So often, the focus of a post-merger integration technology project is on Day One. But what happens on Day Two – the day after you’ve gone live with your new tech environment?
Although negotiations on your latest M&A deal may have been completed to everyone’s satisfaction - it’s ultimately your customers that will decide the success of your merger and acquisition project.
Will both acquirer and acquired company keep their existing client base? Or will change and uncertainty undermine the position they currently hold in the marketplace? The answer to this very much depends on how well you communicate your company’s intentions, and the degree with which you reassure your customers that it’s business as usual – despite any changes.
This is the last blog of a 5-part series on the challenges of Post-Merger Integration - from the technology team's perspective. See the bottom of this article for links to related blog articles.
Now the technology environments have been merged or separated, cultural differences will appear, and these will underpin the communication between the technology teams, their effectiveness and the impact to future collaboration. But the work does not stop here. All eyes will be on Day Two and Day 100 operations; even though they will have collaborated previously, the new joint technology teams will still be getting used to working together, potentially in new environments with new policies.
Service management will be monitoring the new environment closely to see if these monumental changes have impacted on production services, and, if Transitional Service Agreements are in place, whether these are being met.
This is part four of a series of five blogs discussing the challenges of and recommendations for a successful post-merger integration.
For other essential steps for successful PMI steps take a look at:
A good Post-Merger Integration plan is effectively a sales document that will be circulated and assessed by all parties. Therefore, it needs to be convincing, and it needs to work.
Everyone’s eyes will be on the transformation team’s proposed plan, which will assess the feasibility and associated risk.
IT due diligence – a bit dull, isn’t it?
It sounds incredibly dry, but if you’ve worked in enterprise IT for a while IT due diligence is an opportunity to draw from your past experience, both in tech and management, and produce a deliverable that is a crucial component to company growth – the beginnings of a successful M&A transformation and realisation of return of investment (ROI) on the deal. It is far more rewarding professionally than systems implementation.
What is a Post-Merger Integration?
Mergers and acquisitions, or "M&A," are well-known to many, as they are often reported on in national and international press.
Usually, the headlines are regarding a major deal involving at least one well-known brand, such as when Softbank acquired ARM for £24.3bn, or a more consumer-friendly report informing us that George Clooney sold his tequila firm. Once the deal has been agreed, that’s when the Post-Merger Integration occurs. But what is that, exactly?
I was given my Apple Watch as a very generous present back in 2015 when the watch was first released. I was particularly happy about it because at the time I had a Windows Phone and it wasn't really very good, but I still couldn't justify spending money on a new iPhone for that reason alone. However, the watch completely justified migrating back to an iPhone - big win!
When tasked with a major technology transformation, you will likely need to assess the team capability. Often, the assessment will immediately reveal differences in the team capabilities, and it becomes essential to understand the make-up of the team, how they operate culturally, and how they deliver change within their organisation (and most importantly, not make assumptions!).
The the multi-generational tech workforce presents some challenges, which I will cover in a future post. For now though, focusing on the older technical staff I have observed from on-site one-to-one assessments, reviewing CVs, and interviewing candidates, some big and obvious things, started to appear:
In regards to M&A deals two common observations are made:
- The new company formed (or divested) by the integration project did not reach the intended “deal value”.
- The IT work stream was the most expensive within the integration program and is a major reason why the assumed efficiencies were not met.
Dig deeper, and the one of the major reasons stated for the IT work stream causing extensive costs and delays is a problem with the original IT Due Diligence.