The construction industry has been on a tear of late, resulting in a flurry of merger and acquisition (M&A) activity. Here’s why executives in the space should consider emerging software platforms for the due diligence and post-deal integration phases of the purchase process.

Companies across the construction industry are increasingly using sophisticated software tools to help them manage the complex communication and data organization requirements of construction projects. Reflecting the growing popularity of these tools, technology behemoth Trimble recently acquired two construction management software companies, e-Builder and Viewpoint.

While most construction industry executives recognize the importance of using specialized software to manage their building projects, many throughout the industry have yet to realize that software can provide similar benefits in helping companies manage the complicated processes related to selling their business or acquiring another company. As M&A activity heats up across the construction industry, it’s important to understand how new software platforms are helping business owners and executives communicate and make decisions more efficiently throughout an M&A process.

Construction growth leads to heightened acquisition activity

Construction is currently among the fastest-growing industries in the United States. From 2016 to 2017, the number of new construction businesses in the country grew 72.3 percent, according to Swyft Filings, which helps new companies through the filing and compliance processes.

With this significant increase in the number of construction businesses, along with a market that has been recovering rapidly since the housing crisis, companies are expanding and taking on new work. Business owners in the industry, meanwhile—from commercial and industrial construction business owners to industry suppliers—may begin to take a look at their needs, goals and aspirations.

The enriched business environment in the construction industry may even motivate a commercial builder to acquire another company to help with an expansion. While an acquisition may seem like a fast and convenient path to growth, most companies are stretched thin when it comes to managing the complex process of acquiring another company—from identifying potential acquisition targets to conducting due diligence and managing post-deal integration processes.

Some companies, however, may not be big enough to hire an advisor or investment bank to facilitate a transaction. This is especially important in a deal’s due diligence phase, where the two companies have their respective lawyers, bankers and other advisors reviewing the details of each company’s financial and legal structure before making the deal official—an extensive process that often takes months to complete.

The due diligence process requires many different documents and disparate pieces of information, which can be difficult for a deal’s various stakeholders to organize and navigate. Often, companies try to manage this information through simple Excel spreadsheets and email. Other companies use poorly organized data room software platforms. Regardless, there usually is a general lack of communication between different technologies; this leads to systemic inefficiency in the diligence and post-integration deal phases.

New software platforms emerge to fill the gaps

To help solve these problems, companies in the construction industry and other industries are turning to next-generation software platforms that are designed to facilitate the due diligence and post-merger integration processes.

The intuitive and centrally-located file management system built into these platforms gives business owners a clear, bird’s-eye view of all the information involved in a deal. It also makes it easier to integrate new information into a deal and to update the relevant parties quickly.

Overseeing an acquisition and subsequent integration can be a significant distraction for business owners who must also remain focused on running the business. As a result, the ability to streamline and manage the number of requests that come to the owner’s attention during an M&A process can be critical to the company’s success. By centralizing all communication, software platforms give management teams complete control over the way in which they receive notifications regarding M&A requests, helping executives manage their time and attention.

Another question construction executives should consider when thinking about the role software can play in M&A: After the sale or acquisition, how are the companies going to function as a single unit?

Planning for integration as soon as possible is essential to a successful acquisition. The post-merger integration phase is when most of the deal’s potential value is realized—or lost. Therefore, it’s crucial that this phase goes well.

Using a software platform that can not only help facilitate due diligence communication but will also organize the information involved in the post-deal integration process can be a major competitive advantage for constructions companies that are growing through acquisitions. And having a dedicated post-deal integration team and ensuring that it is communicating with the company’s corporate development team is paramount to long-term deal success.

As the U.S. economy continues to expand, construction industry executives with their sights on M&A should take a look at emerging software platforms to help them with the due diligence and post-merger integration processes. By simplifying these processes, executives can focus on running the day-to-day logistics of their business, while also ensuring that the acquisition, sale or other transaction is completed successfully.