Fig 1: Example of dashboard with Maintenance Key Performance
Indicators (KPIs).
Some of these variables must be quantified, qualified, and compared, in
addition to the average service levels of the industry where the seller
is operating and the competitors, also compared with the objectives
established in the 5-year horizon in order to have information and a
management control once the transaction has been carried out, in the
post-acquisition phase. The role of information technology in M&A has
gained greater importance due to the globalization of digitization and
it creates value in the processes of a Company. It is a support for the
risk-free evaluation of the mentioned variables, and therefore can
analyze the appropriate acquisition price. (Stein, Zureck & Jäger,
2018).
2. Technology can reduce information asymmetry:
How can technology reduce information asymmetry? With correct data
collection and its subsequent analysis and processing through BIG DATA
tools, of the acquired company.
Nowadays, it is possible to store files and BIG DATA through remote
access to software, which is called “cloud computing” and which has
become an essential tool for the development and growth of SMEs.
(Zabalza et al.,). This tool makes possible have all the stored data for
processing and treatment. As operations become more complex, technology
and people who provide and support IT are critical drivers for resolving
ambiguities. ICTs are essential in the previous phase of integration.
(Larsen & Larsen, 200505-01).
There are ICTs that allow communication through the Internet of Things
(IoT). In the US auto insurance market, for example, some insurance
companies track driver behavior through technology to apply the correct
insurance premium. For example, a driver who takes risks will pay more
than a driver who is more conservative and does not assume them. It is
therefore about monitoring the habits and behavior of the driver through
a direct recording of the information from the vehicle’s IoT. This
monitoring through technology reduces information asymmetry and adverse
selection. (Chen & Jiang, 2019)
ANALYSIS: ECONOMETRIC MODEL
To support the exposed theory regarding information asymmetry, an
economic analysis is carried out about how would imply in an M&A
process the acquisition of E&E that are not in good operational
conditions and have not been identified during the DD process.
Generally, around the 5-10% of the portfolio are generating more than
the 50% of breakdowns. The key is to identify all those elevators that
are damaging the Profit & Losses statement (P&L).
For this we propose an econometric model that relates operational
variables from the E&E operation and how they affect each other,
allowing us to obtain future predictions and estimates of profitability
and the return of the investment. The proposed model tries to quantify
the cost of acquiring a E&E in unsuitable operating conditions, and as
consequence depending on the volume of these E&E acquired, how can
cause a non-return on the investment. To carry out the econometric
model, first of all, is needed to define the average price values of
the local and regional companies that can be acquired, both for
preventive maintenance, and annual repairs. The econometric model
proposed can be applied to any market in any region, but we have taken
the average values of the Spanish market as an example.
We define preventive maintenance as that which is carried out
periodically according to the Country Regulations and execution program
of each company that maintains E&E. And we define corrective
maintenance as all that which is not predictive maintenance represents
an economic cost for the company.
In the Spanish elevator market, we have to differentiate two segments,
the residential segment composed of elevators installed in residential
buildings, whose average type of installation is 450Kg (6 people), 1 m /
sec of speed and 8 stops. And the commercial segment that It is composed
of E&E, both elevators and escalators, in buildings such as Hotels,
Shopping Centers, Offices, Airports, Train or Metro Stations, and whose
diversity of average characteristics makes it impossible to determine an
average type of E&E installed.
The average normal preventive maintenance contract in the Spanish market
contemplates the periodic review according to the RAE and the
Regulations published, which implies the periodic mandatory inspection,
the attention in a maximum time of 30 min from Monday to Friday and 2
hours from Saturday to Sunday for rescue of passengers. Rest of
breakdowns, the time should not exceed 24 hours, and includes labor only
in preventive and corrective maintenance, and does not include material
in case of corrective maintenance. Repairs are budgeted separately.
Therefore, and given the evidence that local and regional companies
which are the ones that are mostly bought by multinationals, have 99%
of their portfolio of elevators corresponding to the residential
segment, we will carry out the econometric study in the Spanish
residential market. The premises we use are the average price values
of the Spanish market in the residential segment shown in figure 2: