Mergers and Acquisitions

Acquisitions, divestitures, joint ventures, or mergers are simply transactions of a business strategy. The ultimate objective for Merger and Acquisition (M&A) deals vary, however, they are generally intended for:

  • Increasing stakeholder value by obtaining market share
  • Expanding and venturing in new markets
  • Acquiring new skill sets and/or products
  • Optimizing a process or component in the value chain

Based on the scale and complex nature of such transactions, disruption in the overall structure of an organization becomes significant, and CIOs along with the IT team can lose focus.

The United States is experiencing a year-over-year increase in the technology deals. This of course goes down to the sector union and innovations in the industry. Cross border mergers and acquisitions have increased by an impressive 78% in 2010, thanks to the increase in activity in countries across Asia and Europe. As a matter of fact, Asia topped the M&A deals in 2011 as the region experienced the highest value in asset management. Japanese companies stood out from the rest, as their aggressive overseas buying in 2011 saw many of their counterparts become ‘Asian’. These cross border business transactions will only look to increase since the global economy is showing stability and businesses today look to expand beyond the borders when it comes to market share.

On the other hand, CIOs have to be aware of the fact that about 50% to 60% of the M&A transactions never create any incremental value to stakeholders. Failure in post-acquisition integration is the most common cause of this rate. However, CIOs with IT personnel have outlined the potential drawbacks in an M&A cycle. A survey was conducted in the University Of Arizona Eller College Of Management, which highlights these drawbacks as:

  • Failing to involve CIOs in the preliminary stages of planning and operations of an M&A
  • Inadequate addressing of the individuals and the resistance from the organization towards change
  • Inadequate efforts in due diligence
  • Failure in planning staff retention
  • Failure in moderating the culture clash between the IT and associated organizations
  • Ignoring risk assessment
  • Ignoring just in time (JIT) IT training prior to ad after the systems are integrated

Merger/ Acquisition Management

M&A transactions provide access to new markets and products. Revenue gains may materialize…

Business Objectives

M&A transactions may appear straightforward from the outside, however the relatively high rate…

Identifying Benchmarks

The merger and acquisition process always includes a a pre-phase in which the ultimate decision…