The challenges for IT when handling an M&A project can be quite daunting to say the least. But before we go down those winding, twisting roads, I'll start with an overview of the different types of projects we tend to come across related to M&A deals.
M&A refers to mergers and acquisitions. These are the deals that companies enter into for various business reasons including growing talent quickly, expanding product lines or entering new markets. For the IT project manager, these types of deals and decisions result in one of several scenarios.
I have yet to be involved in a merger project. In my mind, a merger is the joining of at least two companies to form a new combined corporate entity. The original companies would typically be comparable in size and enter into the deal more as partners on somewhat equal footing in terms of control and influence. Needless to say, the IT challenges of a merger could be enormous. Again, I haven't had the experience of working on such a project, so I'll certainly spend more time on the other scenarios.
Acquisitions involve, well, the acquisition of a smaller company by a larger company. Dare I say it, assimilation? From an IT perspective, this typically involves figuring out how to bring a smaller company's infrastructure and data into the greater corporate IT environment. I might add that a key challenge of acquisitions is executing this transition without damaging things like culture, process and work efficiency of the acquired company.
Divestitures are the unnamed scenarios of M&A. Sometimes we talk about M&A&D, which makes a nice TLA. 🙂 A divestiture typically involves the sale of components of one company to another company. This is different than an acquisition in that only a piece of a company is being acquired by another. Although one company's divestiture is in fact another company's acquisition. Interesting, no?
Finally, I must include another scenario which seems to be quite common these days, the site closure. Although not exactly an M&A style effort, the site closure is often the ultimate end of an acquisition. Although I am far from an experienced operator when it comes to M&A, I've been around the block enough to see the pattern...big company acquires smaller company...big company extracts value out of acquisition, or not...a few years pass...acquisition site closes. Of course, I have also seen acquisition sites become key facilities for ongoing operations. One interesting twist with site closures is that they can sometimes turn into divestitures. More on that later.
In a nutshell, these are the four major categories of projects we consider within the IT M&A scope. I will elaborate more on each scenario in future blog posts. Stay tuned!
I'm curious to know what kinds of M&A projects have impacted IT at your company?
Disclaimer In Plain English: My efforts are focused on IT systems integration (or the reverse) and I have no involvement with M&A business negotiations or decisions. I have no knowledge of and cannot comment on or answer questions regarding specific deals, either announced or unannounced.