Chapter 1, Introduction to the IT Aspects of Mergers, Acquisitions, and Divestitures
Information technology is generally the single biggest cost element in an M&A event—and can be the single biggest enabler of synergies. Getting IT involved early and often throughout the M&A lifecycle can be critical for effective execution and realization of benefits from a merger, acquisition, or divestiture.
Chapter 2, The Role of IT in Mergers and Acquisitions
This chapter addresses the essential role IT should play in the full cycle of M&A activities, from pre-merger integration planning to postmerger integration, with the goal of increasing shareholder value from the deal. It discusses four basic IT integration models, defined as preservation, combination, consolidation, and transformation, and how they can be applied by both business and IT across the four pillars of M&A: strategy, due diligence, post-merger integration and execution.
Chapter 3, Aligning Business and IT Strategy during Mergers, Acquisitions, and Divestitures
This chapter is concerned with the priority to support the business in M&A and enable synergy achievement. The main focus is on acquisition integration, though many of the concepts are relevant to the broader M&A context.
Chapter 4, Mergers and Acquisitions IT Strategy, Approach, and Governance
In this chapter we lay out the key components of IT integration as it relates to four key functional areas—finance, operations, human resources (HR) and information technology (IT)—and how leading organizations can link strategy, approach and governance within and across each function.
Chapter 5, IT Due Diligence Leading Practices
The focus of this chapter is to help an IT department understand and address the processes, and nuances, involved in an IT due diligence assessment and arrive at an applicable balance of effort, cost and speed.
Chapter 6, IT Infrastructure Aspects of Mergers, Acquisitions, and Divestitures
In many cases, when an organization is going through a merger, acquisition, or divestiture, the IT infrastructure will go through significant and rapid transformation. A large number of synergies can often be quickly gained by combining, consolidating and streamlining IT infrastructure assets and services.
Chapter 7, M&A IT and Synergies
Information technology personnel see firsthand the impact of the process efficiencies and inefficiencies across the company. This chapter focuses on IT’s role in identifying, developing and capturing these synergies in the M&A transition.
Chapter 8, Supporting Business Objectives with M&A-Aware Enterprise Architecture
Based on our collective experience of conducting IT due diligence, preclose planning, postclose execution and synergy tracking, we have identified specific components of an “M&A-aware” enterprise architecture that can be proactively established by companies in advance of an M&A event. When implemented correctly, these options can help increase the projected merger synergies, accelerate the time to achieve these synergies and help reduce the cost of M&A transactions.
Chapter 9, The Importance of a Tested IT Strategy and Approach for Mergers, Acquisitions, and Divestitures
This chapters describes guiding principles that can be used to develop an effective strategy for an IT organization and the IT resources it maintains to execute the integration of an acquired entity effectively. These principles encompass the development of a flexible and open IT function. They effectively help establish an IT ecosystem that allows acquiring companies to easily integrate new IT components from acquired companies and operate them to support the newly combined businesses.
Chapter 10, Cloud Considerations for M&A IT Architecture
Organizations that are evaluating how to address IT in a post-M&A environment should consider how cloud solutions can affect their architecture. This evaluation may include both assessing current cloud solutions that are in place and determining how cloud solutions can contribute to the target future state.
Chapter 11, Data Implications of Mergers and Acquisitions
This chapter contains some key governance and organizational considerations critical for data management, as well as recommendations on data confidentiality, privacy, security, risk and archiving. It also provides a step-by-step road map for data integration and separation projects, as well as a summary of customer data considerations.
Chapter 12, Using M&A to Streamline the Applications Portfolio
An M&A transaction is a disruptive event that can be leveraged to streamline the applications portfolio. No matter whether the transaction is an acquisition, a merger, or even a divestiture, applications rationalization can help to accomplish the following:
- Attain operational and cost synergies.
- Reduce stranded costs left with the seller after a divestiture.
- Standardize, streamline and simplify the applications portfolio.
Chapter 13, Third-Party Contracts in M&A
Though we often understand how critical these suppliers are to maintaining business continuity, few buyers or sellers have fully considered their potential impacts on operations and cost. Suppliers, on the other hand, understand their power during these times. Therefore, they will seek to leverage the importance of business continuity in various ways.
Chapter 14, M&A IT Architecture and Infrastructure—Developing and Delivering Transition Services Agreements
Being a service provider is not typically in either organization’s DNA; therefore, the provision of transition services is often difficult to manage and can distract from normal business. Therefore, the presence of TSAs should be seen as a necessary evil, and they should be used only for the most critical of business functions to help ensure business continuity and minimize negative impacts on customers.
