Академический Документы
Профессиональный Документы
Культура Документы
IT M&A Playbook
What brings repeated success in mergers and
acquisitions? What ensures that IT does not cause
a deal to falter? A playbook that makes IT integration
faster, better, and future-proof.
Information technology plays a crucial role in any M&A. When IT fails in M&A, the repercussions
are felt far more deeply than the failure of any other function, not least because IT is the lifeline
of nearly every aspect of business operations. Our global merger integration survey found
that more than one-third of failed acquisitions are the result of unaddressed IT issues. IT issues
can sink a perfectly good acquisition, cause post-deal crises, lead to acquisition aftershocks,
and result in missed opportunities to innovate (see sidebar: IT Implications in M&A).
IT Implications in M&A
IT is never the sole reason for an
M&A, but it can easily be a deal
breaker, or at least a delayer. One
European services company
postponed an acquisition by
more than six months because
of the substantial investment
needed to integrate the targets
IT into its own centralized IT
organization. In another case,
the merger of two banks failed
when they discovered that
combining their respective
IT systems would require too
Figure 1
A holistic playbook covers M&A from planning to completion
nin
rg
an
me
ri
nt
eg
er
pl
Reduce risks
Du
ed
il
Po s t-
Execute plans
on
ati
liz
a
e
ce
en
ig
Syn
erg
yr
Reap benefits
rati
on
Me
rg
The playbook should not be merely a prescriptive set of processes and activities.
It should be flexible enough to handle
different scenarios.
IT requirements vary depending on the type of acquisition. The most common M&A scenarios are
shown in figure 2business extension, bolt-on acquisition, full acquisition, and merger of equals.
In addition, M&As may also need a simultaneous divestment or an IT carve-out to satisfy
regulatory and competition commissions, and the playbook will need to accommodate this.
An IT integration team must be able to apply the playbook, whatever the M&A scenario. Different
acquisition scenarios can be factored through route maps, which provide a navigation path
through the playbook, making it easier for team members to comprehend the scope of their
work. Based on the acquisition type, a route map guides the team through configurable
processes, tools, and accelerators that can be adapted to specific needs of the M&A.
Figure 2
Four scenarios for merging IT organizations
M&A
scenario
1. Business
extension
(diversification)
Acquirer
Target
2. Bolt-on or
carve-out
acquisition
Acquirer
Target
3. Full company
acquisition
Acquirer
Target
4. Merger of
equals
Acquirer
Target
Mainly
data
A+T
Typical IT
integration
model
Loosely coupled IT
Adopt acquirers IT
Select IT
of one party
Best of breed IT
IT
implications
Limited IT synergies
Minimal impact on
IT operations
Consolidation of
data required for
financial and
management
reporting
Low IT synergies
Low impact on
IT operations
Data migration
crucial
More involvement in
day-one planning
efforts
Acquirer IT work
typically unaffected
and current
challenges remain
De-commissioning
of IT systems
Revoking of licenses
that are not required
High synergy
savings opportunities
Future IT involving
common infrastructure, central core
support, and
distributed valueadded IT capabilities
As-is acquirer
IT organization
Acquisition targets
IT organization
Incorporate connectors with other business functions. IT does not work in isolation during
an integration, and its interactions with other work streams are crucial to M&A success. These
interactions, or connectors, work best when they take into account the needs of other business
functions to ensure alignment and to facilitate coordination (see figure 3).
In an advanced level of the IT M&A playbook, connectors provide a plug-and-play approach
to help manage the overall M&A. Increased efficiency is the biggest benefit of this approach, as
it shortens the acquisition cycle and hastens the capture of synergies. Without these connectors,
IT integration programs suffer time and cost overruns. Since IT has become the backbone
of virtually all business enterprises, having these connectorsand getting them right at the
appropriate junctureis imperative for M&A success.
Accelerate the process. Aimed at shortening the M&A timeline, accelerators are checklists,
tools, and templates needed to manage the M&A effectively. Ranging from IT due diligence
questionnaires to IT synergy-realization templates and benchmarks, the accelerators span all
four phases of the M&A life cycle. The playbook should include examples of these accelerators
from previous acquisitions to help integration teams jump-start their activities and to accelerate
the learning curve for new team members.
Live by lessons learned. Every integration is unique, so it is essential that integration teams
learn from past lessonsboth positive and negativeand update their approach for future
deals. The lessons range from important missed activities to poorly timed interactions with
other functions, communication methods, benchmarks, and contractual arrangements. Keep
in mind that it isnt just your own M&A that offers valuable lessons. There is much to be learned
from watching other mergers or acquisitionseven those in other industries.
