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Episode 11: The One About M&A

By -c

As companies navigate mergers or acquisitions they invariably run up against sticky post-merger problems that often prevent them from realizing their potential. Here are 6 things to consider when thinking about M&A.

We Discuss:

  • What are the major areas prone to M&A failure? (Hint: Security)
  • Why do so many deals fail? – What role does technology play in M&A failure rates?
  • What is the impact of culture on deals that work out great?
  • What can consultants do when working M&A to help ensure good outcomes?

Key Highlights:

  • Complex things like IT Security are very hard to get right in M&A if systems are disjointed; interfaces need to be well-defined (10:22)
  • Most underestimate the effort required to merge the IT systems in M&A which leads to an inability to realize anticipated benefits of the merger (17:18)
  • Decisions around IT consolidation should be driven by business case, not a general desire for simplification (22:01)
  • Leaders understand IT is a huge component of post-merger integration but need business cases to justify and fund changes (29:12)
  • The focus should be on business integration first, then IT integration follows (31:16)
  • Collaboration between business and IT is key to successful implementations of large scale things such as ERP systems (32:34)
  • Don’t overcommit to shareholders on M&A targets; added pressure leads to failure (40:13)
  • Prioritize financial reporting stability for day one post-merger (40:39)

6 Takeaways:

  1. Legacy technical debt, like outdated systems and programming languages, can necessitate more IT consolidation post-merger (26:47).
  2. Effective security in M&A scenarios requires broad organizational maturity as most business leaders don’t understand security implications (32:52).
  3. The business drives M&A decisions based on strategic goals, not to acquire IT systems, so technology enablement should align to business needs (33:36).
  4. Cultural alignment and change management are critical for integration success but often overlooked in M&A planning (35:25).
  5. Customer impacts from the merger like billing changes need consideration in addition to internal system transitions (37:57).
  6. There are often unknown cultural nuances in an acquired company that must be learned in M&A before full value realization (39:42).

Check out the Audio-only version of this episode!
Episode 11 – Audio Only