Post recession, merger and acquisition (M&A) activity is expected to rise; especially
strategic M&As, in which a company buys and integrates another, as opposed to pure financial
plays. With IT playing a strategic role in today's corporate environment, IT research firm Gartner
is of the view that CIOs will be expected to develop mergers and
acquisitions integration capabilities. Dave Aron, vice president at Gartner explains five
critical mergers and acquisitions integration phases where IT plays a key role:
1. The due diligence/planning phase: In most successful mergers
and acquisitions integration activities, integration planning happens concurrently with due
diligence and data gathering, keeping in mind an initial hypothesis. It's a myth that integrations
must be conducted quickly. Rather, planning and communication should be conducted as fast as
possible. The speed of integration depends on the context and goals.
2. The welcome/signaling phase: Here, a limited number of
visible changes are instituted to signal the new reality that the merged organization brings.
Tactics applied in this process of integrating
after
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mergers and acquisitions include giving everyone harmonized e-mail addresses, phone
accounts and security badges, as well as moving key people to different physical locations.
Important outcomes center on setting expectations, reducing uncertainty, and motivating key
staff.3. The initial/commercial phase: This initial phase of mergers and acquisitions integration addresses urgently needed outcomes, which vary depending on the integration activity's nature and goals. Common activities include addressing legal and regulatory issues, as well as achieving transparency through integration of financial and management information. Execution risk is highest during this phase, as a high level of personal uncertainty normally exists, along with transitional governance and project management.
4. The main integration phase: In this phase of the merger and acquisitions integration activity, most of the big process and system changes are executed. Pieces of the post integration landscape are put in place over time, in a series of waves. For absorption-style integrations, it means bringing everything in the target organization onto the parent platform.
5. The reap-the-benefits phase: Remaining benefits such as cost synergies or increased market share are harvested and monitored during this phase of the mergers and acquisitions integration. This phase can also help capture lessons for subsequent M&A activities and other major transformations.