Attractive features of managed services

Despite economic uncertainty, the appetite for mergers and acquisitions is rising across markets and sectors. M&A is CEOs’ top strategy for achieving growth objectives in the next three years¹ .

Leaders seek many characteristics in a potential acquisition or strategic partnership — from profitability to scale to intellectual property — and another could be the skillful use of managed services. Consider some of the ways this operating model can make an acquisition target more attractive:

• Operational efficiency and optimized costs: Combining automation, leading practice, and industry-specific expertise, managed services deliver knowledge-intensive processes with speed, efficiency, and predictable costs. This model helps create the lean, nimble, cost-effective operations many dealmakers strive to acquire. It also enables organizations to unlock additional capacity by redeploying staff to other activities.
• Transformational capabilities: Acquirers are increasingly using M&A to accelerate growth and tap new ways to transform their business, and companies with mature managed services are a good place to look. Indeed, according to the latest KPMG and HFS Research Managed Services Outlook, more than 70 percent of managed services buyers are receiving high impact from strategic outcomes that drive advantage. For example, some companies can enter new jurisdictions more quickly and confidently than their peers, thanks to savvy managed services for regulatory compliance. Others have a competitive edge due to their swift deployment of mobile apps, thanks to managed cybersecurity that’s baked into development processes.
• A mitigator for talent flight: A common risk in M&A deals is the loss of acquired talent, as some workers in mission-critical processes may leave due to changes in organizational culture, job responsibilities, or leadership. In addition to investing in a holistic approach to rebadging and retention, dealmakers may be able to offset this risk by acquiring companies that use managed services for some key processes. Leading providers bring an ongoing supply of hard-to-find skills in areas like cybersecurity, financial crime compliance, cloud, and data management.

With benefits such as these, forward-looking acquirers may want to view strategic managed services as an engine for growth and resilience, creating potential for accelerated returns.

Learn more about KPMG Managed Services. For an archive of past blogs, please visit Going Beyond: Managed Services.

¹ KPMG 2024 CEO Outlook