Figure 3
IT connects functions and work streams during integration
Illustrative
IT focal point
Website migration
Procurement
IT contract rationalization
synergies
Retention and
severance
IT people movement
HR policy changes
Facilities
Future location
strategy
Future IT services
demand
Cutover synchronization
Finance
IT synergy estimation
and tracking
IT integration budgets
Overall integration
framework
M&A team
Deal logic
IT due diligence
Communications
On-boarding
communications
Branding
Cases in Point
The value of a structured IT M&A process is illustrated by some examples of companies that
reaped substantial benefits and credit the playbook approach for turning integration from
an art to a methodical science. The playbook allowed each company to do it quick, do it right,
and keep IT going (see figure 4).
Figure 4
Turning integration from art to science
Do it quick
Do it right
Keep IT going
Do it quick. An engineering services company credits its IT playbook for its ability to complete
due diligence within two weeks, integrate all financial data within four weeks, and decommission
systems within four months. The companys senior leaders say the IT M&A playbook approach
has become the most significant component of their acquisition strategy.
Do it right. A global telecom company integrated its M&A targets within six weeks on average
by employing a highly structured process. The company also achieved an unusually high
employee retention rate of 80 percent in its acquired companies, thanks mainly to its seamless
integration processes. In another example, a major conglomerate used an integration complexity
grid within the playbook to identify unconventional aspects of any deal that might require
a customized integration approach.
Keep IT going. A global news organization incorporated a comprehensive IT integration
process to ensure that continuity and performance are never compromised during integration.
The company completes roughly one integration per quarter, with more than 60 percent of its
IT staff participating in the integration process.
In short, the IT M&A playbook not only increases the speed and reliability of integration, but
also helps reduce costs while ensuring a seamless acquisition and long-term success. This can
also generate important intangible benefits: better employee retention, a consistent process
driven by internal discipline, better development of core competencies, and an IT capability
that is reliable throughout the acquisition process.
Figure 5
Putting the playbook into effect
Train people
Source: A.T. Kearney analysis
In other cases, rapid mobilization and incorporation of IT team members can start with
establishing a baseline understanding to build upon before the project starts. We find that
showcasing the playbook in interactive road shows is an effective training tool and an
excellent way to achieve initial buy-in.
Integrate across functions. An M&A playbook is a structured set of processes that brings all
functions together to help things run smoothly and quickly. An IT M&A playbook must be a subset
of the larger holistic M&A playbook. Some succeed in having M&A playbooks in place for various
functions, and their experience points to similar structures and implementation attributes
as key success factors. Similar structures refer to the breakdown by phases in the M&A life cycle,
relevant processes and activities, and supporting accelerators and examples in all playbooks.
Implementation attributes are the playbooks access mechanism, design, layout, and delivery
formatall of which should be consistent across function areas.
Sustain and improve. Continual monitoring and improvement will keep the playbook relevant.
Incorporating lessons learned and best practices from previous deals and using examples
to illustrate success stories are just as important as outlining processes and activities. For
example, pulling data from previous integrations into your cost and time estimations can
improve the accuracy of future estimates, and including retained staffs feedback will help
assuage anxieties and expedite integration and a return to business as usual.
Authors
Charles Hughes, partner, London
charles.hughes@atkearney.com
The authors wish to thank Amit Jhinzuvadia for his valuable contributions to this paper.
Atlanta
Calgary
Chicago
Dallas
Detroit
Houston
Mexico City
New York
San Francisco
So Paulo
Toronto
Washington, D.C.
Europe
Amsterdam
Berlin
Brussels
Bucharest
Budapest
Copenhagen
Dsseldorf
Frankfurt
Helsinki
Istanbul
Kiev
Lisbon
Ljubljana
London
Madrid
Milan
Moscow
Munich
Oslo
Paris
Prague
Rome
Stockholm
Stuttgart
Vienna
Warsaw
Zurich
Asia Pacific
Bangkok
Beijing
Hong Kong
Jakarta
Kuala Lumpur
Melbourne
Mumbai
New Delhi
Seoul
Shanghai
Singapore
Sydney
Tokyo
Middle East
and Africa
Abu Dhabi
Dubai
Johannesburg
Manama
Riyadh
For more information, permission to reprint or translate this work, and all other correspondence,
please email: insight@atkearney.com.
A.T. Kearney Korea LLC is a separate and
independent legal entity operating under
the A.T. Kearney name in Korea.
2013, A.T. Kearney, Inc. All rights reserved.
The signature of our namesake and founder, Andrew Thomas Kearney, on the cover of this
document represents our pledge to live the values he instilled in our firm and uphold his
commitment to ensuring essential rightness in all that we do.