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July 1, 2021

The Post M&A Mortgage Tech Stack Shakeout

After a merger is complete, mortgage executives will have to manage the post M&A mortgage tech stack shakeout if they want efficiency.

It’s been said that a person can’t ride two horses with one behind, and yet we see many post M&A combined companies trying to do just that by maintaining multiple loan origination systems (LOSs). This makes unifying processes to achieve synergy and enable metric measurement very difficult, and complicates compliance. 

I wrote about post M&A technology challenges in a recent post but I want to go deeper into the decisions executives face as they work to combine two successful companies into a successful third combined entity. 

In my previous post, I pointed to Accenture data that shows that only 27% of companies actually see higher operating margins and profits post M&A. One of the primary reasons is they never achieve the synergies they anticipated prior to closing the deal. 

One of the most significant impediments to synergy is having different groups operating on different technology platforms. While some companies will opt to keep multiple tech stacks within the combined enterprise, they are doubling the costs and the time required to manage them, which will quickly erase any cost savings they hoped to achieve through the transaction. 

This is especially true for complicated financial services offerings, like the home mortgage. To achieve the results the company expected before the deal, mortgage executives will have to make a choice and then manage the post M&A mortgage tech stack shakeout. 

The goal of management must be to get everyone in the company on the same page. That’s very difficult with multiple, competing technology platforms. As a consequence, there will be a shakeout and when it happens there will be winners and losers. 

That makes this a difficult decision but one that must be faced. It will involve a careful analysis of the functionality the institution requires to meet its customer service standards, compliance requirements, appetite for risk and earning expectations. 

Managed improperly, the result will be the loss of valuable staff members. Done right, the combined company will be much more likely to meet pre-deal expectations for better operating margins and higher profits. 

If you’re evaluating technology requirements and seeking a roadmap that will deliver the results you expect post deal, reach out to us and find out how easy we can make it for you to get everyone on your team on the same page. 

By Joe Camerieri, EVP, Client Account Management at Mortgage Cadence

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