A Modern Super Hero: The Dynamic Role of IT During a Merger and AcquisitionOctober 1, 2019
It’s no secret that in our modern era, business and IT are interwoven. Getting IT right has become fundamental to avoiding failed mergers and acquisitions (M&A). While IT is of course not the sole driver of M&A integration success, its importance in business integration has long been recognized. IT can be a powerful factor behind M&A success, assuring synergies are realized and ultimately increasing the deal-making capacity of acquirers.
IT is widely recognized as an enabler of business process optimization and business transformation — impacting and supporting a variety of highly visible functions that drive business value. In some cases, IT alone is responsible for creating overall value.
The following are several areas where IT plays a major role, either as part of IT enablement or as a standalone function:
- Supporting the business case for achieving cost savings by combining the IT cost structures.
- Reducing overlap of IT in the merged companies by rationalizing application portfolios and IT organizations.
- Optimizing infrastructure landscapes and determining operating models for the new entity.
- Enabling synergies by integrating major business functions, improving communications, enhancing processes and providing uninterrupted customer service.
- Providing operational visibility during the integration process via communications and knowledge-sharing portals.
Yet a lot of the time, IT is not considered during acquisition planning and pre-close, but is expected to reconcile systems quickly and successfully once the deal is done. The IT organization should have a seat at the due diligence table to spot potential obstacles to integration and assess opportunities for IT transformation beyond integration. This not only speeds the integration process but can provide an opportunity to create more value faster.
The role of IT during a merger and acquisition should focus on:
- Pursue a dual IT agenda
- Be a full partner during due diligence
- Hit the ground running before Day One
Integration planning should begin well before a deal closes so the merged organization can be operational on Day One. The IT integration team should develop a clear strategy for determining what systems to keep, what data to migrate, and what processes to follow, as well as initial organizational structures and key performance measurements.
Binary Tree has supported thousands of enterprise mergers and acquisitions. We’ve worked on the largest and most complex M&A transactions on the planet. Our end-to-end enterprise M&A solutions enable organizations to achieve their business and integration goals.
To find out more about what we can do for you, get in touch. We look forward to working with you on your next merger or acquisition.