Mergers & Acquisitions: Look Beyond Bean Counting: IT Demands Its Due

M&A is considered to be about financial considerations and synergies, everybody seems to acknowledge
this. Few of the words that you would hear in a typical M&A press release would be: market cap, EBITDA,
topline, bottom line, operational synergies, commonality of target customers etc. It was never about IT, in
fact nobody cared about IT when signing on the dotted line to acquire a new company. However, of late,
there has been a realization that IT can not only be a medium to acquire synergies post-merger but also
could be a potential transformation agent. Given the new age digital companies dotting the Eco space of
business world, IT strength of the Target companies, in fact in a few cases, is the primary driver for M&A.

Fig: Mergers & Acquisitions: IT Transformation & Value Enhancement Map

To ensure a successful merger of IT organizations stakeholders must carry out due diligence to determine
ITs role in aiding the deal thesis. This activity will help clarify the business value that IT will bring to the
merger transaction. Extending the argument that the business integration principles are clear now, these
business principles form the solid bases on which to make other critical decisions. With the clarity on
business integration goals, the IT strategy leadership can decide on the platform that best equips the
merged entity for future successwhether thats using one companys systems, deploying a hybrid mix
from the constituent entities or continuing with disparate systems.

Post merger, while Day 1 IT operations attract the maximum attention, long term IT strategy should be
revisited to look for opportunities to exploit IT as a business transformation agent. Typically, cross selling
and opening of new business avenues for the merged entity throw up incremental revenues and cost
savings, at the same time a profound IT strategy helps organizations to mitigate operational risks in a
transaction. Above Figure shows a sample Value Enhancement Map for an IT Transformation program in
an M&A Transaction.

In short, given ITs critical role in deciding whether mergers deliver the expected value, the key strategic
decisions belong not only to bean counters-financial advisors and strategy consultant but also to IT
executives.