Tag Archives: Mergers and Acquisitions
Following a Merger and Acquisition (M&A), there is usually a focus on consolidating the two companies’ IT systems, leaving behind many redundant legacy applications. Until those legacy applications are shut down, you haven’t realized the cost savings of the consolidation. However, those old applications may contain data that’s no longer used for daily operations, but need to be retained for regulatory compliance. Keeping those applications up and running, just to retain the data within them introduces operational, business and legal risks. It is likely that the IT staff who have the expertise about those applications are no longer with the company, and without them it may be difficult to impossible to access the data in a meaningful way, in the time required, for an audit or eDiscovery request.
The impact of decentralization and a volatile business climate on post merger integration has been a frequent topic of discussion for executives this past year. Gerald Adolph and Justin Pettit from Booz & Company summed it up in “Making the Most of M&A”:
The most significant risk to a well-designed implementation plan is drift. In a business world that increasingly values decentralization and the empowerment of line managers, keeping a complex, interdependent implementation on course can be a challenge. It requires adherence to the outline of the plan, yet also requires that managers be granted the flexibility needed to adapt to changing circumstances.
On one hand, we need organization-wide visibility and transparency to bring the strategic intent of mergers into reality. On the other, we must allow the line managers and front-line workers to make the right decisions at the point of impact where they uniquely see the changing conditions and can act on the insights when an opportunity arises. What is the forcing function to sustain the core ideal of “One Company”, while affording the flexibility and independence to people with the operating experience and in-depth knowledge of business? One vital factor is the core information service. This subject matter was explored in our recent white paper on “Rewire and Synchronize Information.”
Realizing the expected value of M&A is a well-known, top-ranked challenge. Information plays a crucial role in closing the gaps in due diligence, scenario-based planning, post-merger integration and revamping of the merged entities. To address these challenges, I co-wrote an article on effective information strategy for Mergers, Acquisitions & Divestitures with Deloitte.
In a nutshell, M&A deals are complex, and effectively tackling them is more art than science. Leading organizations have been effective in delivering the intended value from M&A, while positioning themselves for increased agility and competitive advantage with robust practice in managing data. This remains valid in the current, volatile environment and equally so for cross-border M&A transactions.
Rewards for cross-border transactions are obvious; access to a new labor pool, a combined portfolio of customers in new geographical territories, and expanded, global distribution. Of course, cross-border deals have additional complexities, including cultural differences and diversity, physical distance and time zone differences.
A lot of our new clients have asked us to build MDM business cases to support their merger and acquisition strategies. Specifically, they’re looking to support the following four activities:
- Recent corporate mergers
Collectively, these activities can roll up into a category called corporate restructuring. Contrary to popular belief, restructuring isn’t just a financial challenge. It includes realignment of marketing activities (for instance, reconciling promotions and re-aligning diverse product sets), sales (reorganizing territories and compensation plans), and operational issues (company locations, product inventories). (more…)
I was reading a report the other day about the fact that most M&A activity fails to deliver shareholder value. Apparently 79% of M&A activity ignores IT integration and this then undermines the success of M&A through poor planning and execution of the IT integration process post-merger or post-acquisition. The piece entitled “Mergers and Acquisitions and their IT impact” comes from UK-based analyst firm Bloor Research.
It had me wondering “why?” (more…)