Our publishing schedule called for discussing IT’s role in supporting Merger and Acquisitions. We seriously questioned the applicability of this topic at this time with IT at the forefront of helping organizations keep afloat, and people stay connected. Never have I been more proud of my IT friends and colleagues than now. They are doing what they do naturally and have stepped up to the plate to expand remote working capabilities and improve security foundation quickly.
As we thought through this decision, we came to a sobering realization. There will be a tomorrow that will bring change represented by challenges and opportunities. One of the opportunities that may be driven by challenges is an upswing in mergers, divestitures, and acquisitions. With that realization, we decided to move forward with the conversation as planned.
M&A Consideration Overview
Lets’s start with an overview of the standard framework, often referred to as the Mergers and Acquisitions (M&A) Playbook. M&A literature abounds, but M&A Playbooks all have a similar table of contents. For IT, the chapters are sure to include:
- The M&A Playbook: Have a playbook of the well-defined yet flexible process; if you do not have a playbook, develop one. A well-designed playbook is analogous to a good cookbook. It focuses on the basic methods and properties of different ingredients before getting to the actual recipes.
- M&A Resources: If M&A is core to your company’s growth strategy, keep IT M&A integration expertise on reserve ready to be called up as soon as confidentiality considerations allow. Obviously, you will not keep an entire team on the bench between M&A deployments, but you should identify who on your team can be called on to lead the next charge.
- Due Diligence: Get invited to join the Due Diligence team early in the process. This will allow you to more accurately forecast the scope for carrying out the integration and assess the acquired company’s IT landscape. You can shed light on the state of maturity in each of the acquired company’s IT domains by how readily they can address the standard list of Due Diligence questions about hardware inventories, business applications portfolio, IT business management practices (including budgets, contracts, and expense schedules) and the skills and competencies of their IT human resources. Information discovered through the Due Diligence process is essential to the Integration Planning process.
- Integration Planning: There is often a more or less self-evident logical order to the projects that make up an M&A program due to inherent dependencies. Assemble and field your team(s), establish secure connectivity, harmonize e-mail (roll out new while maintaining access to old), triage, and plan business application integration.
- Day 1/Welcome: This will be the only chance you will get to make a good first impression with many of your new colleagues. Organizational Change Management (OCM) is especially crucial for Day One activities. Plan and execute wisely!
- Integration Execution: While executing on your Integration plan, you will be balancing on the tight rope between two competing imperatives. Execute as swiftly as possible while minimizing the inevitable disruption to the business (both the acquirer and the acquired).
- Monitor Benefits Realization: The IT Business Office often spearheads this agenda. Identify and quantify cost reductions or cost avoidance enabled through an economy of scales and/or portfolio rationalization.
The M&A Gap
What too many M&A playbooks lack is the details for a robust Organizational Change Management (OCM) Plan. Your OCM Plan needs to be developed well before the deal closes as change management is critical to the success of your M&A program and you need to be prepared to execute specific OCM tasks as soon as the transaction is announced. IT should partner with Corporate Communications, Human Resources, and the business stakeholders in the various M&A project teams to coordinate corporate-wide change and corresponding communications and training for the acquired company’s employees and, as appropriate, the acquiring company’s employees. Your OCM Plan should also include customers, suppliers, and other external stakeholders.
M&A Organizational Change Management
IT needs to ensure its messaging is consistent with corporate goals and policy statements, is timely, and is as transparent as possible. To do so, you must be clear on the M&A goals (increase market share, new business capabilities). Integration approach (run acquired company as a stand-alone entity, adopt best practices from either acquiring or acquired company, implement acquired company systems and processes or some hybrid of the preceding options) as these should inform your OCM Plan.
Be sensitive to the human element. Many of us in IT are strong in the myriad of technical aspects of M&A integration. Unfortunately, given our fixation on objective analysis and drive towards effective and efficient solutions, sometimes we are quick to overlook or dismiss the adverse phycological impact of change. Expect resistance to change and develop mitigation strategies. Arrange to have thoughtful mechanisms in place to address the fear factor proactively and honestly. Enable feedback and two-way dialogue to provide a means for on-going stakeholder engagement.
To know who needs to know what and when, it is helpful to make it your business to learn who is who, who is where and what is where. Get to know the organizational structure of the acquired company(s). Then use targeted communications as a tool to enable change.
A simple OCM framework for each IT project in an M&A program is as follows:
- What’s coming when
- What is the impact
- What actions, if any, are required
- “What’s in it for you”
- Specifics on IT policy changes
- Specifics on business systems changes
- Training program and schedules
- Go Live announcements
Do not allow OCM to become an afterthought in your M&A Playbook. Instead, have a master OCM Plan and weave its well-coordinated components through each M&A phase inside and outside of IT.
Every chapter of the M&A Playbook warrants careful consideration. If tomorrow is likely to bring M&A opportunities your way, my colleague, Mary Patry, and I are available to discuss how to improve your M&A planning and execution.
Today, we send along with sincere wishes that you and yours remain healthy and hopeful. In support of that wish, Mary Patry is offering to help a limited number of CIO on a complimentary basis if you find you need a trusted colleague to bounce ideas or sharing in helping to solve a problem.