- This topic has 7 replies, 8 voices, and was last updated 1 year ago by Andrew Chow.
November 23, 2021 at 4:39 am #36436James EldingParticipant
I have been part of a few deals where post-merger integration is seen as the part of the deal where all value gets realized (e.g., realizing synergies). However, IT matters are often thrown over the fence during the deal close, and more times than not synergies cannot be realized unless IT systems are rationalized across the entities and IT assets will be shared. Never been part of a merger deal where all systems are rationalized and then employees are 100% integrated across the companies due to IT systems.December 8, 2021 at 7:49 pm #51248Greg JessupParticipant
At what point does your IT department have direct contact with the acquisition? Does contact begin at signing of LOI? A lot of variables, but preplanning with the right M&A, Integration, and IT teams can make full integration possible very early on in the process.March 7, 2022 at 1:23 pm #56889Markus GustafssonParticipant
From my experience usually right after signing. As one of the activities between signing and closing.March 7, 2022 at 9:51 pm #56913Tracei McLeodParticipant
In my experience we engage the IT Lead contributes to the due diligence request list, participates in IT discovery workshops with the target counterpart, pre-integration planning and also partners with Procurement to identify software synergies. IT is crucial and should be involved early in the process to ensure a pleasant Day 1 experience and ramping up for post-close integration activities.March 10, 2022 at 9:36 am #57247David DesmetParticipant
I tend to agree with James, quite often the IT part is rather “light” in the Due Diligence, despite the fact that there can be a major impact.
Nevertheless, I think there is a (small) shift ongoing from “identifying costs & risks” in the due diligence, to “identifying future TOM & potential synergies”March 15, 2022 at 12:39 am #57461Michele LearnParticipant
In my experience, the IT landscape is already determined at a high level before we start an integration project. However we do run into cases where interfaces and other external systems are missed which can cause delays on the project. In my organization this is often due to special circumstances in a country or a particular function not being consulted during the planning phase. It can help to have someone from IT directly involved in the integration planning whose responsibility it is to ensure alignment with the business strategy and to provide input on how to structure the IT landscape to realize the anticipated value from synergies. Additionally and where needed they can consult with other entities to understand any special requirements and ensure these are included in the plan.March 25, 2022 at 2:03 pm #57796Dustin DelewskiParticipant
Part of the issue, especially at larger companies, is that there are so many IT teams that support all the IT components that it takes to run a business. Rarely is there one IT person who can speak to all these components, so part of the issue may be that certain IT teams are left out of critical conversations during due diligence. The first step is for the corp dev team and integration teams to be aware of all the different IT areas so that they can ensure that all areas are scoped out. These are the grouping of IT teams that we ensure are engaged on each deal (even if we don’t think they need to be, we validate that hypothesis before we remove them):
o Infrastructure: devices, email, network, telephony, security, active directory, help desk, messaging, A/V, etc.
o Hosting: on premise servers, cloud, etc.
o Back office and operations: Order to cash, procure to pay, record to report, prospect to customer, inventory management, manufacturing management, warehouse management, etc.
o Customer Facing (enables back office): Ordering platforms, EDI, etc.
o Commercial Technology (revenue generating): Saas, etc.
Since there are so many areas that need to be considered, we found things were being missed or misunderstood in our deals. Our team received buy-in from our CTO that an IT executive sponsor will be assigned to each deal to ensure the appropriate IT SMEs are involved and the IT executive sponsor drives the consolidation of the due diligence findings and integration considerations. These findings are presented to the business sponsor in plain language so all leaders are aligned.
The report out includes:
• Scope for each IT area: what’s in and what’s out (just as important for leadership to understand what the team doesn’t plan on doing – there tends to be a lot of ‘aha’ moments for business leaders when they are told in plain language what’s not getting done)
• Assumptions, risks, and dependencies for each IT area – if we do decide to not include something in scope, they highlight the risks of not integration that item.
• Cost summaries by IT area and in total
• High level timeline of the IT integration by IT area with synergy milestones that require IT integration so that we can validate that the timing of synergies are loaded properly in the deal model
• Areas that require further investigation – what due diligence questions have not been adequately answered by the target
• Next StepsMarch 27, 2022 at 12:57 am #57883Andrew ChowParticipant
In my experience thusfar, as Dustin D indicates, it’s complicated. Our business unit general managers are engaged at LOI and participate in the DD. Since the majority are technical in nature, they are able to assess the various technologies at a top-line level. However, as you know, the devil is in the details. We have all BU GMs propose Integration milestones as an out of DD, which post-Close, the real work can begin with deep dives and discovery. Ideally, we would have internal resources sitting around who can take this on, however they would not be at the top of their game in industry – hence we rely on some of our billable resources to help architect and rapidly assess the situations so the IT Ops team can develop the migration details to support the value creation timelines. Once IT can get under the hood, you never know with just conversations how many skeletons hidden.
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