IT Integration and Divestiture
Giving IT a fighting chance
You’re the CIO of a global company with significant pressures to deliver a heavy slate of complex projects on a very aggressive timeline. Now, you have just been alerted by your CEO that the company is about to announce a major acquisition and you will also be on the hook to manage the IT integration activities - how can you possibly get out in front of the action and give your IT organization a fighting chance?
Deloitte has the largest M&A consulting practice in the US and globally with a demonstrated track record of success on over 1,000 integration and divestiture projects including some of the largest, most complex transactions ever attempted. Our professionals are able to combine our M&A transaction experience with our full suite of M&A IT capabilities from IT capability development, diligence through IT implementation to deliver solutions and value that are unmatched in the marketplace. Our services range from critical technical activities such as “cloning and cleansing” IT application environments for a divestiture to the way our proprietary M&A Central tool coordinates real-time, web-enabled project management across all functions. Learn more about the offering.
Breaking Up without Breaking Down
Planning and executing a series of divestitures in the midst of a global economic crisis.
IT Due Diligence Is Fundamental for Post-Merger Synergy
Ignorance is not bliss.
The Role of Information Technology in Mergers and Acquisitions
A win-win deal.
Wired for Winning: Managing IT Effectively in M&A
Managing IT effectively in M&A.
Meet Our People
- Mark Walsh, Principal, Deloitte Consulting LLP
- Finance Integration and Divestiture
- G&A Cost Reduction
- Human Resources Integration and Divestiture
- Integration and Divestiture Planning and Execution
- Sales, Marketing and Customer Integration and Divestiture
Learn More About the Offering
The time to prepare your IT organization to support integration or divestiture is not 12 hours before a transaction is announced; it is months before a transaction is on the radar screen. Only then can you go in ready – ready to know how changes in processes, systems and organization can be planned, executed and enabled by IT along an aggressive timeline. We have analyzed a subset of the more than 1,000 M&A transactions that we have been involved with across many industries, and one thing is clear; M&A success correlates closely to the level of up-front IT preparedness, diligence and planning activities completed.
In M&A, IT Matters
Research shows IT is typically a major driver of synergy benefits – our analysis indicates that in many cases up to 70 percent of transaction synergies are either directly delivered by IT or enabled by IT. IT is also often one of the largest integration or divestiture related costs. And IT is also typically the “long pole in the tent” when it comes to completing integration and divestiture project activities. If your systems aren’t ready to support a transaction that changes the shape of your business, the result can be delay, higher costs and benefits that don’t measure up to expectations.
To promote the success of any M&A transaction, we recommend keeping a focus on IT throughout the transaction process. IT must have a place at the diligence table, and it’s important to develop a vision, strategy and blueprint for how IT will contribute without interruption, even as its own structure changes as the result of the deal. By placing the right emphasis and importance on IT and leveraging track-tested tools, techniques and experience, companies can give IT a fighting chance.