Chapter 15, Day 1 Implications for IT Functions
The Day 1 scope will vary based on whether the transaction is a partial or whole acquisition and also based on the buyer or seller perspective. However, a constant across most transactions is that information technology (IT) is a major part of Day 1.
Chapter 16, Transition Services Agreement (TSA)—Untangling the Web
Several integration challenges can be effectively addressed by using a TSA in which the seller agrees to provide specific services on behalf of the buyer to maintain business continuity while the buyer prepares to receive and operate the new business. A TSA can accelerate the negotiation process and financial close by allowing the deal to move forward without waiting for the buyer to assume responsibility for all critical support services.
Chapter 17, IT Risk, Security, and Controls in M&A
The first step in combating and managing common M&A IT risk considerations is to obtain a thorough understanding of the parent and target organizations’ IT environments. Information such as asset inventories, employee rosters and infrastructure diagrams can provide a snapshot of the environment for which controls must be applied.
Chapter 18, The Role of the CIO in Mergers, Acquisitions, and Divestitures
The CIO takes on two separate roles during significant M&A activity. While the rest of the C-suite is concentrating on combining organizations and building a future strategy for their own business functions, the CIOs, Janus-like, must face both inward to their own function and at the same time outward to accommodate all the changes their own customers demand.
Chapter 19, The Role of CFO
Leading CFOs are expected to deliver in four key roles: strategist, catalyst, operator and steward. This chapter further describes the four faces in the context of an M&A transaction and the key linkage between the CFO and CIO organizations in driving the transaction to a close while preserving deal value.
Chapter 20, Managing the People Side of IT M&A
It’s not easy helping people through the aftermath of a merger or an acquisition, and your leadership will be tested. Having and executing specific, detailed plans for employee communication, organizational design, talent management and workforce transition can help smooth the road ahead.
Chapter 21, Planning for Business Process Changes Impacting Information Technology
In this chapter, we do not focus on the affected employee group as a whole, but specifically on how information technology (IT) changes impact people throughout the organization and the importance of planning each step of the technical integration of the two organizations while keeping in mind the resource skill sets needed to implement the change successfully.
Chapter 22, Integration Management Office Best Practices
This chapter contains an overview of the integration management office (IMO), a key component of any successful merger or acquisition. It highlights key roles, responsibilities and activities. In addition, it provides a high-level overview of legislation that governs M&A transactions and shows how it affects the complexity of deal management along with other variables. Last, it contains some IMO best practices that will help your organization be more effective and successful in managing merger integration efforts.
Chapter 23, IT Program Governance during the Deal
The establishment of a program governance structure, as allowed by law, comprised of IT participants from both companies, can enable effective controls with specific lines of communication and responsibility to build the foundational program and help achieve the IT objectives of the deal.
Chapter 24, Important Role of Data in an M&A Transaction
In this chapter, we examine the premise that effective data management is critical to successful mergers and acquisitions. We look at the pitfalls associated with traditional IT M&A approaches, giving examples from real companies’ experiences. We then present 10 keys to effective data management to leverage, manage and improve the value from M&A.
Chapter 25, Overview of Testing
Testing is a critical component in mergers and acquisitions (M&A) projects. In an effort to reduce project duration, this is an area projects are tempted to shortcut; however, the most successful projects include a sufficient number of testing cycles. This chapter reviews the following specific areas:
- Types of testing
- Testing functions and tools
- Test preparation activities
Chapter 26, Why Mergers, Acquisitions, and Divestitures Fail, and Considerations to Help Avoid a Similar Fate
It is an unfortunate fact that many M&A efforts fail to achieve the business results that were used to justify them. A study of these transactions shows that about 60 percent of acquisitions fail to achieve their stated strategic objectives within the planned time frame. This chapter explores the four groups of risks that impact the results of M&A transactions: synergy, structural, people and project.
Chapter 27, M&A IT Key Success Factors
To aid in the effectiveness of the transaction design and execution, we have identified a number of factors that should be front of mind for any IT executive about to embark on a transaction and are applicable to the full gamut of M&A and divestiture activity.
Chapter 28, M&A IT, Summing It All Up
In this chapter, we focus on providing you with a series of best practices, case studies and lessons learned that are aligned with the key success factors outlined. They are applicable to the full gamut of M&A activity and can enhance an organization’s ability to complete current or pending IT M&A or divestiture due diligence, planning and execution to achieve the desired objectives and to help drive shareholder value creation.