M&A momentum undone by legacy systems and talent gaps, warns Unit4

M&A momentum undone by legacy systems and talent gaps, warns Unit4

Today, enterprise cloud company Unit4 unveiled part one of its international research study “The Back Office in 2025.” 

The study surveyed 600 senior IT and finance decision-makers across the professional services sector in midmarket and enterprise organizations to uncover insights into key challenges and opportunities, particularly around M&A and modernizing finance systems.

According to the research, 81 per cent of firms have participated in M&A activities over the last five years, with 58 per cent making acquisitions and 48 per cent being acquired. 

Unit4’s research found that 86 per cent of senior finance and IT decision-makers feel M&A integrations take longer than expected, causing delays in delivering value. On average, it takes eight months to integrate a new acquisition, and 1 in 5 firms take over a year.

These delays result in increased operational risks, higher employee turnover, and challenges aligning stakeholders and systems.

The UK is the fastest globally to integrate acquisitions at 4 months, compared to the global average of 8 months. In the DACH region, it takes 12 months. Globally, media and publishing firms take 11 months to integrate  acquisitions, followed by management consultants (10 months)

Further, for many organizations, the promise of M&A remains unmet due to significant operational and technological hurdles. Globally, the majority of respondents (and by industry sector) say inconsistencies with financial data are the biggest business challenge facing M&A integration. The top challenges that delay M&A, according to survey respondents, are:

• Fragmented financial systems: Legacy systems often impede the ability to create a single source of truth for financial data, leading to errors, inefficiencies, and time-consuming manual reconciliations.
• IT talent constraints: Limited IT resources result in delayed integrations, further elongating an already complex process.
• Lack of standardised processes: Without standardized systems, aligning operations across merged entities becomes a bottleneck, hindering progress.

Other risks include increased cybersecurity threats, damaged brand reputations, and slower decision-making processes.

However, respondents noted that demonstrating real-time financial insights, automation, and scalability will enhance their firm’s appeal to potential buyers. 

According to Bryce Wolf, Director of Strategic Growth at Unit4, every professional services firm is laser-focused on growth and extracting value wherever possible, which means M&A is a strategic weapon in building more robust business models.

“Unfortunately, IT and finance systems are hindering their ability to assimilate acquisitions quickly to realise value. It is essential that Professional Services firms address this limitation by modernising their core back-office systems to remain competitive into the future.”

Globally and in the UK, respondents said the best way to attract a buyer was to improve the availability of real-time financial insights. US respondents believe the emphasis should be on streamlined and automated operational processes, which is also the top response for media and publishing.

Management consulting respondents believe the focus should be on operational scalability.