Mergers & Acquisitions (M&A) continue to be an effective way for companies to grow their businesses rapidly. Studies have shown that while many M&As have failed for different reasons, a key reason is that the business’ leadership did not include the IT leader early enough, because of a lack of understanding of the critical role that IT plays in M&A deals.
Successful M&A deals typically rely on strong IT support delivered by experienced IT specialists who understand the impact of these deals, can perform appropriate technology due diligence and can plan the post-merger integration work. With sufficient advanced notice and proper involvement in the M&A process, IT can deliver enormous value and help to ensure a successful transition.
The 3 key considerations outlined below should be included in any IT-oriented discussion related to an M&A deal.
1. Collecting requirements and evaluating any gaps in IT capabilities
The first consideration in merger integration typically occurs during the initial (or due diligence) phase, when IT must develop an understanding of all technological requirements created by the merger or acquisition. This starts by considering requirements within the IT department itself. IT leaders must have a good understanding of the IT resources on both sides of the deal to decide how the two organizations can best fit together, where any possible synergy can be found, and where integration risks occur. This requires a survey of IT landscape and a plan for rationalizing resources and eliminating redundancies wherever possible.
Areas of analysis include:
- Hardware, software, and network systems;
- Enterprise and departmental application and data platforms (e.g., ERP and/or CRM systems); and
- Corporate programs for specific lines of business, products, services, and vendor platforms.
IT leaders should define how best to provide IT support for the company’s long-term growth strategy, including hardware and software for new product and service proposals, customer retention and acquisition, and entry or expansion into new markets.
2. Prioritizing Initiatives
Given that IT resource availability will likely be impacted during merger integration, technology leaders must be methodical in evaluating how resources are best deployed to support current operations while planning the merger or acquisition. When IT is involved in the process of integration planning early on, effective collaboration with the business teams can occur to ensure projects are properly prioritized.
3. Creating a unified Implementation Roadmap
Once IT leaders have identified priorities for both the IT department and the new corporate structure, they can translate this list into a roadmap, including projects, detailed timelines, and contingency plans. The map will likely uncover redundancies across the prioritized initiatives as well as key gaps in the IT capabilities needed to carry them out. A well-developed roadmap should include a plan to address those imbalances. Furthermore, it should highlight important conditions and success factors for each of the three steps.
Conclusion
Since IT plays an overwhelmingly important role in today’s organizations, successful merger and acquisition integration requires close alignment of IT and other business units within a company before, during, and after the transaction. This type of approach dictates that IT communicates early and often with the business during all aspects of the M&A process. Frequent, frank communication between the two will generate a well-rounded view of the new company and a thorough understanding of its capabilities.
The Litcom approach
Litcom is an independent source for IT due diligence. We have broad knowledge and experience in all aspects of IT management. Our association with leading industry research firms gives us practical data for benchmarking the target company’s IT spending and preparing a useful economic analysis. Our structured methodology allows us to deliver an assessment within short deadlines and our strict independence from technology vendors gives us an unbiased perspective that is essential for due diligence. Please contact us for additional information at: [email protected] .
MERGER & ACQUISITION DUE DILIGENCE: IT ALIGNMENT & PLANNING FRAMEWORK
Properly manage the IT integration risk associated with a M&A deal.
LEARN MORELitcom provides Merger & Acquisition IT Advisory services that enable our clients to understand the full IT risk profile of M&A transactions and determine the most effective way to integrate new organizations. We deliver IT Due Diligence services as part of an overall deal analysis and IT Post Merger Integration services upon completion of transactions.
