Benefits of Using API’s for Mergers and Acquisitions

Benefits of using API’s for Mergers and Acquisitions

In system integration, discussions arise: “Is direct integration between systems faster than building an API infrastructure?” Simply put, “Yes, if integrating just one system.” Nowadays, integrations rarely involve only two systems. A solid API infrastructure, especially in acquisitions, enables easy adoption of innovative business methods.

Consider, for instance, a company embarking on an acquisition spree, striving to merge and integrate multiple additional entities over a period of time. This article seeks to clarify the advantages of leveraging a well-constructed API infrastructure to foster adaptability and efficiency in the acquisition process.

Merging different company systems has always been difficult and expensive, with minimal change over time. Technologically, things haven’t changed much, but architecturally, a well-designed API infrastructure has transformed integration. This infrastructure significantly speeds up and standardizes integration, especially for the acquiring company.

Consider, for example, the following scenario where Company A is attempting to expand through acquisition. The top-half of the diagram depicts Company A acquiring four companies of a period of four years. The lower-half of the diagram show the same company acquiring the same four companies but in a span of three years. While this timeline is obviously not scientific, it effectively demonstrates the efficiency that could be gained by utilizing solid API Infrastructure for the acquiring company.

In the past, Company A would acquire Acquisition 1 and build point-to-point integration applications to incorporate their systems. When that was completed, Acquisition 2 would begin and another set of point-to-point integrations would need to be written for Acquisition. The cycle would continue, one after the other. With an API-led architecture, the Enterprise API layer would need to be developed, which takes some time, and then adapters are written for each of the acquisitions.

Accelerating Acquisition Integration

Developing point-to-point integrations is quicker than creating a comprehensive API architecture. The ROI doesn’t often appear in integrations between Company A and Acquisitions 1 or 2. However, subsequent acquisitions reveal the true ROI. While the initial investment in an API infrastructure is significant, ongoing API use requires minimal intervention, needing developers to make adapters for new acquisitions.

Ensuring Consistency via Business Logic Reuse

While integrating acquired entities, a key challenge arises: rewriting integration logic for each Company A and Acquisition X union. In the MVC era, IT stressed isolating business logic from the user interface for reuse. When business logic is in the API layer, acquirer’s adapters follow API agreements, crafting converters to transform their elements into standardized objects for Company A.

Additional Perks of API Infrastructure

  1. Constructing an API infrastructure offers more benefits than what meets the eye.
  2. Teams creating many integrations can be divided, allowing faster acquisitions in a shorter time.
  3. APIs designed for acquisitions can serve other internal or external clients, revealing an extensive enterprise data model.
  4. Managing API infrastructure can be easier compared to point-to-point integrations.
  5. With API version control, acquired companies can make API changes when they prefer.

In Conclusion

This article highlights a vital point: creating a robust API infrastructure may have higher initial costs and inefficiencies compared to building point-to-point integrations. However, organizations should acknowledge the potential for a more effective ROI over time. They might experience cumulative benefits in the long term, justifying the initial API infrastructure investment.

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