Acquire and merge to grow. Your IT?
It is often identified as a root cause of failed M&A and divestiture efforts due to inefficient due diligence and failure of IT to enable business synergies. These same areas, however, are also key targets for significant profit opportunities – and we at Horizon Systems can help you materialize on them.
CUSTOMER CHALLENGES
More than half of the initiatives intended to capture synergies are strongly related to IT. This has to be considered during the due diligence and early stages of post-merger planning.
A successful post merger IT integration already starts before of the due diligence. A neutral assessment of the buyer IT landscape will show strenghts and weaknesses will allow for a structured synergies identification during the due diligence and will give an early impulse on the buyer IT project portfolio to materialize additional effectiveness.
The more flexible and streamlined a buyer’s IT is set up, the higher the value of integration will be. This comprises in getting the inhouse IT in a best possible shape before initiating any deals. CEOs and CFOs should be wary of embarking on an M&A growth strategy that will require a lot of back-end integration if their corporate IT architectures are still fragmented: the risk of failure is too high.
Consider Oracle, which from 1999 to 2004 consolidated 70 internal systems into a single enterprise-resource-planning (ERP) system for all business functions, including sales and finance. This approach saved the company $1 billion annually; more important, it created a platform that supported an ambitious M&A strategy of more than 50 deals from 2005 to 2009. As a result, Oracle can now integrate most acquisitions within six months.
Too often, cost and revenue synergies forecasts are driven by financial formulas or rules of thumb provided by the merger’s advisers. In practice, however, many of these calculations depend on a company’s ability to integrate IT operations—not just IT itself, but the functions that IT enables, including finance, HR, logistics, and customer relationship management.
OUR SOLUTIONS
Mergers and Acquisitions
Our consultants help companies focus on the value that technology brings to a deal. Integration plans are uniquely tailored to the nature of each deal and needs to begin early in the process. We work with clients to assess existing IT environments and capabilities, and then identify the opportunities and threats of changes in business structure through our due diligence process. We work together to develop a tailored strategic IT roadmap and migration plan that is closely linked with the business integration plan, and to guide the IT decisions and actions required to realize the deal’s maximum value and nothing less.
Divestitures and Carve-Outs
When successful companies think about how to manage their portfolios, they think not only about which businesses to grow, but also which to shed. Divestitures require careful orchestration to reorganize and maximize the value of a business’s IT platforms and people. Sometimes, divesting non-core assets allows management to focus its attention on the core business, including its IT strategy.