Managing Mergers and Acquisitions in the Digital Age: Questions Every CIO Should Ask
Technology is more important than ever to successful mergers and acquisitions. StrataFusion Partner Jim Murphy provides deep expertise to navigate complex M&A scenarios. Here are some of the key questions CIOs and IT should be focused on to navigate the M&A journey.
Your company decides that it is interested in making an acquisition. Now what?
It’s a rare CIO that hasn’t had to deal with supporting merger activity at some point in their career, but caution should be exercised before assuming that a prior playbook is a fit for what may be in front of you. No two mergers or acquisitions are exactly alike. While the need for speed is great, first take a moment to be sure that you understand what type of M&A activity you’re facing so that you know how best to get things moving in the right direction.
There is no accepted industry standard to characterize the different types of M&A, but there
are some basic questions that need to be answered up front to help determine your strategy.
First, it’s about understanding the business landscape. Is the acquisition to supplement product, customers, supply chain, IP, personnel, or assets? Is the move to take on a competitor? Is it about expanding into an adjacent market? Or is it about trying to address scale?
Next, and more specific to IT, what applications critical to business value does the acquired company run? What can potentially be replaced with what you’ve got in an ‘adopt and go’ manner? How strong is their IT staff and are they respected by their business partners? How is their infrastructure and is their cloud strategy consistent with yours?
Finally, in what locations do they operate? How solid is their security and compliance management? What risks might they introduce for you? Is there an opportunity to improve your overall architecture or are the risks so great that you’ll need to lock down and reduce your current POR?
Once you’ve digested questions like these, and many more, you can determine your strategy and guiding principles. Congratulations! You’ve completed step one and can now start the work of setting priorities and fleshing out a plan.
M&A activities are complex, critical and have high visibility. Often, the timelines are set, the scope has many non-negotiable deliverables and the budget is less then you’ll want. The good news is that there is a wealth of knowledge you can tap into. Getting help to ensure that the very first steps are in the right direction can be your most important planning decision.