growth, they take considerable time and effort to execute successfully. Here at Workday, in the last two years, we acquired Adaptive Insights and Scout RFP—to gain great talent, expand our product capabilities, and ultimately accelerate our customers’ business transformations.

There were three key factors that helped us successfully integrate these new companies. And for our customers, I think you’ll find that Workday tools can be very helpful to you as you execute on your own M&A strategies. Below, I will share a bit about these three factors.

Quick Integration of Data and Compliance

One of the biggest jobs during an acquisition is integrating data from the company you’re acquiring, including its finance, human resources, payroll, and other operational information. Getting access to data, ensuring its integrity, and mapping it into your own data structure can be a significant challenge, particularly when the two organizations have different systems and/or different business models.

You also need to ensure the company you’re acquiring is compliant with the rules and regulations your company is required to follow. For example, when we acquired Adaptive Insights, we had to work quickly to bring them into compliance with the ASC 606 revenue recognition standard—as a private company they had another year to adopt, while as a public company we had already adopted the standard. 

If legacy on-premise systems are involved, integrations can take a long time, often years, because those systems and their data structures can be quite rigid and don’t necessarily reflect the way their business current operates. In addition, from a regulatory standpoint, it’s often not possible to access data from the acquired company until the transaction closes, limiting the ability to start integration efforts early. 

Because of the way the Workday system is designed, we’ve been able to quickly integrate our acquired companies’ finance and HR data and processes, enabling immediate visibility and compliance with our policies. For example, after an acquisition, it’s important to know how you are performing against the acquisition plan. We’ve been able to look very closely at the combined performance of both organizations to ensure we’re on track to achieve the goals we set for ourselves. At the same time, as some of our acquired companies’ teams were able to move off of legacy systems, they found with Workday Financial Management that they were able to get consolidated financial data at any time, rather than wait until the end-of-the-month close, at which point the data is stale.

What does this mean from an acquisition perspective?  The same day we closed the $540 million acquisition of Scout RFP, we were able to bring their employee base live on Workday Human Capital Management and payroll, and just one month later Scout RFP was fully integrated into all of our Workday financial systems.

Having the Right Data at the Right Time

Having real-time visibility into financial data is a huge advantage, enabling you to act quickly, before and after the acquisition. During the $1.5 billion Adaptive Insights acquisition, our finance team was able to access our cash holdings across the globe in real-time, which was helpful as we started to think about liquidating investments for the transaction as well as integrating the two businesses from a cash management perspective.

We use our own Workday Prism Analytics to pull data from Workday, as well as third-party investment software, to create a daily treasury dashboard that shows us how much liquidity we have globally, by currency and by investment maturity. We can also see how much can be liquidated and deployed, and at what cost. The ability to deploy cash efficiently and make decisions faster and with more confidence are crucial when you are bringing another company on board.

Putting Culture First

A successful acquisition is just as much about the people as the technology you’re bringing in, so one of the high bars we have around M&A is culture alignment. Before acquiring a company, we conduct our due diligence on whether it’s a good fit with the Workday culture. During that process for both acquisitions, it became clear to us that Adaptive Insights and Scout RFP shared a lot of our values, including putting our Workmates first

As a software company, our people are our biggest asset and we want to make sure that employees from an acquired company feel valued and welcome. You also need to consider their resources and bandwidth during the integration, which may be stretched thin. People managers must take the time to communicate and demonstrate how much you value what each new person brings to the table. 

Every acquisition or merger will have its own unique challenges and curveballs. Quick integration of core business data, having real-time visibility into the combined organizations, and embracing and aligning on culture are all cornerstones to successful M&A.

More Reading