When aiming to create value through mergers and acquisitions (M&A), acquirers must select the best in breed among potential acquisitions and then honor both the talent and the technology they bring on board.
If done wrong, M&A can destroy value. Done right, it can create a combined company that builds on the strength of each company to create something new and better.
“I love working in transforming businesses,” Dotmatics Chief Financial Officer Rebeca Sanchez Sarmiento told PYMNTS in an interview. “There’s nothing more gratifying than seeing things kind of come together.”
Bringing Acquisitions Together
Sanchez Sarmiento joined Dotmatics — a software company that helps scientific researchers use and manage data — last year, bringing extensive financial industry experience.
Dotmatics and Insightful Science had merged about six months earlier, in March 2021, and the combined entities now go by the formal name and brand of Dotmatics and have a global team of 800 employees supporting 10,000 customers in 180 countries.
Over the past year, Dotmatics has experienced 100% growth and now exceeds $200 million in revenue.
Beyond that merger, Insight Partners, the global venture capital and private equity firm that backs Dotmatics, has made 11 acquisitions since late 2017, with half of them taking place in 2021 alone.
“The company has grown in size, scale, complexity and global footprint rather quickly,” Sanchez Sarmiento said. “I was brought in this time last year, as all these acquisitions were coming together, to help start framing how to bring them all together and how to start scaling effectively.”
Communicating, Collaborating, Engaging
Interviewed for the PYMNTS series “A Day in the Life of a Digital-First CFO,” Sanchez Sarmiento said she thinks every day about how to bring the teams and the organization together to ensure they are aligned in terms of business, strategy and communications.
For example, the finance and accounting team is globally distributed, so she touches base with leaders in the United States, Europe and the Asia-Pacific (APAC) region to maintain communication and understanding around both short-term and long-term objectives and what’s changing in the business on a day-to-day basis.
“So, there’s a lot of time and energy put into communicating, collaborating and engaging,” Sanchez Sarmiento said.
Deploying Technology to Work Collectively
Technology plays a significant role in this project too, Sanchez Sarmiento said. Introducing systems and technologies that will help everyone work collectively together has been a key project over the past year.
For example, when Sanchez Sarmiento joined the company, there were six accounting enterprise resource planning (ERP) systems in operation. She’s been working on integrating and building out into a single accounting ERP system.
Already, when the organization acquires brands, it spends a good deal of time platforming them onto a shared service environment and leveraging centers of excellence across sales, marketing, customer success, finance and people operations, Sanchez Sarmiento said. Now, as they build out the ERP, they aim to use it at its maximum for efficiency, workflow and visibility.
Having determined the end state they want to build toward, she and leaders within the finance and accounting team have been redesigning the system architecture to ensure they have a framework that can support growth.
“That has been the most critical foundation in my world because ultimately having one source of truth for our financial data is most critical, but it also helps ensure that my team that has come together both organically and inorganically across the world can effectively share workload, redistribute efforts and connect in a more organized workflow manner,” Sanchez Sarmiento said.
Scaling the Business Effectively
Next on the technology agenda is an enterprise performance management tool for budgeting, forecasting and reporting.
“Systems have been the name of the game this year, all with the idea of bringing everybody together, having sources of truth that are very integrated but singular in each of their individual domains, as well as ultimately establishing an operating framework with which we can continue acquiring businesses and teams and bring them into the broader Dotmatics organization more seamlessly going forward,” Sanchez Sarmiento said.
The company aims to continue acquiring firms within the scientific research and development (R&D) software industry and is engaging with as many as 1,200 targets at any given time, Sanchez Sarmiento said. In support of its acquisitive aims, the company is cash-flow positive, grows 25% to 30% each year, has strong backing from private equity sponsors and has leadership that’s driven to create value through acquisitions.
“Our objective is very much tailored in identifying who are the best-in-breed applications within R&D software and very much focused on ensuring that we have discipline around, one, the targets we ultimately go after and, two, how we go about integrating them and running through our internal playbooks to operationalize them quickly to generate ROIs that support the investment thesis and continue to scale our business effectively,” Sanchez Sarmiento said.
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