Growth by merger or acquisition (M&A) is an appealing way for an architecture and engineering (A/E) firm to strengthen its competitive positioning. But as viable as the M&A route is, it does present the acquiring firm with a unique set of challenges, among the most formidable of which is managing the data of the combined companies.

From our own original benchmarking research (see the 2022-2023 AEC Inspire Report, available for free download here), we’ve established that data-driven, tech-forward A/E firms outperform their peers in key areas like profitability, win rate and talent retention. So for firms that go the M&A route, once the dust from the deal settles, what you want is a combined entity that uses data intelligently to operate more efficiently, win more business, and ultimately, keep growing the bottom and top lines. Let’s explore some of the key data-management decision points where firm leaders can help fulfill that vision.

One of the weightiest decisions they’ll face in the context of an M&A is whether to consolidate the systems and data of the acquired company with those of the acquiring company, or keep them separate. Merging the data into a single system lays the foundation for a more centralized and integrated operation post-M&A, one capable of capturing new user efficiencies and deeper business insights, faster. On the other hand, keeping systems and data separate can create new inefficiencies operationally and new challenges with reporting and analytics, along with multiple login and identity management issues. It boils down to an existential question that firm leaders will need to answer (typically with findings from a cost-to-benefit analysis to guide them): to maintain siloes or break them down? 

Another M&A-related consideration has to do with how compatible the accounting policies of the acquired firm are with those of the acquiring company. This includes the fiscal year the firm follows, revenue recognition methodology, whether the firm uses a cash basis or accrual approach, the applicability of overhead rates, and a host of other factors like segment reporting, accounting structures, chart of accounts, month-end procedures, profit center alignment, and multi-currency (functional vs. database). Operational policies and procedures also need to be considered, including timesheet and payroll processes, shared projects and cross charges, and synchronizing operational reporting. That’s quite a bit for firm decision-makers to reconcile.

Once the deal is done, it's also important for the acquiring firm to assess the acquired company’s existing digital infrastructure, then make operational decisions accordingly. This evaluation is important because it could reveal opportunities to automate business processes, orchestrate the freer flow of data throughout the organization, and generally streamline disjointed business processes.

A high-quality enterprise resource planning (ERP) system that’s purpose-built to map directly to AE business best practices and processes should offer a variety of capabilities to help firms take advantage of these opportunities. Unanet ERP AE, for example, provides an easy-to-use cloud-based application, streamlined invoice delivery and payment facilitation, workflow automation, a comprehensive integrations platform, and more. In addition, Unanet ERP AE offers centralized analytics with dashboards that provide firms with a single source of truth across companies. This allows teams to focus on similar key performance indicators, eliminates time-consuming reporting, and provides real-time business intelligence that puts data to work. The key features of Unanet ERP AE's analytic dashboards include the ability to interact with data in real-time, dynamic filters and drill-through, date ranges for locked-in visibility, and multiple data sources (e.g., Excel, other databases, etc.).

Last but certainly not least, firms need to anticipate and proactively resolve potential data-management issues before they become problematic. This includes researching data availability early in the process of combining the two entities (perhaps even during the due diligence leading up to the transaction), dealing with redundant information (e.g., contacts), performing data cleanup pre-conversion, and dealing with NULL (empty) data. By anticipating and resolving issues proactively, firms can reduce the risk of disruption to ongoing operations and minimize the learning curve associated with an acquisition.

Growth through acquisition is indeed a viable path for an ambitious AE firm to take. However, maximizing the value of an acquisition depends on a firm’s ability to work through all the data-management challenges that M&A creates. With a thorough understanding of the pros and cons of merging or migrating data, accounting and operational nuances, and the common pitfalls that can make managing data a headache instead of a straightforward exercise, firms can make better-informed decisions about handling the data they acquire. Armed with a best-in-class ERP system like Unanet ERP AE, firms in M&A mode can harness their data to better orchestrate processes and produce insight that powers growth. To learn more about how Unanet can help your firm handle acquired data, visit us today.

Lucas Hayden is Director of AEC Strategy for Unanet, a leading provider of project-based ERP and CRM solutions purpose-built for architecture, engineering, and construction firms, and government contractors.