By our CTO, Jaco Vermeulen
Not only does it mean 10 different things to 5 different people, it is also often not even heard of in areas where it is actually of significant value, like M&A.
Very few PE firms, or corporate dev teams, know what Enterprise Architecture can do for them. Most have probably never even heard of Enterprise Architecture. What they do understand and value is the impact technology, digital operations, and digital IP have on deals and realising value post-transaction. The Red, Amber, Greens.
- Technology and digital IP due diligence informs deal go v No-Go decisions and valuations adjustments.
- Tech due diligence discovery plays a vital part defining TSA terms and informs the approach to transition/integration and value creation.
- Solution and enterprise architecture formulates integration estimates and design transitions.
- Enterprise architecture and tech/IT operations deliver synergy realisation.
- Technology leadership, incorporating enterprise architecture, drives technology investment and modernisation for value creation.
What PE forms and corporate M&A need is technology advisory and leadership that incorporates Enterprise Architecture. Like a lot of technology solutions incorporate AI but didn’t say so (before the AI hype); We need to consider EA the same. It is a component in the M&A Technology Advisory tool box.
There are the exceptions. Especially in corporate M&A Enterprise Architecture is leveraged extensively to inform deal decisions, valuations, and integration estimations and approach, and synergy realisation. This is likely because they have already experienced the value of Enterprise Architecture as a named capability to the wider business. But even in these cases it isn’t just Enterprise Architecture, but a combination of technology leadership and operations as part technology related corporate M&A support.
Lastly, we must recognised that PE firms have a different investment objective to corporate M&A. PE firms’ focus is on optimised investment in a portfolio with value creation over a 3 to 5 year term, vs corporate M&A where it is likely strategic with an objective of long term sustainable growth. Given this, PE first do know that they need to consider current state operations and tech, and invest in appropriate modernisation for value creation (revenue drivers or operational savings) as well as creating a solid tech foundation in the business when it comes to the point of selling again (to get the best possible valuation, because Tech DD will be taken into consideration). The role of Technology Advisory and how it incorporates enterprise architecture will be different given the investment objectives.
