Top 5 Challenges in Mergers and Acquisitions (M&A)

Is your IT team ready for the 5 top challenges with mergers and acquisitions (M&A)?

Mergers and acquisitions (M&A) are more commonplace than most small-to-medium-sized businesses may think and are among the most disruptive events.  In addition to increasing frequency, they are also becoming more complex in today’s fast-changing corporate climate. Information technology has become a vital success factor and a larger portion of a company’s operational and strategic importance in both acquisitions and divestments. At the same time, IT is perhaps the most significant risk element in a mergers and acquisitions (M&A) operation.

Buyers and sellers must overcome a number of IT-related hurdles in order to successfully execute or finish a merger or acquisition:

1. Demystifying IT is the first challenge. IT is sometimes regarded as a “black box,” with no understanding of what happens inside it. All IT-related partners in an M&A transaction, however, should have a clear understanding of the breadth of IT activities required to plan, execute, and finalize the merger or acquisition.
2. Involve IT as early as possible in the transaction process. IT is typically addressed as an afterthought in the process, with no engagement in strategic conversations, such as how to realize synergies or identify potential risks and bottlenecks to a successful merger or acquisition. Instead, IT employees are frequently charged with operational tasks (such as setting up network connections) without any oversight and with little value to the big picture.
3. Effective IT planning is essential for M&A success. Significant time is needed to separate systems and data versus separating corporate operations, processes, or contracts. Similarly, a more thorough evaluation of the migration strategy during a merger or acquisition may help to prevent unforeseen expenditures once the sale is closed. The CEO, the IT M&A team, and the CIO should all place an intense focus on ensuring that business activities go without interruption, and that performance does not suffer during an IT M&A transition.
4. Understanding the specific requirements for M&A IT projects is key.. When compared to traditional IT projects, M&A-related projects are very different in terms of the amounts and flows of information available, as well as in how the parties involved interact. Carefully consider the resources and time involved when executing integrations or migrations during an M&A project.
5. The whole of IT needs to be addressed throughout the entire process. In order to ensure that any issues or risks are addressed early in the deal lifecycle and are handled appropriately, IT M&A specialist teams should be engaged in each of the three phases of the M&A project lifecycle: (i) Pre-signing (ii) Deal Execution (iii)Monitor and Control and (iv) Post-closing. This is monumentally important and generally advantageous to maximize value from the M&A operation.

An accurate understanding of the IT assets covered by the transaction’s perimeter during the pre-signing stage aids in determining the deal’s true worth.

It is crucial to incorporate experts from all fields of IT and security throughout the deal execution phase – where a deal often emerges from behind the veil of secrecy – to make sure that the deadlines for closing the agreement can be reached. 

In order to complete any unfinished business efficiently and in accordance with the business strategy (whether from the seller’s perspective for the retained business or from the buyer’s perspective to achieve desired integration or strategic goals), it is crucial that IT specialists maintain momentum in the post-closing phase.

Every deal’s strategic justification is different, but it is and will be increasingly dependent on IT.

In order to complete agreements faster, more effectively, and with a greater value to both the buyer and the seller, new technological solutions have arisen. Resolving IT challenges is crucial to accomplishing M&A goals. However, most companies do not realize how important competent IT management can prove during an M&A project until it is too late.. At ITAdOn, we have observed that when IT concerns are addressed throughout each transaction process – involving the IT department as early as possible – mergers and acquisitions secure more value and success.

Schedule a meeting with us today to see how we can benefit your IT merger or acquisition project.