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When organizations engage in M&A initiatives, the IT topic is not taken into consideration. Target identified for acquisition, the HR, Finance, Operations, Legal, Quality, Engineering leads conduct their due diligence. Then, the Deal Team begins the creating of the Purchase Agreement (APA or SPA). At this point, the Deal Team asks the IT department to engage in the process, and asks the IT Lead to plan and deliver the Day 1 separation. I am not sure why IT is an after thought almost always. Does anyone agree with me on this?
Very interesting take! I can only speak from my experience and having come from an I.T. background – I find myself being the spokesperson for I.T and Systems in DD – ensuring that they have an equal stake at the DD process and ensure that ample time is spent looking at a target’s systems. If this isn’t the case at other companies and I.T is in fact an afterthought – I find that alarming as there are so many synergies and opportunities that can be gained by making sure that I.T. is looked at thoroughly during DD.
Interestingly, from my perspective, this might be due to the fact – how an organisation perceives it’s Information Technology. From my perspective, IT is and should be considered as an enabler for doing business; making IT part of DD will add value. I think global organisations have now started to realise this, but needs a wider acceptance.
The role of IT may be regarded lower in few industries causing the miss you suggested. In the healthcare IT product development space, IT is considered one of the key functions and brought onto discussion table and due diligence much earlier in the space.
I agree with Surabhi Khanna, in my opinion is up to the industry. I think that in the industries where IT is a supportive tool, should be a part of integration strategy, and as we all know the sooner you start to plan your integration (before transation) the smoothier it goes.
As a CFO, more often than not, the integration of infrastructure (Accounting, HR, IT, etc.) falls under our responsibility. I bring IT into the process as soon as we begin formal due diligence to have them be a part of the integration planning. We are a small company so our resources are limited. This means we have to do a solid job of planning up front to allow us to adequately allocate resources.
My company deals with recordkeeping for 401K plans and 529 plans. Because of the personally identifiable information that we have, IT is one of the key departments in any integration. There are many things that IT has to deal, but especially inportant is security and keeping information safe. Some acquisitions are not as sophisticated, so IT has a hard job to integrate and the acquisiton, but not put our own data in danger. Another interesiting IT job is to make sure that the acquisition employees don’t inadvertantly succomb to a phishing attach, malware attach, etc. Training of new employees regarding IT threats is an important ancillary function.
I agree that the importance of IT systems, architecture and involving the department early is critical to a successful integration. IT systems tend to touch on every aspect of the business/functional workstreams and create interdependencies. Having an IT workstream with a dedicated lead from both parties and recognizing early on that IT should be involved early is sound planning for integration. I once participated in a 6 hour marathon session led by the IT Architect engineer planning for cutover and how the IT architecture needed to be set-up. I am not an IT person, so I can’t elaborate, but it certainly demonstrated the importance of not overlooking IT.
I suspect the importance of IT integration is highly industry and deal specific.
I agree that IT systems should be another consideration for the merger exercise, given today’s inter-connected world. Many of businesses rely heavily on their IT systems and if there is no proper integration of 2 differing systems, the merged entity will likely fail.
We engage the IT team starting with due diligence kick off. They are heavily involved in due diligence and integration planning efforts before a deal is signed. IT not only creates their own functional integration plan, but they also have significant participation in many cross-functional workstreams such as employee onboarding, sales readiness and internal operations teams, playing a critical role to transition/integrate target’s systems, apps and data to our environment.
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