Another Year of Record-Breaking Buyouts – Is Your Contract Management System Ready?

There was $3.7 trillion in merger and acquisition activity in 2016 according to the Wall Street Journal – the third highest year in terms of deal value. Peter Weinberg, adviser on two of the largest transactions, remarked, “I haven't seen a set of factors that's been more bullish for M&A activity in some time.”

Why the Boom in Buyouts?

Last year IPOs were at a record low, while mergers were higher than ever before. Why? Going public can take forever. Buyouts, on the other hand, have long been the preferred ‘get big fast' strategy, especially in sectors like technology, and trying to compete on a global playing field requires companies to be able to scale – quickly.

If you expect your firm may be involved in M&A activity this year, now is the time to gauge your readiness. One easily overlooked area is your contract management software.

Is Your Contract Management System Ready?

Critical to the M&A process is risk assessment. During an M&A transaction, sellers need to respond to a huge volume of due diligence queries on contracts involving customers, vendors, suppliers, employees and even intellectual property. Even a simple question around contract expiry dates or the location of the latest version of a contract can slow down an M&A process.

Once the deal is done, the buyer must integrate the acquired company's contracts into their own system – while avoiding technical issues and costly delays that can compromise the whole reason behind the transaction. For companies who have been through the process, ‘seamless' is not a word they typically use to describe it.

Without a robust contract management platform, the risk assessment process both pre- and post- close becomes onerous and lengthens the amount of time it takes to capture the full value of the merger or acquisition for all parties. Having helped global enterprises to manage $320 billion worth of contracts, Icertis knows how to organize, analyze and improve the speed with which contracts can be reviewed.

So if your enterprise is likely to be involved in an M&A deal this year then you need to ask yourself: is your contract management system ready?

– Seth Nesbitt, Chief Marketing Officer, Icertis


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