The first and probably most important prerequisite for a successful merger or acquisition is that you have a complete and well-defined future brand and value proposition for the resulting company. Next, you should perform a thorough due diligence process, not only looking at financial and contractual obligations, but also at the enterprise architecture focusing on business processes and the application portfolio, maybe with even more scrutiny.
The strategic benefit of a merger or acquisition does seldom come from a bigger turnover, but from economies of scale within administration and other support processes as well as from synergies between technologies or product development.
If there are large differences in vital business processes and consequently in supporting IT-systems, it will result in a big and comprehensive change and IT project. Unfortunately such projects are expensive, long running and risky. It is therefore vital that knowledge on scope and risks of such a project is available before the merger or acquisition is executed.
One place to look for help in completing this part of the due diligence process is CobiT; particularly the Risk IT part would be relevant in the process. In addition to the standard itself, ISACA produces an extensive set of guidance. Among them a guide for IT audits. Parts of this guide can be directly used in the process.
Beside the IT Governance standard, CobiT, a pretty good understanding of enterprise architecture is necessary. The people participating in this part of the due diligence process must be able to identify IT issues that are easily solved as well as those only solved with great difficulty.
If you have the future brand, value proposition, business processes and infrastructure under control, it will be possible to evaluate the consequences and necessary changes to culture, processes and infrastructure and then decide on the financial and legal possibility to complete the merger or acquisition with a positive outcome.
Hi Erik
First of all it is an interesting blog post you have composed and published.
I do have a comment or two that I want to share with you on this particular topic.
Erik:
" Unfortunately such projects are expensive, long running and risky. It is therefore vital that knowledge on scope and risks of such a project is available before the merger or acquisition is executed."
IT projects (as well as all other forms of strategic projects) are influenced by time, and time itself can have a great impact on how well the IT (or business) project impacts the enterprise. The change program that is needed in order to join the two enterprises is influenced by time.
Time itself includes the moves of the competitors, suppliers, customers, local government, technology and culture. These elements will alter the potential outcome of the projects or programs. In order to develop, complete and implement the projects on time to crystallize the potentials of the projects, resources (manpower, money and time has to be committed) have to be committed.
I haven't seen evidence that a particular framework or concept has made the time consumption on M&A lesser resource demanding.
However I am sure that in the long run the enterprise could crystallize the hidden potentials of the joint architecture by applying Enterprise Architecture and / or IT governance approaches like CoBIT.
Erik:
"One place to look for help in completing this part of the due diligence process is CobiT; particularly the Risk IT part would be relevant in the process. In addition to the standard itself, ISACA produces an extensive set of guidance. Among them a guide for IT audits. Parts of this guide can be directly used in the process."
When in the M&A process should IT and EA be included? Usually an EA program takes time and resources to establish and in a process where the enterprise has to move fast to crystallize moment and potential it would seem like it is the gut-feelings of the decision makers that are central.
Best wishes,
Peter F. T. Sjoelin
- Login or register to post comments
>