IT Mergers and Acquisitions

Our IT Mergers and Acquisitions team (IT M&A) supports M&A and restructuring transactions by advising clients on ways to mitigate deal risks and associated costs. In many cases, the IT M&A team also estimates the effort and resources needed to separate, stand-up, or integrate an organization.

In today's rapidly evolving business landscape, mergers and acquisitions (M&A) are increasingly complex and challenging. However, Information Technology (IT) can be a strategic driver of M&A success, enabling companies to navigate the complexities of integration, accelerate value realization, and achieve their long-term business goals.

This article explores the strategic value of IT in the M&A journey, highlighting key considerations and best practices for harnessing its full potential. By strategically leveraging IT, companies can position themselves for success in the increasingly competitive M&A landscape.

IT in the M&A Journey: Key Considerations and Best Practices

IT Due Diligence (IT DD)

The IT DD will help the client understand those matters that can have a material impact on the value of the business in scope and that need to be accounted for prior to deal signing, such as potential deal breakers, key strengths and synergies. The IT assessment is structured along the following:

• General focus areas: The capability of the business to support its IT strategy & projects, the IT organisation & third-parties, the robustness and scalability of the IT landscape, the operational resilience of the IT organisation (cybersecurity, business continuity, etc.) and the analysis of the IT expenditure to support the IT current needs and future aspirations.
• Specific focus areas: Examples of possible specific focus areas include but are not limited to: compliance assessment with specific standards & regulations, data architecture & information flow, advanced model governance reviews (AI/ML), and a scalability/reliability/customization assessment of digital platforms.

Integration Planning

IT Integration Planning refers to the strategic process of harmonizing various IT systems, infrastructure, and data from multiple entities to create a unified, efficient, and productive ecosystem. It goes beyond just merging technologies; it's about aligning the people, processes, and technology to drive sustainable growth.

Key considerations include:

• Communication and collaboration: Establish clear communication channels between the two companies' IT teams to ensure everyone is aligned on the plan and challenges are addressed promptly.
• Data migration: Develop a detailed plan that accounts for all relevant factors, such as data volumes, types, and dependencies.
• System integration: Develop a detailed plan that addresses all aspects of the process, from data mapping to system testing.

Separation planning

Designing the right IT operating model post-separation is vital to the success of any carve-out process. A disjointed IT can lead to significant overhead costs, impede processes and put business objectives at risk. Whether you are involved on the sell side or the buy side, it is essential to obtain clarity and guidance about post-closing IT operations to avoid unforeseen costs and unexpected delays.

Different carve-out archetypes call for different approaches, and IT is a crucial driver for business value in every archetype. Sometimes, an existing IT landscape can be separated and remain in use post-closing. Or the Buyer can migrate the IT landscape to an existing system by transferring all the Seller’s relevant data. Alternatively, the Buyer might implement a new cloud solution that accommodates more features and advanced technologies.​

The type of IT target operating model will depend on the Seller’s objective in divesting the business, the business dynamics with respect to the bidding landscape, the Buyer’s strategy in operating IT and the existing landscape of the business to be divested.

In summary, Information Technology (IT) plays a pivotal role in Mergers and Acquisitions (M&A) success. Through detailed IT assessments, thoughtful integration and separation planning, companies can navigate M&A complexities, uncover hidden value, and secure long-term competitiveness in today's business environment. IT is not just a tool, it is the cornerstone of M&A success.