Mergers & Acquisitions: The Golden Opportunity to Extract Contract Intelligence

February 19, 2020

4 minute read


From the moment the ink dries on the agreement, the value of a merger or acquisition hinges on your ability to act fast—not only in defining the union but in identifying shared opportunities and risks. By simply “lifting and shifting” your documents—without giving attention to the value of the data locked within—you could miss the boat on extracting vital contract intelligence and other insights from historical and inherited data.

Identifying risk within contracts is essential for meeting compliance mandates, but organizations mustn’t overlook the additional insights that contract analysis can surface. To improve decision-making and enhance contract performance, contract analytics must be treated as more than just a risk-management tool.

Who you merge with plays an important role in your ability to achieve strategic objectives, but it’s how you merge that will ultimately determine your success. Contract intelligence is one example of the more nuanced strategic value that a corporate marriage can bring.

Read on to learn why mergers and acquisitions present a golden opportunity to surface vital contract intelligence.

Why The “Lift and Shift” Approach is Problematic

If you’ve moved homes more than once, you've likely encountered it: that pile of unpacked, unlabeled boxes that collects dust as it moves from place to place.

Similarly, when two companies merge, or a business acquires another, each brings its own set of “mystery boxes” in the form of legions of legacy paperwork and documents. This disparate information may not live on compatible systems, increasing the challenge of utilization (and demonstrating why the typical approach to merging legacy documents is so troublesome).

As you triage the various business units that need attention after the deal, old boxes or storage drives of contracts may not seem like a top priority—hence the tendency to simply “lift and shift” this information to its new home.

But successfully merging two companies requires a concerted effort to “move and improve” data by transforming it into searchable, structured data with maximum strategic value. By adding value to your contract documents before, during, and after the move, your organization can gain vital insights—such as contract intelligence—in the process.

Caution: Move Contracts with Care

Though they likely comprise just a small portion of the overall content that needs to be merged, contracts represent some of the highest value and highest risk data in an organization’s possession. Agreements often contain sensitive and risky data related to IP, personally identifiable information (PII), regulatory and compliance documentation, and more. Contract documents also contain a treasure trove of insights that could help your organization identify new revenue streams, enhance R&D, and even improve customer experience. But extracting and acting on the insights buried within contract documents is like trying to catch a fish with your bare hands: a slippery prospect. Here’s why:

  • Contracts can be one of the most difficult documents for organizations to parse, since they often live on different systems in different formats.
  • Because complicated, long-term corporate agreements are rarely structured documents with predictable layouts or sections, simpler data ingestion tools are not up to the task.
  • Without the right technology in place, organizations are hard-pressed to identify and act on the hidden risk and value buried within their contracts.

Contract Analysis: The Post-M&A Differentiator

If it takes you three years to perform a thorough manual contract analysis after a merger or acquisition—a conservative estimate given the vast volume of contracts most companies possess—then that’s three years of sitting on opportunities and potential landmines.

To maximize opportunities and mitigate contractual risks before, during, and after a merger or acquisition, your organization must adopt a robust contract analytics tool. Look for a platform with advanced contract analysis capabilities like robust optical character recognition (OCR), machine learning (ML), and natural language processing (NLP). These capabilities are crucial to diving deep within data stores and performing the following key functions:

  • Quickly and accurately locating contracts within data stores
  • Removing redundant information
  • Classifying the contents of vast volumes of contracts by type, region, and party
  • Extracting actionable insights

Only after each of these tasks has been performed—on every contract—are newly joined organizations positioned to move on their shared mandate.

The Final Verdict

Mergers and acquisitions present a golden opportunity for organizations to extract vital contract intelligence, but not all tools are up to the task. To ensure you choose the right solution for your organization, read about the pros and cons of three types of contract analysis technologies.

Next in the Series

Get up to speed on these 5 essential data governance considerations to ensure a successful merger or acquisition.

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