How We Can Help
Deloitte has the largest M&A consulting practice in the US and globally with a demonstrated track record of success on over 1,000 integration and divestiture projects including some of the largest, most complex transactions ever attempted. Our professionals are able to combine our M&A transaction experience with our full suite of M&A IT capabilities from IT capability development, diligence through IT implementation to deliver solutions and value that are unmatched in the marketplace. Our services range from critical technical activities such as “cloning and cleansing” IT application environments for a divestiture to the way our proprietary M&A Central tool coordinates real-time, web-enabled project management across all functions. Some of the key services we provide are:
- M&A IT capability development
- Processes and playbooks
- Organization and infrastructure readiness
- Training and simulation
- IT due diligence
- IT integration planning and execution management
- Strategy development
- Synergy identification and capture / cost modeling
- Workplan development
- Organization design, employee selection and workforce transition
- Transition Service Agreement (TSA) development
- Risk identification and mitigation
- IT divestiture and carve out planning and execution management
- System selection
- Applications work
- ERP and non-ERP integration / carve out / new build / on demand
- JD Edwards
- Emerging solutions
- ERP and non-ERP cloning and cleansing
- Data management
- Application rationalization
- Interface development and fine-tuning
- Application development, maintenance and support
- ERP and non-ERP integration / carve out / new build / on demand
- Infrastructure work
- Data center consolidation / stand-up
- Network consolidation / isolation / separation
- Help desk consolidation / separation
- End user computing
- E-mail migration
- IT sourcing consolidation
- Network security and controls assessment and management
- IT security and controls
- IT related regulatory compliance
- Third-party IT contract assignment and transfer
- IT organization design, staffing and selection
- IT synergy identification and capture
- IT cost model development
- IT TSA development
- IT outsourcing advisory
- IT resource backfilling
- Hosting services
- Communications and change management
During an integration or divestiture, IT is a two-way concern: Like any business unit, it must go through the transition and emerge in a new, efficient form. Even as it changes, it must help almost every other part of the business go through the same process. An effective M&A IT support strategy can help an organization:
- Experience an issue-free Close and a smooth, cost effective transition to final integration / separation
- Achieve and exceed synergy goals
- Avoid transaction delays and/or cost overrun
- Reduce transition costs
- Avoid post-close disputes and litigation
Three Ways to Get More Value Now
We have helped companies around the world, in various industries, generate more value from the IT function in the midst of an integration. Here are a few lessons we’ve learned along the way.
Engage stakeholders early. Too often, the CIO is the last to know about a deal’s details – or even its existence. Key company leaders should not learn about a transaction in the newspaper, especially not the department that’s going to help everyone else weather the change. When you add up everything IT is going to touch, it makes sense to have IT and the business joined at the hip.
Establish an IT PMO. Even if there’s a central project management office (PMO) for the integration or divestiture, it makes sense to create a separate one for IT. With so many work teams and moving parts, IT can overwhelm and monopolize a general-purpose PMO if it’s lumped in with other functions. Better to give IT its own air-traffic control.
Envision the IT finish line and develop a clear path to get there. It’s common sense to establish an end-state blueprint and roadmap for any function that will be involved in an M&A transaction, but it’s a more complex task for IT because of how deeply it’s tied into other parts of the business. Make sure the blueprint includes heavy input from the business – don’t do IT for IT’s sake alone.
IT Integration and Divestiture in Action
- In the middle of the global credit crunch, a large financial services company needed to sell off multiple businesses to raise money and repay a government loan. The challenge was made greater by the company’s operating model and IT infrastructure, in which a large number of interdependent subsidiaries operated with significant autonomy and used their own processes and systems. With Deloitte's help, the company was able to design and execute a program for handling numerous divestitures in rapid succession. Each resulted in an issue free Day One, an avoidance of stranded costs and smooth separation from all transition services agreements.
- A merger in the health care industry created a new global player, but the anticipated benefits couldn’t come about until the legacy companies’ operating models and IT systems were brought into alignment. Deloitte used IT blueprinting and Day One and Day Two detailed planning as part of a broad integration strategy, which resulted in a clear, well-executed reporting regimen and decision-making process. In the end, the deal’s synergies exceeded the original target.
- When two gaming concerns joined forces, the new company needed to present a single face to the market in Europe, Asia/Pacific and North America within 12 months. That meant integrating multiple processes and systems not only across business units, and third-party vendors, but also across borders and languages – without making any changes during a seasonal busy period. Deloitte helped plan the IT integration in stages, using a dedicated global IT PMO to coordinate with changes elsewhere in the business. We helped integrate five separate Oracle instances into one, resulting in a global business platform that supported internal and external requirements, and improved data connectivity in the supply chain.
As used in this document, “Deloitte” means Deloitte & Touche LLP, which provides audit, assurance and risk management related services, Deloitte Consulting LLP, which provides strategy, operations, technology, systems, outsourcing and human capital consulting services, Deloitte Tax LLP, which provides tax services, and Deloitte Financial Advisory Services (FAS), which provides financial advisory services. These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.