M&A Information Technology Best Practices


Praise for M&A Information Technology Best Practices

"Jan Roehl-Anderson and colleagues have done a superb job creating a guidebook for executives in an area where limited information exists—how to leverage the IT function during a merger, an acquisition, or a divestiture. The book examines current trends and is loaded with practical examples. The book and related website are brimming with valuable blueprints, checklists, and case studies."
— Valerie Borthwick former Senior Vice President, Oracle Consulting

"Every once in a while, you come across a book that provides real-world, practical advice on an important business topic—M&A Information Technology Best Practices is one of those gems. The twenty-plus years that Jan and her team have worked in the M&A IT space have provided valuable experiences and insights that can benefit a broad audience. This is a must-read for every business and IT executive who has or will be involved in a merger, acquisition, or divestiture effort."
— Mark Walsh U.S. M&A Service Line Leader, Deloitte Consulting LLP

"One of the most crucial components of mergers, acquisitions, and divestitures is addressing the IT aspects of the deal. M&A Information Technology Best Practices walks the reader through IT situations that may be encountered during one of these transactions. By using this text, the prudent manager can help mitigate a key deal risk while increasing the probability of achieving a successful transaction. Highly recommended."
— Steven Bragg author ofAccounting Best Practices

JANICE M. ROEHL-ANDERSON is a Principal at Deloitte Consulting LLP, coordinating key components of the M&A IT–related services area. She has been responsible for leading some of Deloitte's most complex global mergers, acquisitions, divestitures, and initial public offering projects from a technology perspective. She has written numerous books on controllership and information technology and successfully passed the CPA exam.

Preface xv

Acknowledgments xix




Introduction to the IT Aspects of Mergers, Acquisitions, and Divestitures 3
Varun Joshi and Saurav Sharma

Role of IT in M&A 4

Due Diligence 6

Integration/Separation Planning 8

Integration/Separation Execution 16

Wrapping It Up 20


The Role of IT in Mergers and Acquisitions 23
Peter Blatman and Eugene Lukac

Quest to Capture Synergies 24

Capturing the Benefits 26

Wrapping It Up 32


Aligning Business and IT Strategy during Mergers, Acquisitions, and Divestitures 35
Jason Asper and Wes Protsman

The Business-Aligned Integration Model 36

Enterprise Blueprint and IT Alignment 38

IT’s Role in Functional Blueprinting 39

Decision Making and Business Alignment 43

Business Alignment in Due Diligence 43

Wrapping It Up 44


Mergers and Acquisitions IT Strategy, Approach, and Governance: IT and Its Customers 47
Chris DeBeer and Michael H. Moore

Strategy 48

Approach 49

Governance 50

Finance 51

Operations 54

Human Resources 57

Information Technology 60

Wrapping It Up 66


Information Technology’s Role in Mergers, Acquisitions,

and Divestitures


IT Due Diligence Leading Practices 69
Mark Andrews and David Sternberg

Objectives and Complexities of IT Due Diligence 70

Areas of Investigation 72

Proprietary or Product Technology-Driven Due Diligence 76

Impact of Transaction Type on the Due Diligence

Investigation 77

Investigation for Strategic Buyers versus Financial Buyers 78

Considerations of Planning IT Due Diligence 79

Considerations of Conducting IT Due Diligence 82

Considerations of Finalizing IT Due Diligence 86

Tying Due Diligence to the Next Steps in the Post-Merger

Process 88

Wrapping It Up 88


IT Infrastructure Aspects of Mergers, Acquisitions, and Divestitures 91
Rick Kupcunas, Mike Trisko, Jeffry Sprengel, and Mushtaque Heera

IT Infrastructure Blueprinting 91

IT Infrastructure Planning 93

IT Infrastructure Dependencies 100

Wrapping It Up 102


M&A IT and Synergies 105
Jim Boland, Ronald Goldberg, Colin Hartnett, Sunil Rai, and Stephen Ronan

