By Jon Milward, director of managed and support services, Northdoor
The high-profile plan for a merger between the mining and commodities giants Glencore and Xstrata has brought merger and acquisition deals to the forefront of the news agenda. The fusion of two separate companies is a complicated process with huge IT implications, not just where multinationals are concerned, but also when smaller businesses choose to integrate.
Key decision makers often place inadequate focus on IT, which can drive up costs and even lead to a deal failure. Yet IT plays a crucial role in any business as it links together and underpins all business functions, from HR to operations and finance. If managed effectively, IT can be a leading vehicle for growth in mergers. Consolidating product ranges, entering new markets, increasing market share or gaining new customers all rely on a reorganisation of the business to a certain degree, which has obvious IT implications.
Including IT in the due diligence stage is central in order for a company to move from integration to innovation. Moreover, a lack of IT due diligence in the pre-deal stage can lead to value erosion. Failure to address IT issues in the early stages of an M&A deal can also have serious operational implications, particularly for day one business continuity and data migration. Companies involved in M&A transactions need to get to grips with the end product IT set up as early as possible, in order to assess the value of existing systems and plan where savings can be made after the merger is completed.
Ultimately, IT is not going to be a deal stopper. However, failing to understand the full implications and impact that M&As have on the IT system could mean increased operating costs at a later stage, and possibly impact on the integration of IT infrastructure, business processes and make creating a unified workforce much more difficult.”
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