September 26, 2022

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Why Digital Transformation Is Sparking So Many M&A Deals: Paul Inouye Weighs In  

Why Digital Transformation Is Sparking So Many M&A Deals: Paul Inouye Weighs In  

Digital Transformation: Paul Inouye Discusses Its Role in Mergers and Acquisitions

Digital transformation is by no means a new concept. In fact, it’s been going on for decades now, despite the proliferation of the phrase in headlines today. Part of the reason why it’s getting so much attention, though, is due to the immediacy, frequency, and scale at which it’s happening. Paul Inouye, an investment banker who specializes in mergers and acquisitions, discusses its role in the field and how it’s changing the ways that decision-makers think about their prospects.

Deloitte’s 2022 Future of M&A Trends Survey

In Deloitte’s latest survey, 63% of all respondents said that the key factors driving the industry were digital transformation and automation. When so many tasks can now be completed with the help of machinery (often with little to no oversight by staff), it’s shifted the way entire professions perceive what is possible. It’s also led to company leaders wondering how they can benefit from their competitors on a larger scale.

Paul Inouye points out that M&As are complex undertakings even for the most experienced of professionals. The upheaval doesn’t just affect employees and customers, it affects everything from financial markets to industry returns. (The indirect effects of mergers often aren’t even clear until years after the paperwork is signed.) That being said, the digital transformation has not only made it possible to streamline things like system integration and customer accounts but it’s also opened doors for companies that want to focus more on how to build stronger consumer and professional relationships across the board.

Paul Inouye on a Smooth Transition

Another big reason why technology is sparking so many M&As is that it’s a smart way to combine the old with the new. For instance, banks are still largely operating on legacy systems. Even as they express interest in capabilities like the blockchain, their core tech is woefully ill-equipped to handle the expectations of a younger banking crowd. New fintech companies address many of these concerns but lack the clout to handle transactions on a worldwide scale. Bringing the two together makes for a more efficient customer experience and streamlines much of the manual work that larger institutions were undoubtedly wasting time on prior to the event.

When an M&A gets going, Paul Inouye says that evaluation and communication have everything to do with the success of an M&A. The most important part is to recognize the real value of each holding, which may mean thinking about assets on a broader level. This is particularly true when it comes to quantifying the capabilities of different platforms. For instance, a legacy CRM may contain data or functionality that is invaluable for the business’s revenue, which will give a company more leverage when it comes to negotiating the sale. These kinds of calculations need to be multiplied across the board, which is often why M&As take longer than anyone anticipates. It’s also why technology should be used whenever and wherever possible to ensure that neither time nor data is lost along the way.