36 mergers & acquisitions


M&A: not always as straightforward as they may seem


Many transactions make sense on paper and seem simple from the vantage point of the Board table. But they flounder when it comes to execution – cost savings prove difficult to deliver; ways of working turn out to be inflexible; databases are incompatible; networks can’t connect, writes Graeme Freeman of Freeman Clarke


The first step is to ensure proper due diligence. There are four critical areas that need careful checks:


1 Precisely what hardware, software (including licensing) and facilities are there


2 IT staff, their contracts and arrangements


3 Fitness for purpose of infrastructure, business systems and online (including support and maintenance contracts)


4 Committed or looming costs or risks.


If you’re buying, then be wary of kit or software that need to be replaced; ineffective support or maintenance arrangements that need to be changed; regulatory compliance or contractual headaches (for example, data protection issues or limitations on novating contracts to the new company); and whether there are commitments that need to be unwound where there will be an exit cost or a long notice period. And, if there is bespoke software, can you prove the ownership of that software?


If you’re selling, on the other hand, make sure these points can’t become an issue that will impact your negotiations.


Any significant M&A should be treated as a project, with someone on the Board responsible for delivery of IT and with time to make it happen. Here are three simple phases to give you some structure:


1 Planning 2 Interim arrangements 3 Integrated solutions.


During Phase 1, the planning, you need to consider how infrastructure, business systems and online will be merged. Some parts will be simple and standard, but other parts might be complex, specific or critical to your business, and getting expert advice early can save huge ordeals later.


Phase 2 is likely to be about just creating www.businessmag.co.uk


M&A can be a time to overhaul operations, step up to the benefits of a new scale, and create new momentum


a stable interim arrangement once the deal has completed and you simply want to continue to trade. It’s important to be realistic, to merge the minimum as there will be plenty of non-IT issues to address as a priority.


In some businesses, some simple IT quick wins can really help people feel like they’re part of a new company. For example combined short number internal dialing, or shared internal directories can help people engage with new colleagues, especially in consultancies and other people businesses.


In other businesses all this can wait until later.


However, running two sets of infrastructure and business systems for a protracted period can be expensive and complicated. We frequently see companies which merged years ago but, behind the veneer of one logo, they are stuck at phase 2 - duplicated IT, duplicated suppliers and duplicated costs.


Phase 3 is about creating new, fit for purpose, IT. Remember that a larger business, possibly with new locations and new activities might mean that previous suppliers and previous solutions won’t be suitable at all.


If, for example, you're an online retailer taking on a much larger product set then think about your web platforms and whether they can accommodate this. Similarly, check the suitability of your CRM systems or logistics systems and think about all your suppliers and support providers. In all these cases


careful consideration needs to be given to whether they are up to the job ... your supplier will rarely phone you to say that you’re too big for them now.


Above all it’s critical to establish how the newly merged business will actually work before foisting IT upon it. It’s much easier to change and perfect manual systems and then to automate them afterwards. We often see ill thought-out solutions implemented in a hurry in the wake of M&A.


But it’s also true that the roll-out of new solutions can be the most disruptive phase as the original systems are still running, and now a new one is running in parallel as well. Again, careful planning of the people, process and technology issues will be critical to avoid late nights, unhappy staff and business interruptions.


Data migration projects are a great opportunity to “spring clean”, but this requires involvement of experts from across the operational side of your business as well as IT experts. So this can be an unwelcome drain.


M&A can be a time to overhaul operations, step up to the benefits of a new scale, and create new momentum. But this doesn’t happen by itself and requires strong leadership and good management.


Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it “fractional”) IT directors.


Details: Graeme Freeman graeme.freeman@freemanclarke.co.uk www.freemanclarke.co.uk


THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2014


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60