The increasing reliance on data has revolutionized the world of mergers and acquisitions (‘M&A’), offering unprecedented insights and unlocking more transaction value than ever before. As a Senior Manager in the Private Equity Performance Improvement practice at Alvarez & Marsal (‘A&M’), Liam Huxtable has been providing data-driven insights for his clients for many years now.

In today’s conversation, Liam sat down with Joel Lister-Barker, Host of Talking Data, to discuss his background in consulting, the typical data sources used on M&A projects, and some of the frustrations that he has had to overcome when working with data.

Liam’s Journey

Joel: Can we begin with a brief introduction to yourself and your current role at A&M?

I recently joined A&M where my focus is on M&A, carve-outs, integrations, and value creation. My experience is across the full transaction lifecycle including pre-deal and post-deal projects, both on the buy-side and sell-side. I have been working in the M&A consulting industry for six years with previous experiences at EY in London and before that I was an engineering consultant.

Joel: When you kick off a project, what are some of the key pieces of information that you typically request from clients?

My role has a strong focus on business operations. So, we are usually looking for financial information, starting with the latest Profit and Loss (‘P&L’) statement. We are also looking for operational data on things like people, technology, and the supply chain. Examples on the people side include the HR or payroll data set, and vendor or procurement spend on the supply chain side. Information sources can vary by industry, but as a guiding principle we are always looking for data from any activity that drives a cost line in the P&L.

Joel: Outside of client data, what other data sources do you often use to generate insights early on a project?

Regardless of the client data available, we always look to leverage our own internal databases and third-party data sources to gain extra insights. We often use these sources to provide an outside-in view of what the company headcount, costs, and operations may look like. It can be in lieu of the client data being available or to provide an alternative perspective that drives more insight for our client. Examples of these data sources include things like IBISWorld for general industry research, benchmarking data from providers like APQC or Computer Economics, and targeted research on specific companies using publicly available information. Sometimes our private equity clients also provide us with data points that they have collected from their portfolio companies.

Joel: Can you share an example where high-quality data analysis led to a successful outcome for your client?

We were recently working for a private equity client looking to acquire a large consumer products company. They were looking to consolidate data from their own portfolio companies to create a benchmark database to assess the business plan of the target company. This included metrics to assess the operations, headcount, and cost base. From here, we were able to provide our client with a revised forecast cost base that gave them a lot of comfort about their value creation hypothesis for the investment committee.

Joel: Turning data into insights can be difficult. What are some of the frustrations that you often face when working with data, and how do you overcome them?

When working with data on client projects there are always two main hurdles, being what I refer to as ‘inbound’ and the ‘outbound.’ On the inbound side, the challenge is usually around the completeness, accuracy, and appropriateness of the data that we are working with. There are two questions that I often ask my team; is the data set is relevant, and can we apply it in a way to ensure the outputs are appropriately robust? Outbound refers to the story that we present to our client based on the data that we have analyzed. There is no point putting a database in front of a client, as they are looking at us to provide them with insights, advice, and delivery. Ultimately, we want our clients to have a high degree of confidence in our work, so that they can use it to make the best decisions – Inbound and outbound are the key to achieving this.

Joel: If you had a magic wand that could do anything with data, what would you make it do?

I would use my magic wand to transform data from any source into a consistent format that can then be merged and analyzed with other sources in the same format. This is where the most time is spent when working with data, so it would speed up the time to insights significantly.