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Let's Make a Deal

The CIO’s contribution to a merger or acquisition can make a significant difference in mitigating risks and realizing the value related to the deal
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Reflecting the current global economic turnaround, mergers, acquisitions and divestments (MA&Ds) are on the increase. Enterprises are using MA&D to drive growth, reduce costs and acquire assets, such as new capabilities and brands. And despite the popular myth that MA&D destroys value, evidence shows that most deals are positive for all stakeholders. Success it seems rests on clarity of MA&D goals along with a well thought through approach to integration.

The problem is that MA&D activities represent significant challenges for the CIO and IS organization: they involve really complex integration projects with very tight time frames; they demand lots of very tough decisions and the creation of a new decision-making body; and they produce a great deal of uncertainty for IS staff on each side of the deal. That said, MA&D activities offer golden opportunities for the CIO and IS organization too. Opportunities include: a chance to contribute beyond IT leadership by taking a leadership role in business integration; a chance to support staff growth by giving them an opportunity to develop new capabilities as the post-deal merger progresses; and a chance to improve infrastructure and business applications.

Taking the time to cultivate relationships with the target CIO and IS staff at an early stage will pay off many times over

From a CIO and IS perspective then, preparing for MA&D needs to start long before the deal is announced and preferably long before it is even a glimmer in the M&A team's eyes too.

Plan the integration before the deal is done. The first step is for the CIO to work with the senior business team to define and agree on the appropriate role for him or herself and IS in each of the deal's phases. CIOs who get involved earlier in MA&D deals tend to take a more positive integrative viewpoint, rather than an IT functional one. Beyond providing IT functional leadership in the deal, information-integrator CIOs often provide leadership throughout the whole deal in areas such as project management, measurement and reporting; risk assessment, monitoring, mitigation and reporting; and legal issues, including intellectual property. They also bring together information to help the due-diligence team make decisions that are optimized for the deal as a whole, not just for each functional part.

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More about: BIAS, Evolve, Gartner, Vantage Point, Viewpoint

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