Training for the M&A Marathon
Copyright © 2017 Tata Consultancy Services LimitedMay 2017
Dave Jordan
Vice President of Business Consulting,
Consulting and Enterprise Solutions
PERSPECTIVES VOLUME 8
M&A: Behind the Scenes
M&A helps companies generate more revenue at lower costs
Such strategies help leverage synergies between two or more firms
Securing those synergies by quickly integrating the firms is a challenge
The Price of Being Unprepared
An M&A is like a marathon: you need to prepare extensively well in advance. Not planning ahead can cause three major problems:
Synergies will take longer to generate
Superior business processes and systems that provide a competitive advantage might be discarded in favor of inferior systems
Valuable IT people might be lost to the competition
Unlocking the Synergies
IT is often ignored during due diligence, even though IT infrastructure and applications power critical business activities
Integrating the IT infrastructure is the biggest challenge after an M&A
To unlock the synergies, companies need to first focus on quickly integrating the IT-intensive business processes and functions
Become an M&A Powerhouse
1. Build an M&A CoE
2. Measure synergies
5. Narrow the integration focus
4. Standardize systems and business processes
3. Know the infrastructure
6. Embrace M&A
1. Build an M&A Center of Excellence
Build a CoE to increase the chances of success, especially when mergers become routine and involve IT-related processes
CoEs should employ core staff and build skills critical to the function they support
The team should learn from every deal and refine best practices
2. Create Metrics for Synergies
Time is a great killer of potential synergies, especially in merging IT-related operations
Organizations need to move fast to gain from and retain benefits from integration
Set up an aggressive timetable to ensure integration efforts are swift and effective
3. Know Your Infrastructure
Starting to look for this information during the integration process can add months to the integration timetable
Organizations need an in-depth understanding of their infrastructure to ensure their best processes are not lost in M&A
Document the different components of the infrastructure to save up to 40% of the time taken to integrate after an M&A deal
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4. Standardize Enterprise Systems
M&A deals bring together different kinds of customized software
Integrating such systems is time consuming and difficult
Adhere to a policy of standardized enterprise systems to make IT integration easier
5. Narrow Your Integration Focus
Only a few processes truly matter to a company’s marketplace performance
In most companies, 70% to 80% of their processes and systems are commodities—infrastructure that does not distinguish the company
Identify processes and systems that are in the core 20% to 30%, then spend 70% to 80% of your time deciding how to integrate them
6. Embrace Continuous Improvement
For companies in mature and fast-consolidating markets, M&A is unavoidable
Mindsets must change—M&A is a necessity to keep companies competitive
Organizations need to have a positive outlook and constantly upgrade their knowledge about IT
Companies with M&A as a key growth strategy need to prepare rigorously for the day when they buy another company
They need to hone their integration skills and learn to capture synergies quickly
Companies that rise up to this challenge will have a powerful advantage in a world driven by scale and cost advantages
Winning the M&A Race
Copyright © 2017 Tata Consultancy Services Limited
Training for the
M&A Marathon
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