According to Computer Weekly, as many as 70% of mergers and acquisitions have substantial difficulty and often lose market share in the first year. Very often a key factor in the failure or success of the merger comes down to integrating the technology of the two entities. Despite the seemingly obvious importance of technology to a merger, too often companies fail to involve their technology advisers in the merger process at an early point in the discussions. Perhaps this is because too many technology advisers fail to forge close relationships with senior management or don’t speak the financial language of mergers and acquisitions. Skipping this essential early step can lead to a disastrous outcome if technology incompatibilities arise after the merger is already well on the road to completion.
Cloud-based systems improve results when blending separate systems.
There are several best practices for the technology merger process. Here are some practical steps that can help your company plan for success instead of bracing for the worst in a merger or acquisition:
The earlier and more detailed the planning, the better
One of the greatest precursors to a successful integration is to include your technology advisors in the due diligence process before the merger gets very far down the road. Risks, systems, and logistics should be assessed addressed well before the deal even hits the paper. If both companies have a standard architecture and flexible, secure systems it is likely the deal will do well. This is the best time to discover obsolete devices and software that are no longer supported and present security risks. The state of the technology can then become a bargaining point—possibly even affecting the cost of the sale.
Prepare from both sides
The two entities need to make a concerted effort to thoroughly document their technologies. Updated and detailed information regarding equipment, vendors and systems will help facilitate the merger. This is especially important in smaller companies where a few individuals may have knowledge that is personally held and lacks formal documentation. This is the time to agree on a set of standard practices that both parties will use in the new entity.
Only so much can be understood by sharing specifications and diagrams. It is important for each firm to see the facilities and take a close look at the installed technology and conditions. Seeing is believing and a lack of best practices including poor data wiring and inadequate server room conditions can lead to expensive remedies before the transition even begins. A meeting of the key counterparts opens the lines of communication and smooths the way for a successful integration.
Know who is in charge
The organizational flow for the merger needs to have clearly delineated roles and responsibilities. All involved parties must not only know who is at the top of the hierarchy and ultimately responsible to management, but also the chain of command. Individual responsibilities need to be assigned to ensure that the two sides can effectively execute the merger according to plan.
The shorter the time frame, the better
Once all the critical planning and preparations have taken place, there is no time to waste. A seamless transition of the technology, with limited productivity issues and lost data, will create a better climate for both employees and customers. A protracted timeline slows down the workings of the new company which creates unsettled employees, investors, vendors and clients.
An outsourced technology management company can ease the process
An outside adviser will bring a practiced and agnostic eye to the technology landscapes of the merging companies. Their impartial assessment will set the tone for final negotiations, communication between the two entities and a plan for the most efficient, cost-effective way to combine technologies. Ongoing management of the new system ensures that it continues to operate smoothly.
NPI Technology Management has the expertise to manage every step along the way toward a successful merger or acquisition. We know the technology integration process from pre-planning and risk assessment through to integration and support. Our knowledge of cloud-based systems allows us to improve results when blending separate systems.
Invite NPI aboard early to maximize the returns on your merger investment.