The global pandemic has created havoc for organizations across all industries, affecting supply chains, customer demand, staff availability and a variety of other critical business factors. These effects have led to an increase in the number of mergers and acquisitions in the United States
M&A activity creates significant challenges for IT departments. These teams should be aware of these challenges, as observers predict that mergers and acquisitions are unlikely to decline in the coming months. In fact, according to a 2022 report from Deloitte, many business leaders expect the number of mergers and acquisitions to increase in the near future. Deloitte reports that 92% of executives expect M&A volume to increase or stay the same in the coming year.
“Most of the acquisitions we see are small acquisitions, which often means a company is looking for a specific capability,” said Michael Bock, director of sales at CDW.
When companies deal with M&A activities, they should pay close attention to IT issues. A smooth IT integration is an important step towards a successful merger or acquisition. This forces companies to establish strategic plans that put in place the integration of data, cloud platforms and personnel and also address security issues, among other things.
DIVE DEEPER: Find out how organizations are overcoming their IT integration challenges for mergers and acquisitions.
Key objectives for a successful M&A
Many organizations engaged in mergers or acquisitions seek to take advantage of economies of scale or expand their talent pools in specific capabilities, says Matt Varin, senior services manager at CDW.
“It’s often easier and more cost-effective to go out and acquire talent than to develop internally,” says Varin. “Talent is hard to spot, so making an acquisition gives you a chance to acquire that talent at scale.”
As companies engage in M&A activity, advises Varin, they should avoid making technology an afterthought. Instead, they should come up with a plan for the transaction. This should include the goals of the business and the steps needed to achieve them, with specific but reasonable timelines that IT teams can meet as the deal progresses.
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The importance of integrating technology platforms after a merger
One of the primary goals of any strategic M&A plan should be to integrate data and technology platforms between merging organizations. “If you are not able to fully integrate and engage in the sharing of data and knowledge that this enables, you are not going to realize the synergies that are the ultimate value that companies seek in a merger and acquisition,” says Varin. “Merging companies need to ensure that there is good collaboration and that they are able to share ideas and data within the new organization.”
Cloud computing solutions have become powerful tools to achieve this goal. Platforms such as Microsoft Azure, Amazon Web Services and Google Cloud make it easy to centralize information involved in a merger or acquisition, Bock says. This makes the cloud a more attractive option in many cases than standardizing on an on-premises solution. “Cloud platforms have taken center stage because they are much more agile and flexible,” he says.
In addition, cloud platforms allow employees of a merged company to access corporate data from anywhere they have an internet connection, supporting work models at distance and hybrids that have been widely adopted in recent years.
READ MORE: Find out why banks need to modernize their applications after a merger.
Security remains a top concern for M&A activity
Focusing on security is critical to successful M&A integration. Bock explains that even in industries that don’t seem to make cybersecurity a priority, like agriculture, data breaches can be a huge problem. This has made security a top concern as IT teams seek to integrate systems.
As organizations consider mergers and acquisitions activity, they pay close attention to issues such as risk assessment, patch management, multi-factor authentication, single sign-on, and network segmentation. A security audit is a critical step when companies engage in mergers and acquisitions, Varin says, so IT teams can identify security vulnerabilities before beginning integration efforts.
Ultimately, organizations that plan their transitions and execute them effectively will stand a better chance of successful mergers and acquisitions.