IT Needs to Be Valued at the M&A Table

2024/05/06

Posted by 3Capital Partners

M&A is a strategic bet for growth and strengthening companies in the market, increasing competitiveness, aiming to stand out from competitors and attract an ever-growing audience.

In addition to planning financial issues, the synergy between processes and the transition period, it is also necessary to evaluate IT-related points, such as information exchange and system integration. This part does not always receive the attention it deserves, and in today’s article, we will show what the role of IT is in the success of these operations. Check it out!

Why Should We Not Forget About IT?

Despite meticulous planning, an operation can fail for various reasons, ranging from insufficient due diligence to differences in company culture. A potential cause that is often overlooked is when IT is incorporated into the process too late, which can result in a series of problems in the future.

Digital transformation has reached all market sectors, and its impact is evident in business operations. Companies are digitizing and automating all their value chains and processes to accelerate operations, meet customer demands, improve cost savings, and overall efficiency. Despite this, IT is often left out of initial conversations and sometimes fails to secure a place at the table. The impact of not including in comprehensive strategic discussions can be costly, as the pieces of integration are missing.

The integration of technologies and systems is crucial to successfully concluding a deal, but the migration process can vary considerably depending on the IT portfolios involved. For example, consider a company interested in acquiring a competitor. The acquirer may view M&A as an opportunity to significantly increase its market share, diversify its product portfolio with new additions, increase brand recognition, expand into new regions, and optimize costs by eliminating redundancies in back-office operations. However, if organizations use different enterprise resource planning (ERP) systems or have very distinct IT operational models, this will require a complex integration plan to migrate and progressively align systems during the operation.

The importance of these systems is often overlooked until the deal is closed, leaving a very tight schedule to start the integration process. CIOs need to act quickly to integrate new employees, who in turn will need to learn new processes and adapt to a different work environment.

IT Must Be Included as Early as Possible

M&A requires change management at all levels, making it essential to plan IT integration from the start to avoid risks and challenges that may lead a deal to failure.

The role that technology plays in negotiations is increasingly critical in the post-pandemic world. Organizations can successfully manage changes throughout the M&A process by using technology to bridge different systems.

This ensures that the team has the right tools and support to be productive, and that new employees are introduced to new tools and processes through well-crafted integration sessions. Although the M&A negotiation process can be complex, business leaders who integrate IT in all aspects of the process are positioning their organizations for a seamless transition and to achieve business growth.

Changes Require Expertise

The success of M&A processes depends on the speed of both the buyer and seller, as well as the complexity of the business in question.

At 3Capital, we work for the interest of maximizing the value of businesses and recognize that well-done integration is key to the success of negotiations.

Count on a team of experts along with the founder, who follows each step, ensuring quality service and commitment to results.