The proposed acquisition of Astra Zeneca by Pfizer has been dominating the business news for several weeks. This high profile case appears to be representative of a growing interest amongst corporates in mergers and acquisitions (M&A).
According to the latest figures from Mergermarket, the first quarter of 2014 was the most active start to the year since 2011 in terms of M&A activity. Global M&A was valued at US$ 599.1bn in Q1 2014, up 33.2% from Q1 2013 when it was US$ 449.6bn.
The resurgence of the M&A markets is another sign of global economic recovery, but is also revealing a big problem for organisations that have been relatively dormant when addressing legacy data problems.
No matter what the motive for the M&A, creating synergies and economies of scale are often a pre-requisite for a successful venture. This will often involve a major review of the IT strategy and infrastructure of the organisations followed by a consolidation or migration of IT systems.
It is during this stage that they find out the extent of the problem: i.e. that companies have data centres full of backup tapes that contain legacy information, some of which is undocumented and therefore unknown as a risk to the business.
The problem is not just that data is unclassified, but it may be stored in the form of back-ups from legacy systems using back-up software that is no longer used, or that cannot be identified.
This will present a significant risk since the companies involved may still need to have access to the legacy data for compliance, regulatory or legal reasons.
As a result, there is a groundswell of companies looking for help with resolving these challenges arising from M&A activity and using services from partners such as Kroll Ontrack to help them meet their compliance and regulatory obligations. At Kroll Ontrack, we have, on occasions, been literally presented with crates of old backup tapes that are unlabelled and whose content is unknown.
Organisations – particularly those in regulated industries like pharmaceuticals and financial services – are legally obliged to keep data for a number of years. M&A activity, along with regulatory and legal investigations, can expose shortcomings in the way in which that data is classified and stored. Considering the value at stake in that activity, it makes sense to mitigate against risks as early as possible.