IT’s Role and Contribution to Synergy Capture 105

Synergy Capture and Benefits Tracking during the Merger, Acquisition, and Divestiture Lifecycle 120

Wrapping It Up 135


Supporting Business Objectives with M&A-Aware Enterprise Architecture 137
Pavel Krumkachev, Shalva Nolen, Nitin Prabhakar, and Rajat Sharma

Sources of IT-Related Synergies during M&A 137

Post-Merger IT Integration Planning: The Model Makes the Difference 139

M&A-Aware Enterprise Architecture Models 139

Divestitures and the Enterprise Architecture Frameworks 143

Wrapping It Up 144


The Importance of a Tested IT Strategy and Approach for Mergers, Acquisitions, and Divestitures 145
Pavel Krumkachev, Shalva Nolen, Nitin Prabhakar, and Rajat Sharma

M&A IT Organization and Strategy 145

A Tested and Repeatable Approach for IT Integrations 149

A Tested and Repeatable Approach for IT Divestitures 152

Wrapping It Up 155


Cloud Considerations for M&A IT Architecture 157
Mike Brown

Understanding Cloud Solutions 157

Types of Cloud Solutions 158

Cloud Solution: Potential Benefits 158

Opportunity during Post-M&A Integration 158

Cloud Solutions for Post-M&A Plug-and-Play IT

Frameworks 159

Determining Suitability for Cloud Solutions 160

Assessing Cloud Migration Timing 160

Establishing a Cloud Strategy 162

Evaluating Cloud Providers 163

Cloud Solution Success Factors 164

Wrapping It Up 165


Data Implications of Mergers and Acquisitions 167
Sascha Elsing

Criticality of Data Management in M&A Transactions 167

Data Governance and Organizational Considerations 167

Data Confidentiality, Privacy, Security, and Risk Management 168

Data Archiving Requirements 168

Data Management Road Map 169

Customer Data Considerations 172

Wrapping It Up 173


Using M&A to Streamline the Applications Portfolio 175
Colin Whiteneck, Joydeep Mukherjee, Ted Veterano, and Venky Iyer

Overview of an Applications Rationalization Program 178

Achieving Cost Synergies through Applications Rationalization 178

Achieving Operational Synergies through Applications Rationalization 182

Technology and Cost Impact in a Divestiture Event 188

Emerging Trends 193

Best Practices for Applications Rationalization in an M&A Scenario 194

Wrapping It Up 198


Third-Party Contracts in M&A: Identifying and Managing Common Implications 199

Christine McKay, Joseph Joy, Ramkumar Jayaraman, and Ninad Deshmukh

Challenges Inherent in Different Types of M&A Transactions 200

Typical Realities 200

Primary Challenges 204

Tackling Challenges 206

Program Management 215

Wrapping It Up 217

Case Studies 218

Lessons Learned 221


M&A IT Architecture and Infrastructure: Developing and Delivering Transition Services Agreements 225
Olivier May and Kevin Charles

Plan Early and Resource Appropriately 227

Foster Deal Team and Business Collaboration to Document Appropriately 229

Price Services Conservatively 231

Establish a Practical Governance Approach 235

Plan Exits and Remove Stranded Costs 247

Wrapping It Up 250


Day 1 Implications for IT Functions 253
Sejal Gala and Sandeep Dasharath

Top Day 1 Priorities for IT 253

Wrapping It Up 263


Transition Services Agreement (TSA)--Untangling the Web 265
Simon Singh, Nikhil Uppal, and Jennie Miller

Key Considerations for Drafting an Effective TSA 267

Structuring the TSA 270

Managing TSAs 271

Governance of TSA Services through a Parallel Structure 273

Rationale for Accelerated Exit of a TSA 278

Key Considerations for TSA Exit 279

Wrapping It Up 281


IT Risk, Security, and Controls in M&A: Identifying and Managing Common Considerations 283
David Caruso, Kelly Moynihan, John Clark, Jamie Fox, Joseph Joy, and Scott Kaufman

