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There are three stages in the M&A IT lifecycle: preparing for an anticipated
merger (Fit to Flex), assessing the suitability of the target company's IT (Fit
to Buy), and integrating the IT to support the new business (Fit for Purpose).
Fit to Flex
M&A is a dominant item on the CEO agenda and this is unlikely to change
in
the next decade. As a CIO, you should:
- Ensure strategic fit between IT and the business it
supports
- Implement a flexible structure that anticipates business
change e.g. be ready to outsource
- Design process enabling systems e.g. around service
Fit to Buy
An acquiring business will
want to make an investment decision based on the worth
of, and the risks associated with, the target
company. IT due diligence informs this decision-making
process and provides:
- an assessment of the target
company's IT
- quantifies any risks to business continuity
- outlines the required operational and capital expenditure
for the first 12 months of the merged
company
- identifies the opportunities for synergy
- defines
the high level integration plan.
Fit for Purpose
Two thirds of acquisitions fail to create shareholder value.
Integration is the single most important factor influencing
acquisition success.
IT benefits are typically delivered in three phases:
-
Day 1 imperatives
-
Year end transition projects
-
Post-merger realisation programme
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