Buyer Beware?

A recent interim role opportunity advert listed among the required skills “extensive mergers and acquisition (M&A) experience” but on further discussion the need really seemed to be focused on systems integration.  Clearly the ability to plan a sensible integration of two or more corporate IT landscapes into a strategic coherent whole is critical in a M&A context, including re-conforming previous decisions on delivery models still meet the needs of the organisation.  However, there is equally value, potentially more value,  to be gained from engaging the CIO prior to the deal being struck rather than simply to handle the consequences.  If the acquisition is not a technology company it can be very easy to ignore hidden value or costs within its IT assets, a relatively trite example being that buying a company today with only Microsoft XP deployed on very aged computers will very quickly present a potentially material investment cost.  In a previous role I was taken along to a newly acquired company in Germany by my regional CEO on the Monday morning we took possession.  The employees joining the company were there bright and early in the very smart office but there was no IT kit on any desk as the detail of the deal had failed to actually acquire those assets; hard to believe but a true story.  It was this incident that made it very easy for me to insist on the IT team being engaged with any acquisition deal right from the start and being part of the final buy decision review process.

If anyone is needing convincing of the criticality of IT and its leader on successful M&A then point them at this excellent McKinsey article from 2011, Understanding the strategic value of IT in M&A.  If M&A is all about finding synergies then the McKinsey statistic in this article that over 50% of those synergies tend to relate to IT probably wins any debate on why CIOs should be actively engaged from the twinkle in the eye stage through to the fully integrated with no seams showing outcome.   This argument holds true if you are part of the divesting team equally and a compelling articulation of the strength of the corporate technology and how it is designed to enable rapid and low cost integration could well help close the deal.

I do struggle to understand why the CIO role in M&A is open to question but at a recent industry event I found a number of CIOs that were feeling excluded from the decision process and very concerned at the potential consequences that they would inherit and have to resolve.  The common pitfall it seemed to me listening to the debate was to express the imperative in technology terms rather than using business language and describing the concerns in terms of business outcomes that would be thwarted as well as the clear attention grabber of how much money getting the IT assessment and integration plan wrong could require.  I’m not sure it can really be that simple, but then again perhaps it might just be that straightforward?

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