Management practices making an impact – mergers and acquisitions

Business growth can be achieved in a number of ways, but increasingly a mix of organic and merger and acquisition (M&A) growth is the strategy being employed.

Businesses that find themselves with a strong strategy, high demand and good backing can use this powerful mix to achieve scale and pace that might otherwise be impossible.

DigitalWell is a provider of enterprise communications, consultancy and technology transformation services that empowers clients and their teams to unlock best-in-class customer and employee experiences. The company rebranded from Welltel in May 2022 as the organisation consolidated and rationalised the talent, expertise and product service portfolios gained from a series of strategic acquisitions since 2017.

Headquartered in Dublin, Ross Murray, CEO, DigitalWell, said the business operates “in Ireland and the UK, and now, increasingly, on a global basis. We’ve about 250 staff, with key customers in financial services, businesses like banks, insurance companies, utilities, online travel providers, business process outsourcers, and pretty much anyone that has a large volume of interactions with consumers on a daily basis”.

DigitalWell is a strategic partner to customers, providing communications solutions that enable them to improve their customer service while conducting business from anywhere, and simultaneously reducing staff turnover in an industry where the remote working trend has complicated the lives of HR directors, CIOs and CEOs alike.

Murray highlights the changing world we now face.

“In terms of employees, the flexibility that everybody enjoys now was unheard of in February 2020. It’s a different world,” said Murray. “Did the bank ever think that an employee would be at home and answering a call about a customer’s personal bank account from their bedroom?

“Employee practices changed, and obviously the labour market has changed dramatically over that period. Our customers need to do what they can to retain employees.”

Since its founding in 2007, the business that would become DigitalWell had an ambitious growth strategy with a cloud communications platform, Murray said, that was “years ahead of the market in terms of technology”.

With that advantage, Murray said the business was always looking for ways to help customers make the leap to new platforms and cloud-based technologies. With specific ambitions to grow in key areas and market segments, such as enterprise, the M&A route looked attractive.

Jan Fitzell, a partner who advises companies on their M&A deals at Deloitte, sees companies often look to M&A to broaden their service or product offering. “Companies reach a point where they are market leaders in a particular niche and then realise that they have a huge customer base that they could sell other products or services to. That’s when they turn to acquisitions, to acquire these additional services which will allow them to enhance their organic growth rate.”

In 2014, said Murray, the business made an acquisition “which effectively brought some premises-based services into the company, and seeing that, we could cross-sell to that customer base – or could we accelerate the cloud migration for those customers due to the fact that they were being served by the one company?”.

“That worked well, and then we started looking with the bigger lens, if you like. What else could we be doing for our customers to help them grow?” said Murray.

The successful integration of the acquisition, supported by strong, well-executed strategy, saw further acquisition activity in 2018, with Eyrco being added to the earlier Advanced Telephone Systems acquisition. The following year saw further moves, with Invistech becoming part of the fold.

Murray acknowledges that, even over this time frame, things have evolved for the M&A process.

“In 2017 it took a long time to finance, as there wasn’t really a functioning banking market at the size that we were operating. It took a long time from identifying in that position, to funding it and closing it. It took 12 months for the first deal to close effectively in terms of being able to fund it, which was a massive problem in Ireland at the time. It has changed so much since.”

Fitzell agrees that the funding market in Ireland has advanced a lot over the recent past. “The market has become more sophisticated with a greater number of options available to companies. The traditional banks are active, along with some non-bank debt funders who like the ‘buy and build’ acquisition strategy. And on the equity side, we’ve seen dedicated minority funds introduced to the market who play a role alongside the traditional majority private equity houses.”

Despite the difficulties, there was always a clear, big picture focus for DigitalWell.

“We have an overarching plan of where we’re trying to go with the business in terms of moving it into mid, enterprise, and large multinational customers,” said Murray. “We are looking to grow it beyond what was our core geographies, but we’ve always been really focused on looking at the latest technology platforms that are winning out there.

“For example, Microsoft Teams, or Genesys in the contact centre, have been technologies that we’re winning. So, we went and identified partners that we could acquire in those spheres. Then also, we’re looking at getting the people on board that have the expertise to deliver these technologies for our customers, for their customers. We are then able to get the synergy from bringing the people together in these organisations under a single brand, and that is really what has been the accelerator for our business over the last number of years.”

This ability to integrate the best of acquired companies has served the business well.

Getting into the detail of two acquisitions, Murray recounts, “one of the businesses [acquired] was quite technically focused around building integrations and deployments, getting the platform to talk to other platforms and therefore improve the customer experience. The other business was much more business focused”.

“So, going in understanding the business strategies and the outcomes we’re looking to achieve, designing process and then designing the technological implementation around it so that the combination of those two businesses, with the platform we already had, has allowed us to go out and win much, much larger contracts than any of the individual parts would have. We’re growing quite quickly in those markets on an international basis.”

Success in M&A is not always guaranteed, with various studies showing high failure rates in delivering on initial expectations. Murray insists clear vision and pragmatism, along with communication, has made it work for DigitalWell.

“I think a lot of it is the focus on the integrations,” he said. “There’s probably a bit here going back to when we started this, this approach, we were funded by high interest debt partners and we had little margin for error, so we had to make sure we executed very efficiently in terms of the acquisition plans and the integration of them.

“We were extremely focused on that from the outset, and what we’ve learned over the years is, people will carry the success of the integration of the business. If you have the leaders within the business, or its CEO, or the key management team, on board with the integration, then you can be successful. And that’s the biggest risk and they’re the ones that can cause pain in any acquisition process.”

Jan Fitzell agrees. “Ensuring the acquisition fits with the desired strategic ambition of your company is key, and then, once the terms have been negotiated and the legal elements agreed, implementing a plan to integrate the target and capture those strategic benefits is critical if the acquisition is to be a success.”

That emphasis on people, and investing them in the process, is a key factor for success, Murray states.

“It’s getting people to believe in the vision of what we’re trying to do. We’re trying to create a business winning on a global basis, headquartered in Dublin, trying to get the best of talent from all of these — that were great companies in their own right — to come and work together,” said Murray.

DigitalWell has enjoyed strong support, because of its strong performance, from investment firm Livingbridge, which in 2020 funded its further expansion into Europe and beyond. Murray said the investment firm is “very supportive in terms of allowing us to accelerate our expansion, and providing funding, and access to funding, to go on and achieve our ambitions”.

Fitzell noted, “The fact that management at DigitalWell had a track record of successfully completing acquisitions was attractive to Livingbridge and was a key feature in the company securing its funding deal. The track record gave Livingbridge confidence to back a management team which could continue to grow the business via complimentary acquisitions, to create a valuable business of scale.”

With the acquisitions of Wren Data and Eleven in May 2022, DigitalWell strengthened its ongoing partnership with Genesys and Centrical, bringing to 10 the acquisition tally. In 2021 it was recognised as a Deloitte Best Managed Company, also achieving Microsoft Gold Partner status.

After so many successful integrations, Murray has some advice for other businesses considering the M&A route: “If you’re thinking about going down this path, it’s going to involve a huge amount of work, and to get it to work, it is all based around people, and dealing with people.

“We pride ourselves in doing what we say we do — we will honour our side of the deal and we like to deal with people that do the same. You need to find people like that to do business with, and that will make your life a lot easier – which is the key to where we’ve got in the last five or six years.”