A merger and acquisition is usually shrouded in mystery - more closed-door meetings than usual, blacked out calendars, zipped lips (but knowing looks) in planning meetings.
An aura sets in around the company so even if you aren’t directly involved in M&A activities you get the feeling that something is going down.
There is, of course, good reason for this – especially for publicly traded companies as insider trading penalties are steep. So who is the trusted circle for an M&A? Normally it is the legal and finance departments, the head of sales, maybe the head of marketing. A notable absence is all too often the IT department. For sure they will be called upon when it is time to integrate the acquired company into the acquiring company – but not until the ink is dry on the agreement and there is no turning back. Yet, in the digital age, IT is a critical business component - for many companies IT is the business - so it is unwise and short-sighted not to involve experienced IT staff beginning in the due diligence phase.
Your IT experts can provide crucial insights before the walk down the aisle to ensure that what seems like a match made in heaven doesn’t turn out to be one destined for – well, you know.
- How good is the targeted company at exploiting technology for digital business? Will it give the acquiring company a competitive advantage?
- Will there be high costs for integrating old legacy systems, if these will still be needed? Will you be able to replace these with more modern technology?
- What are the potential cost savings in running both companies’ IT by getting rid of redundant technologies?
- What are the potential cost savings of consolidating similar projects or using existing technology from one company in the other company’s planned projects? Can you accelerate delivery of planned projects by re-using technology from the other company?
- Where can you standardize the technology of the acquiring company to ease integration of the target company?
- What long-term licensing contracts exist that the acquiring company will have to honor?
Another benefit to involving IT in due diligence is that you’ll be that much further ahead when the merger does happen and be able to speedily get the combined company running smoothly - getting products and services out the door instead of wallowing in integration morass. These are results that will please customers and employees, for sure, and most decidedly those that bankrolled the acquisition.
Granted, it may not be easy to get the targeted company to lift the veil on their own IT. There’s a good chance that the merger won’t happen and you’ll end up being their competitor – after having divulged their formula for competitive advantage. But hopefully their mistrust will dissipate with the combined interest in wanting to build a truly awesome IT infrastructure.
So what is IT’s secret to a successful M&A? Find out in this 30-minute webinar on “Faster gain, less pain in acquisition integration” and then go to your board and tell them you’ll let them in on a little secret - if they’ll let you in on theirs.