Mergers & Acquisitions 

IT mergers are exciting and hold great opportunities for the companies involved. However, the uncomfortable truth is that mergers are still an inexact “science” and a significant percentage of IT mergers fail to meet expectations, or fail altogether. This is a point of commonality in all mergers, IT and otherwise: dangers may be underestimated or disregarded and many organizations do not see problems until they are squarely in the middle of them.IT Mergers

There is no foolproof means of avoiding a failed IT merger, but there are certainly steps to be taken that minimize the dangers and provide a foundation for success. Most important is being aware of how IT failures most commonly occur and avoiding those scenarios.

Here are some of those common reasons for IT merger failure:

Letting emotions cloud judgment. Sound and rational analysis should form the basis for any merger operation, however senior leadership can get caught up in the emotions of the deal. In the IT world, this typically results from excitement over access to new technologies, anticipation of synergies that promise huge cost savings, and/or enthusiasm for the potential of new markets. When emotions take hold, enthusiasm can turn reckless and even exemplary organizations can fall victim to unreasonable expectations.

Loss of perspective is usually the first casualty of emotional thinking. Deep into the merger process, resource expenditure may be substantial and emotional thinking pushes senior executives to complete the merger at any cost. The tipping point may be ignored, where the merger is no longer good for business. Smart IT companies realize that momentum should not be the driving force behind a merger.

Companies that ignore red flags during the merger process also set themselves up for failure. These red flags are typically revealed in the preliminary analysis, but may be ignored if enthusiasm is running high. Red flags should be thoroughly analyzed and examined, to ensure they are not the harbingers of a disastrous IT merger failure.

Information Technology MergerInformation Technology MergerDon’t let emotions cloud your judgment when analyzing an IT merger: enter with a clear head and let facts speak for themselves.

Information Technology MergerMismatched organizational cultures. Not just mismatched, because many differences can be either papered over or bred out in short order, but rather diametrically opposed organizational attitudes that spur almost immediate conflict. These mergers fail because the resulting organization is at war with itself and has no energy left for profitable operations.

Trying to reconcile two opposed cultures typically devolves into a siege that exhausts organizational resources, destroys morale, and leaves bitter feelings all around. This often happens when companies with a more traditional portfolio attempt to enter the IT market. Think of News Corporation and its disastrous acquisition of Myspace. The writing may have been on the wall already for Myspace, but the two corporate cultures were incompatible.

Think also of Mattel merging with The Learning Company, to access new markets in software and technology. The toy and entertainment culture of Mattel was a poor match for the education culture of The Learning Company, and the result was a near disaster. The lesson: know before the merger that the organizational cultures are at least broadly compatible.

Faulty governance and integration. Integration begins with establishing a clear chain of command, so everyone knows who is accountable for what, as well as who is responsible for giving orders. In an IT merger, companies often must cope with initial overlap in responsibilities among middle and senior management. During this initial merger period it is crucial to establish governance protocols, to prevent debilitating battles for authority and territory.

Turf wars are one of the almost inevitable results of an IT merger, however letting them spiral out of control is what marks the failures. Conflicting organizational cultures (see above) may be partially to blame, but it’s more likely a natural occurrence from having ambitious employees who are interested in preserving their jobs (and their opportunities for advancement) intact. At the top, CIOs may lay claim to duties better handled by a CTO, and vice versa. Below that, upper and middle managers jockey for influence and acclaim.

The solution: settle governance issues before the merger and create a clear understanding of who is responsible for what. Afterward, adjustments can be made in response to realities on the ground, but don’t go into a merger with governance issues up in the air.

The clearest lesson from all of this: take nothing for granted. Even when you think everything is going right with an IT merger, be aware that failure is still a possibility to guard against. IT mergers can be full of opportunities and profits, but even the ones that seem obvious and easy can hide perils.  This is why it is best to get the advise of a Professional IT Mergers Company who has been through every scenario.  A second set of eyeballs on your situation could be the difference in a success and failure