Mergers & Acquisitions

When two or more businesses are put together it is generally with the intention to create shareholder value. However, research shows that the majority of M&A activity fails to produce any shareholder value at all. The most common causes are that the target was acquired for the wrong reason or that the acquiring company failed to treat the acquisition correctly.

The most successful companies acquire for the right reasons and fully integrate the target eliminating all duplications and harvesting synergies to the full by following a well defined process.

IT is typically an area that often produces the largest benefits potentially constituting up to 50% of all the synergies - RBS takeover of National Westminster bank and Southern Electrics merger with Scottish Hydro to produce Scottish and Southern Energy.

However, IT is often overlooked as it is put in the too difficult category. This in itself can lead to failure. Correctly handled IT will produce one of the largest synergy savings and once the department has been properly integrated and rationalised it will also inevitably lead to a second wave of benefits as the combined organisation takes advantage of the rationalised landscape and the improved operating environment.

CIO Plus has significant M&A experience in the IT space and can engage at any stage of the process. However, benefits will be increased if the engagement occurs before the due diligence process when the integration plan can be defined and honed.

The only point that all the research agrees upon is that successful companies use a well defined and proven integration process.

Read our white papers on M&A.