Mergers and acquisitions traditionally involve intricate
planning over several months or even years. However, in recent
weeks the economic climate has meant that this tradition has been
dispensed with by many.
The M&A market is now very different. Companies are having
to be swiftly rescued from collapse in order to preserve businesses
and safeguard jobs. There are numerous examples, but the one that
probably springs to most people's mind is HBOS and RBS.
It is not just the financial services sector that has been
impacted though. Retailers are also suffering
Woolworths has been the first major victim of being unable to
find a buyer in time.
In a fluctuating climate, well established due diligence
processes are being sidelined and the result is that internal
process such as IT are left in a state of chaos as they scramble to
integrate disparate systems in a matter of weeks where it would
normally take months. This begs the question: are these companies
setting themselves up for a fall?
Although speed is crucial, it is essential that businesses drive
efficiencies from their M&A activity. Consumers are not
concerned if you have only just merged, they expect a business as
usual approach - if you cannot give them what they want, then they
will go elsewhere.
Few will give your newly merged company a second chance.
Investors too are extremely wary of the risk that M&A brings
and will flee at the merest whiff of trouble.
So how can companies ensure their merger is a success in a
climate that does not allow for an extended due diligence
process?
IT is the absolute backbone of any organisation and as such it
is vital to have complete transparency during M&A. Companies
need to ensure that they have complete visibility and control of
business processes.
This will help them to better understand what they have, how it
all fits together and recognise gaps - if any exist. More
importantly, it drastically increases the chances of the merger
being a success. After all what is the point of acquiring a
company, only for the new organisation to fall over in 18 months
time?
A lot is being asked of IT. Not only does it have to rapidly
bring together two infrastructures, it has to do it in a way that
creates a platform for innovation and ongoing competitiveness. At
the heart of this is instilling agile business processes that allow
the companies to adapt to rapid change.
A dynamic and responsive organisation is more likely to drive
return in investment and see real benefit from the merger of two
companies, than one that is rigid and unable to respond to changing
market conditions.
Let's not forget that it is not just about surviving today, it
is also about making it through tomorrow.