Many investors aim to unlock the full potential of data in the world of Mergers and Acquisitions (‘M&A’). Prateek Parakh, Senior Director at Alvarez & Marsal (‘A&M’), brings a wealth of IT management and leadership experience to help his Private Equity (‘PE’) clients reach this full potential during the transaction lifecycle.

In today’s conversation, Prateek sat down with Joel Lister-Barker, host of Talking Data, to explore how deals happen when data access is limited, provide examples of how data has played a pivotal role in successful transactions, and hear how Artificial Intelligence (‘AI’) is changing the landscape of M&A.

Prateek’s journey

Joel: Let's start with a brief introduction to yourself and your role at Alvarez & Marsal…

I’m Prateek Parakh, a Senior Director in the CIO and Technology Services Practice at A&M, part of the Private Equity Performance Improvement group. I bring over 25 years of experience across various industries, including consumer goods, aerospace & defense, manufacturing, and professional services. My role at A&M focuses on M&A transactions, specifically validating client investment theses, identifying technology risks, and designing IT operating models to support value creation amongst other things. Prior to joining A&M six years ago, I ran my own consulting firm specializing in supply chain operations and post-acquisition integration. Based in New Jersey, I have lived in the US for over 20 years, having started my consulting career at GE Lighting in Cleveland, Ohio.

Joel: In the world of M&A, many deals get done with limited data. During these situations, how do you navigate missing information to provide reliable advice?

We have to adapt our approach when there’s limited data available. On the sell side, we’ll partner closely with management, leveraging our extensive transaction experience and industry expertise to source the right information and provide focused insights. While on the buy side, where data access is typically more constrained, we often rely on our collective expertise, industry practices, and qualitative data from management discussions to assess key areas like IT systems, scalability, and technical debt. When it comes to mid-market deals, many companies have limited access to data due to outdated or underinvested IT infrastructure and systems. In these situations, we will often perform benchmarking and have targeted management interviews to help us provide actionable insights despite these limitations.

Joel: When developing the IT strategies for a value creation plan, how do you use data to identify initiatives with the highest impact and prioritize them effectively?

PE clients typically enter deals with a clear investment thesis and view on value creation opportunities, which we help to validate and implement by leveraging our experience. Most of the time the management team of the target company plays a critical role in identifying key pain points, while benchmarks can provide us with insights into resource allocation and potential inefficiencies. We are able to utilize our industry experience to opine on suitability and gaps in current tech stack. Once initiatives have been identified, we then prioritize them based on factors like speed of execution, organizational readiness for change, and the ability to manage those changes. We also address fundamental IT needs, such as cybersecurity and infrastructure updates, to ensure that systems can scale and meet future demands. This rigorous approach ensures that value creation is supported, not just in the short term but also from a long-term perspective, which is important when it comes to IT.

Joel: Can you share an example of a time when a data-driven approach significantly impacted the success of a transaction that you have worked on?

Yes, there was a large transaction in the agricultural sector where the closing date was delayed multiple times. The seller's advisor and IT team had already done some planning, but what was needed was greater visibility into the data to move the transaction forward. In this case, I stepped in as an interim CIO, and we focused on creating transparency between both parties, being the buyer and the seller. By identifying key issues and gathering relevant data, we built consensus on the actions needed to move forward. This approach helped to identify roadblocks early on, ensure both parties were aligned, and allowed for timely course corrections. Ultimately, the transaction was successful, and I still maintain a strong connection with the CIOs on both sides of the deal.

Joel: Looking to the future, how do you see advancements in data analytics and AI transforming the way that IT strategies are developed in M&A consulting?

AI has the potential to streamline the collection and synthesis of data, which can then provide a preliminary point of view that serves as a foundation for more complex analyses. A key opportunity area in M&A consulting is to have AI review the vast amounts of documentation uploaded to virtual data rooms. From here, AI could then provide initial insights, including the identification of potential risks and value creation opportunities. While AI is helping to provide early insights and red flags, human oversight remains essential to validate the results. I believe that this combination of AI-driven analysis and human expertise can lead to faster and more informed decision-making, especially in the early stages of a transaction.

Joel: Is there anything else that you would like to share about using data effectively in the world of M&A consulting?

In mid-market PE, a common challenge is ensuring timely access to reliable data. Many mid-market companies struggle with financial and operational reporting. Delays in receiving this critical information often impacts the overall success of the business. Sometimes, companies hire data scientists who aspire to develop predictive models, but can’t do so because they are struggling with fundamental issues around capturing and standardizing data. Without timely and accurate data, it's difficult for firms to make data-driven decisions. By implementing more reliable data collection and reporting systems, many mid-market businesses will have the potential to unlock the full value of their data.

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

I’d make data access easier. While having perfectly cleaned data would be ideal, simply making reliable data more accessible would have a significant impact!