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Four digital investments that can help deliver value in M&A

It’s no secret that companies across the industry spectrum are doubling down on going digital, and M&A can play a critical role in transformation. In PwC’s 2021 CEO Survey, 26% of US respondents who ranked new M&A as their top growth driver said their main goal is to acquire capabilities, including different technologies. And it doesn’t necessarily have to be a big deal. In some cases, smaller transactions can help companies keep pace with innovation and bring change down the road, even if not considered “transformational” at the outset.

But where exactly should you look to help drive digital transformation through deals? Here are four important areas.

Virtual communications

The COVID-19 pandemic led many different types of companies to rapidly advance their communications capabilities to better connect employees and customers. From healthcare to financial services to retail, those investments will only increase and change how acquirers value potential targets. Even in industries where it isn’t possible for some work to be remote, such as manufacturing and agriculture, there still are offices and functions that will be assessed for flexibility and efficiency.

Cybersecurity

Four out of five US executives responding to our CEO survey said they plan to increase their investments in cybersecurity and data privacy over the next three years, including 30% who plan to increase investments by 10% or more. Data breaches have previously affected acquisition prices, and growing concerns by consumers and governments will almost certainly drive more cybersecurity investments.

Artificial intelligence

AI is seemingly everywhere, expanding well beyond the tech industry to many sectors. Whether it’s a seller trying to boost the value of a business or a buyer trying to determine an asset’s true value, how well an organization harnesses the power of AI to make operations more efficient, strengthen customer relationships and better position itself for growth is increasingly important.

Talent

Technology without people who know how to use it doesn’t help anyone. Whether you’re an acquirer or a potential target, consider ways to upskill your employees. That means pointing to investments that anticipate the right skills for the future and lay a foundation for constant learning and development. How well a company does that is playing a bigger part in determining its value — today and years from now.

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Colin Wittmer

Colin Wittmer

Deals Leader, PwC US

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