The strategic role of IT in Merger & Acquisition integration

The Merger and Acquisition (M&A) boom is set to continue in 2017 as quoted by many industry analysts including the Financial Times. Until recently, due diligence for M&A activity has involved assessment of financials, channels and partnerships. All too frequently CIOs are not engaged until after a merger or acquisition has been announced and then are left with unrealistic expectations on effort, costs and timeframe to integrate IT services and savings that can be generated.

When undertaking a merger or acquisition; it is essential to properly appreciate the complexities that are likely to be encountered when integrating IT services. In our opinion IT should be involved at a strategic level, in the initial valuation stages of the M&A process for technical evaluations. There can be hidden IT complexities, cybersecurity vulnerabilities or data breaches that could be a potential future risk to the business and the deal itself. Getting involved at an early stage also means that a more realistic scale and effort of IT integration can be assessed to manage post M&A expectation and costs.

It is essential that IT capabilities of both M&A parties are evaluated early in the process to establish a realistic integration plan. The plan should leverage opportunities and synergies to improve IT service delivery as well as tackling underlying service challenges, such as legacy risk. This may require an IT audit that considers all facets of IT delivery to highlight technical, security, operational, delivery and contract/governance challenges and opportunities. The analysis of those findings can help in developing a strategic roadmap that provides a framework for achieving effective and secure IT integration. It can help achieve short-term benefits and a longer term target IT capabilities that are equipped to better service business aspirations.

The evolving IT landscape demands organisations involved in M&A activity to involve CIOs at a strategic level and undertake early technical and security evaluations in order to achieve smooth, effective and on-schedule post M&A IT integration.

Wavestone works with large organisations with complex IT network infrastructures to conduct the IT audit, develop strategic IT integration roadmap and deliver a smooth post M&A IT integration.