Understanding the IT Risk, Security, and Controls Current State 283

Practices for Managing IT Risk, Security, and Control Considerations 293

Wrapping It Up 301


The People Aspects of Mergers, Acquisitions, and Divestitures


The Role of the CIO in Mergers, Acquisitions, and Divestitures 305
Irwin Goverman

The Double-Duty Role 305

The Internal Role 307

The External Role 314

Some Lessons Learned 317

Wrapping It Up 320


The Role of CFO 321

Rich Rorem, Trevear Thomas, Nnamdi Lowrie, Heith Rothman, Venkat Swaminathan, Chelsea Gorr, Jenny Xu,
and Mia Velasquez

Strategist Face 324

Catalyst Face 329

Operator Face 332

Steward Face 338

Wrapping It Up 341


Managing the People Side of IT M&A 345
Tammie Potvin, Don Miller, Suseela Kadiyala, Michael Proppe, Sarah Hindley, and Laurel Vickers

Key Priority: Communicating for Impact 346

Merger Stages 348

Effective M&A Communication 351

Key Priority: Defining the Future-State IT Organization 352

Steps in M&A Organization Design 353

Key Priority: Assessing and Selecting IT Talent 358

Key Priority: Managing Change 363

Start with Your Leadership Team 363

Transition Employees 366

Consider Cultural Implications 367

Assess Integration Progress 369

Wrapping It Up 370


Planning for Business Process Changes Impacting Information Technology 373
Blair Kin

Pre-Day 1 Planning 373

Day 1 Integration Imperatives 376

Long-Term Integration Requirements 380

Wrapping It Up 388


M&A IT Project Governance, Testing, and Business Intelligence


Integration Management Office Best Practices 393
David Lake and Mauro Schiavon

Roles and Responsibilities 393

Key Activities 395

Sample IMO Templates and Deliverables 398

Managing the Deal 398

Wrapping It Up 403


IT Program Governance during the Deal 405
John Uccello

Establish Governance Model 405

Establish the Program Management Office 408

Execute the Plan 413

Wrapping It Up 415


Important Role of Data in an M&A Transaction 417
Lynda Gibson, Anil Tondavadi, and Chris Vu

Current Challenges and Lost Opportunities 418

Top 10 Ways to Use Information Management to Improve M&A 419

Wrapping It Up 438


Overview of Testing 439
Angela Mattix

Types of Testing 439

Testing Functions and Tools 443

Test Preparation Activities 444

Timing of Testing 446

Wrapping It Up 448




Why Mergers, Acquisitions, and Divestitures Fail, and Considerations to Help Avoid a Similar Fate 451
Nikhil Menon

M&A Risks 452

Common Pitfalls 453

Critical Success Factors 455

Wrapping It Up 457


M&A IT Key Success Factors 459
Nadia Orawski and Luke Bates

Key Success Factors 459

Wrapping It Up 461


M&A IT, Summing It All Up 463
Habeeb Dihu, Nadia Orawski, Justin Calvin, Luke Bates, Bryce Metro, and Eric Niederhelman

Best Practices 464

Best Practices to Be Considered Prior to the Deal 464

M&A IT Strategy, Approach, and Governance Best Practices 467

M&A IT Security and Privacy Implications Best Practices 472

M&A IT and Synergies Best Practices 473

M&A IT Contracts Best Practices 473

M&A IT Organizational Implications Best Practices 475

Best Practices to Consider in Order to Execute the Deal 477

Lessons Learned 478

Wrapping It Up 479


M&A IT Playbook Overview 493
Joseph Joy, Shalva Nolen, Simon Singh, and Nikhil Uppal


Sample M&A IT Checklists 509
Shalva Nolen, Sreekanth Gopinathan, and Devi Aradada


M&A IT Sample Case Studies 521
Manish Laad, Abhishek Mathur, and Prasanna Rajappa

About the Editor 531

About the Website 533

Index 535