Mergers and acquisitions activity (M&A) through the beginning of 2023 remained somewhat muted, consistent with the environment in the second half of 2022. But looking further ahead to the second half of 2023 and beyond, deal-making is likely to accelerate, according to Morgan Stanley.

While the number of announcements slowed in 2022, dialogues about potential strategic transactions have continued. As some of the headwinds the M&A markets faced in the back half of 2022 abate, M&A activity should return quickly.

Firms that are turning to an M&A growth strategy must consider several factors and challenges, and it can be beneficial to implement solutions prior to the official merger or acquisition in order to ease the operations transition.

Manage and Normalize Data Across Multiple Platforms

When merging and acquiring a new firm(s), mutual fund companies must figure out how to manage all the new data that comes with the acquired company, including mutual fund fees. A Fee Management solution can manage files from multiple TA platforms, as well as normalize data across those platforms.

Without a Fee Management solution to manage data across multiple platforms, the organization will have to manage each TA in a different process. With an automated solution in place, that TA data is automatically taken in, normalized, and sent through the process set up within the tool.

Having this solution already in place allows the acquiring firm to quickly integrate the new data into their workflow and processes, minimizing the disruption.

Processing With the Same Checks and Procedures

Using a Fee Management tool also allows an acquiring firm to process invoices and payments with the same checks and procedures across all fund companies.

Each firm has a specific way they validate their invoices, and the acquisition of a new firm brings on a completely different set of manual processes to follow, based on the way the acquired firm operates. Each addition of a newly acquired firm introduces unique workflows and processes to validate the same types of invoices.

Using an automated Fee Management tool ensures the data goes through the exact same checks and balances. From an auditing perspective, all the workflow processes are the same.

Reporting and Analytics

A Fee Management solution presents the ability to report on everything holistically, as well as breakout reporting by each individual fund company. An automated tool makes it easy to integrate new data into an acquiring firm’s existing process.

In addition to data integration, a Fee Management tool gives firms the ability to break out and do further individual analysis on the fees paid by the acquired firm to ensure those deals are in line with what they are currently paying in their own contracts.

The Board or management of an acquiring mutual fund company may want to report on the new acquisition separately. An automated Fee Management solution allows a firm’s operations team the ability to quickly respond to those types of requests.

Compare Across Fund Companies

In further relation to reporting and analytical functions, a Fee Management solution gives acquiring firms the ability to compare rates across various fund companies. It provides easy and quick insight into potential areas to improve and/or change the terms based on a new consolidation.

As more firms turn to M&A’s as a basis for growth strategy, it’s important to fully understand and consider all the operational components that will play a role in the consolidation of multiple organizations. Firms that anticipate future M&A activity should take steps early on as part of an overarching M&A strategy to put solutions in place that will minimize any operational disruption that may result once it’s time to integrate acquired firms.

Learn more about Delta Data’s Fee Management solution and hear from a Delta Data Product Expert about solution benefits as you consider incorporating an automated tool to streamline future or current M&A activity within your firm.