Three M&A
Success Factors
Companies with successful M&A track records share these
best practices when it comes to back-end integration:
1 They enter deals with their own IT operations in good shape, often with a flexible service- oriented architecture.
2 They engage IT leaders early in the process, allowing them to assess the target company’s tech- nology. Then, as the deal progresses, the IT leaders
devise a more complete strategy and budget for integration.
3 They develop careful post-merger integration plans that identify key issues, such as which tech- nology platforms and data architectures will prevail.
SOURCE: McKINSEY & CO., JANUARY 2011
Beyond assessing the assets of each player’s IT department,
including the people and infrastructures, the playbook needs to
cover different scenarios, such as whether the target company
will be fully integrated or keep its own systems, and whether to
consider using any of the target company’s IT or just move everything over to the buyer’s systems.
What’s at Stake?
Getting a CIO’s involvement early on in
an M&A deal and allowing IT to delve
deeply enough to really understand the
key issues is crucial for limiting risks
and maximizing opportunities.
“Only IT leaders truly understand the
risks and consequences of not doing a
proper due diligence on technology ahead
of time. Only they know the intricacies
of the enterprise architecture, infrastruc-
ture, and have the system and business
domain knowledge needed to support
them,” says Dorothy Hatzikonstantis,
vice president of enterprise business ap-
plications at Pegasystems in Cambridge,
Mass. Without that insight, she says, “the
cost to the company can be millions in
redundant or unseen expenditures.”
Hatzikonstantis has worked on the I T front in several M&A
deals with previous employers. She recalls one case where her
company thought it was buying another at a great price but
learned through its IT due-diligence process that the target
company had never paid for its desktop software licenses and
faced a licensing liability in the millions.
CIO Greg Taffet uses checklists to identify
potential IT challenges during a merger.
How to Integrate an Acquired Company in 90 Days
IT SOUNDS IMPOSSIBLY FAST. But Avnet, an electronic components distributor, has an M&A playbook that helps the Fortune 500
company bring acquisitions into the fold (including I T systems) within 90 days — and with sensitivity to the human cost. Avnet CIO Steve
Phillips explained the process at Computerworld’s Premier 100 IT Leaders conference in March. http://tinyurl.com/C W-Avnet
