Unit4 has published the first part of the research based on a survey of 600 senior finance and IT respondents across the US, UK, France, Belgium, Netherlands, Nordics and DACH regions. “The Back Office in 2025”, highlights concerns facing professional services organisations following mergers and acquisitions about their finance systems. Vanson Bourne conducted the research.
This first report provides a brief analysis of the impact of M&A activity. It is followed by a detailed appendix which shares the data points from the survey. The results are displayed overall, by country and by sector, of which there were five:
- IT & Tech
- Management Consulting
- Architecture and Engineering
- Media and Publishing
- Other business and professional
While 58% of organisations have made acquisitions, and 48% have been acquired over the past five years, 86% found the integration process took longer than expected. Other firms surveyed, one in five firms took longer than a year to complete the integration, and the average was eight months. It seems that M&A is still tricky to complete successfully.
Bryce Wolf, Director of Strategic Growth, Unit4, commented, “Every professional services firm is laser-focused on growth and extracting value wherever possible, which means M&A is a strategic weapon in building more robust business models.
“Unfortunately, IT and finance systems are hindering their ability to assimilate acquisitions quickly to realise value. It is essential that Professional Services firms address this limitation by modernising their core back-office systems to remain competitive into the future.”
What are the issues with M&A?
There has been a lot of research around the issues associated with M&A failures. This report found challenges associated with business issues and technology issues. The top business challenges facing M&A success were:
- Inconsistencies with financial data – 47%
- Personnel changes/redundancies – 41%
- Stakeholder misalignment – 40%
While communication (38%) was also cited, the loss of customers following M&A was not. It is one of the key issues that lead to M&A failure and, surprisingly, the survey omitted it. Interestingly, in other business and professional services, business challenges were higher than average across the board. With inconsistencies with financial data (67%), stakeholder misalignment (53%) and cultural misalignment (48%) are the top three.
It is a shame that there is not a greater understanding of the breakdown of this sector. The Nordics generally faced the greatest business challenges, placing in the top three with the exception of personnel changes/redundancies. For example, inconsistencies with financial data (59%) and stakeholder misalignment (58%) were the highest.
What the report does not do is look into the reasons why these scores were so high. Nor did it explain what the challenges were in any detail. While the insights are useful and a flag for business leaders, greater depth would have been useful.
The top three technology challenges:
- IT Talent and resource allocation – 44%
- Incompatible finance systems – 43%
- Standardisation of back office processes – 42%
Poor data migration (32%) scored lowest, except in the Nordics (50%), where it was second highest behind incompatible finance systems (54%).
The impact of challenges
The research did not examine how these challenges were overcome, but it did examine the impact of these challenges. They lead to:
- Increased cybersecurity risk – 44%
- Brand reputation damage – 37%
- Slower decision-making – 36%
- Increased employee turnover – 36%
- Regulatory and/or legal compliance challenges – 36%
The solution, according to the respondents, is interesting, with the survey questions asking for opinions around 8 answers. The top three responses were:
- A focus on clear and transparent communication – 41%
- Scalable & flexible cloud-based IT/business solutions – 39%
- Streamlined financial tools and systems – 39%
The survey did not consider how the organisations approached the acquisition, nor did it differentiate by the size of the acquisition. In some cases, organisations can easily impose their systems on the acquired firm. In others, especially where the power dynamic is less extreme, this can be harder.
My experience shows that acquisitions are smoother when cultural, business and technology alignment is key. The burden for this often falls during the due diligence phase of the M&A activity.
What was interesting was the question that the survey asked about how respondents would increase the value of their organisation for buyers. The top three answers were:
- Availability of real-time financial insights – 45%
- Streamlined and automated operational processes – 43%
- Operational scalability – 41%
The inference is that organisations should invest in both technology and business processes that make them more appealing. This is likely the same for attracting funding as well, which is worthy of note.
Enterprise Times: What does this mean
While the report itself is quite short and offers little in the way of analysis, the rich appendix has additional insights that readers will find worthwhile. It will be interesting to see how Vanson Bourne/Unit4 craft the subsequent parts of this research and what subjects they focus on.
Unit4 ERP is “designed to address the pain points that professional services firms face during M&A processes”, according to a recent blog. It cited Havas Group, which leveraged Unit4 to onboard seven new companies within three months. For professional services organisations considering expansion through acquisition, Unit4, the ERP people-centric organisation, is certainly one option to consider.
