There are a lot of moving pieces to mergers and acquisitions (M&A). If you’re a small business and it’s your first time prepping for the rigorous M&A process, you’ll want to know how to keep your technology in sync.
These days, businesses and their IT are often entwined symbiotically, especially in organizations with a high IT maturity level. If your IT architecture affects virtually every aspect of your company’s operations, involving IT leaders early on in any merger or acquisition process is a must.
Make sure your IT leaders understand your business strategy, objectives, and overall vision as it will undoubtedly impact the long-term success or failure of your deal.
To ensure optimal integration when merging two IT infrastructures, it’s critical that you take the following key steps:
What to do pre-close
Do Your Due Diligence
When doing your IT due diligence, you want to understand the company’s dependency on technology in order to quantify the risks and costs associated with continuing to deliver IT products and services after the merger.
In every M&A process, it’s vital that you examine the target company and investigate essential details, such as:
- What kind of operating systems and platforms are used?
- What current IT department hierarchy system is in place?
- What processes, standards, and documentation procedures exist?
- How will the IT maturity level of the acquired company impact your ability to merge?
Optimize Your In-house IT Department
It may be tempting during this process to continually look outward but understanding and optimizing your own IT infrastructure can also have a significant impact on successful integration. Having an explicit knowledge of your systems will allow you to eliminate redundancy, identify how new assets fit, and cut IT costs now.
The goal here is to create a streamlined, flexible, architecture that can absorb new assets easily and adapt quickly to your needs. Adopting this approach decreases the need for back-end integration and ensures you have the knowledge to make disciplined decisions at the pace a merger or acquisition deal requires.
Create a Plan, Define Objectives, Establish a Timeline
You have the knowledge. Now it’s time to lay down the framework for what happens once the deal is done. To ensure that your IT leaders deliver every step of the way you’ll have to talk out critical operational details such as how you plan to continue day-to-day operations during the merger.
You’ll also need to create a roadmap to combining the two departments into one once the merger is completed and, finally, visualize and design an end-state architecture that can support all your ambitious plans.
What to do post-acquisition
The commencement of the integration process will inevitably create a myriad of complex questions to answer. Chief among them: Who’s in charge? This is especially crucial in the early stages of merging IT departments when uncertainty is high, and roles & responsibilities need to be clearly defined to eliminate confusion.
In many cases, putting one person in charge and holding them accountable for the ultimate outcome can create a more streamlined hierarchy that speeds up decision-making. Strong governance is the only surefire way to provide clear direction for everyone involved and assure you stay on time and within budget.
Prioritize Energy and Focus
Since IT resources will likely be spread thin during the M&A process, technology leaders will have to continually assess how to allocate them properly and what projects to prioritize.
The first 100 days of the integration process are disproportionately crucial to the success of the integration process. Decide if you have the capacity to run the current business.
Approaching this 100-day period, trade-offs will be necessary, and decision-makers will have to act swiftly and be transparent about their reasons for making difficult choices to ensure employee support. Communicate, communicate, communicate. As Booze & Co. advocate in their perspective on The Role of IT in Merger Integration, “mergers are inherently stressful for an organization, but clear and frequent communication can help alleviate this problem.” Leadership must keep everyone informed on progress, including challenges and successes.
Stay Customer Focused
Once the whirlwind of decisions and deadlines begins, you’ll be tempted to focus on internal challenges. However, customer retention and acquisition should always be top priority no matter what may be in flux behind the scenes. It’s vital that all the uncertainty you face doesn’t affect customers negatively. Keep them in the loop with how the changes may negatively impact the services you provide.
Confirm Your Diligence Assumptions
The diligence period is short, limited in scope, and guarded in the depth of the responses. Post-acquisition, you must go deeper to confirm assumptions and adapt your plan as needed based on full information.
Common M&A mistakes
Approaching M&A Like a Standard IT Projects
In M&A, you won’t be building your IT department from the ground up, so you don’t have the luxury of creating solutions for problems as they arise. Many companies incorrectly assume that since they have created IT architecture from scratch, they can use the processes they developed along the way. But an M&A integration is much more daunting and requires a more streamlined focus. Standard services should be put to the side to focus on business-critical operations that are tailored to the needs of integration and can scale quickly with the expected growth of the company.
Not Having Scalable Architecture
Because so much of the M&A process is intensely focused on integration and keeping business moving while managing a difficult transitional period, it’s easy to lose sight of the bigger picture and forget that the entire reason for a merger or acquisition is to drive long-term success.
Many companies focus too closely on short-term savings and fail to implement a base technology platform that can expand with new business. Consult closely with your IT leaders on how to support growth and scale your future business right from the start.
In some cases, integration timelines are set too far in advance, before due diligence has been done, before the end-state architecture has been decided upon, before all the IT leaders can weigh in and set forth realistic goals for integration. In this case, employees can end up feeling overworked, stressed, and demoralized. Consistently pursuing realistic timelines will be essential if you want to create a culture where employees trust their leadership to provide them with realistic goals.
When you weigh all the technology decisions that could make or break an M&A deal, it’s clear that communication with top IT professionals will be the key element. Therefore, as you plan and execute your merger and acquisition strategy, make sure you and your IT team stay attached at the hip.