03 Oct 2018

Using technology to ensure your merger or acquisition pays

Companies considering mergers and acquisitions (M&A) today could be forgiven for being pessimistic.

Back in 2010, analyst and accountancy firm Deloitte reported that around half of all post-M&A integrations fare poorly and little has changed since then; only now there are even more challenges and risks.

This has not, nor should it, deter organisations from seeking successful marriages, however. M&A activity has been on an upward trajectory for many years, both in Australia and globally, with the goals remaining unchanged: achieving economies of scale, acquiring more customers, reaching additional markets, boosting purchasing power, and growing faster.

Technology: facilitating integration and ensuring it’s not a point-of-failure

The failure of ‘Post-Merger Integration’ (PMI) has many potential causes, but in today’s hyper-connected business environments, where so much rides on technology, the potential for (and cost of) failure is greater than ever.

It’s essential, therefore, that before undertaking any M&A activity that you have a view of the other organisation’s technology and a plan.

Establishing clear and effective processes for the integration of networks, hardware, legacy systems, and core business platforms such as for CRM, finance, HR and ERP is going to be central to PMI success. Not only that, failing to successfully merge help desks can be disastrous for any organisation that relies on IT, operates out of multiple offices, or who’s staff are in-the-field and/or mobile.

The disruption of the smooth running of business-critical processes, key tools, and people’s day-to-day activity in either organisation risks more than a technology headache, however.

The integration of two organisations often struggles due to the cultural fit or that people feel that the pain of going through the process of forming a new organisation is greater than that of finding a new role. The loss of key talent is a common source for PMI failure or, at best, the failure to realise the financial gains promised. Technology, however, can help here, too.

Getting everyone working effectively within the newly created entity with the tools they need, providing them with ample opportunities to connect and fix problems rapidly, as well as enabling them to share experiences and ideas with tools like video conferencing or sophisticated digital workspaces, can mitigate a lot of the potential problems that may arise.

Use your people to guide technology integration and drive value

There will also be instances where it’s important to bring different people and teams physically together to help guide your technological PMI.

Sales teams, for instance, are custodians not only of important business data, but also more nuanced details about particular clients, personal histories and other intangibles like ‘good will’. Existing spreadsheets and CRMs are often inadequate for communicating this purpose, so you may well need to couple technology integration with development to provide a way for both teams to get onto the same page and operate remotely.

And just because two companies have merged, it doesn’t necessarily follow that their original customers will even recognise and continue to deal with the new entity.

This is one of the more dangerous assumptions that merging organisations make; dangerous because M&As typically shift the market perception of the respective brands, while the newly created organisation is, at a best, largely unknown but with a familiar face. Marketing and Comms teams, therefore, need to be able to integrate data, efficiently merge brands, and communicate change effectively, providing a seamless (or improved) user and customer experiences in the process.

Finance teams absolutely need to know everything from the big picture to the minutia.

Operational teams need the data they’ve always had coupled with technological functionality, as well as the insights provided from the other organisation, to provide your current customers with what they need and expect. They’re also often where the Intellectual Property (IP) is – another key factor for driving value.

Even the biggest and smartest companies struggle to manage their IP successfully and smaller companies can find it hard to properly identify, let alone document, their IP. Having a structured approach to auditing IP will not only prevent organisations from ‘re-inventing the wheel’, it will also ensure that the best ideas don’t get buried and lost.

 

According to business analysts McKinsey, even if M&A isn’t on the immediate radar of an organisation, it still makes sense to prioritise creating a highly-flexible IT environment, as this can actually boost its appeal as a potential target – also making it a more confident suitor – in addition to capturing all of the operational benefits that would flow.

Influential business analyst, author and founder of M&A Partners, Mark Herndon advocates a four-point approach for getting corporate marriages right:

  • Develop a thorough, seamless process workflow
  • Develop a ‘rapid results’ type of project management workflow
  • Provide specific training for due diligence teams
  • Conduct a thorough audit of cultural, talent and organisational structures.

Put that in another context and that should look very familiar to any technology professional.

Brennan IT knows as well as any company that well-managed M&As can catapult companies into new markets and opportunities. Our experienced consultants can help you to plan and deploy your post-merger integration technology strategy; ensuring that your workforce are supported, your security sound, and that you’ve a hybrid IT platform that will enable your new organisation to thrive.

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