Harnessing Technology for Value Creation
SAP's SVP and Global Head of Private Equity Sean Epstein explains the impact of technology in M&A.
What impact does technology have in M&A?
Mergers and acquisitions present an opportunity for businesses to capitalize on new innovations to shield themselves from disruption and improve productivity. According to a recent Accenture survey, 85% of respondents said M&A pushed them to define a more robust digital and data strategy.
A company’s post-transaction technology analysis should focus on capabilities that support the investment thesis. If international expansion is part of the thesis, for example, the company should look at technologies that support multi-currency and multi-language capabilities and longer-term next-generation procurement and supply chain capabilities. If the goal is to reduce indirect spending, improving visibility into current spending levels and optimizing procure-to-pay processes should be a focus. If the thesis includes increasing top-line revenue growth and multiple expansion through business model changes, Industry 4.0 technologies such as artificial intelligence, machine learning and advanced robotic process automation are likely candidates for technology investments.
How are PE-backed companies using technology?
At SAP, we continue to see technology being used to drive efficiency, productivity and top-line revenue expansion at private equity portfolio companies. Automation continues to be of interest to many companies, but bots should not be deployed to automate antiquated processes; those processes must be reimagined before a company applies automation technology.
One of the top priorities for investors is to establish a consistent repository of data—a “single version of truth.” They want to have complete visibility into product pricing and margins, understand customer and employee sentiment, and be able to identify risks and areas of opportunity in their supply chains.
For serial acquirers, it is essential to bolt-on acquisitions quickly that provide new revenue sources, markets or geographies and customer engagements. These companies are investing heavily to ensure their digital resources are standardized and integrated across lines of business so that when new entities are added, there is a playbook to get them on board with minimal disruption.
How does SAP work with PE funds?
Sean Epstein
Title: SVP and Global Head, SAP Private Equity
Company: SAP
Location: Arlington, Virginia
Expertise: Sean Epstein manages strategic partnerships and initiatives with private equity funds, institutional investors and family offices and helps drive portfolio companies’ success throughout investment life cycles. He also leads SAP’s global M&A program, supporting value creation during significant transactions.
For over a decade, SAP has invested in a dedicated team to support private equity funds and their portfolio companies globally across their investment life cycle. Drawing on SAP’s more than 40 years in the business software space and as the largest cloud company in the world, the SAP Private Equity team helps investors accelerate value creation across their portfolio. The team provides thought leadership and executive education, global governance, preferential commercial terms, access to industry experts and benchmarks, and a host of services to support project and transaction success.
