Training for the M&A Marathon

Copyright © 2017 Tata Consultancy Services LimitedMay 2017

Dave Jordan

Vice President of Business Consulting,

Consulting and Enterprise Solutions

PERSPECTIVES VOLUME 8

M&A: Behind the Scenes

M&A helps companies generate more revenue at lower costs

Such strategies help leverage synergies between two or more firms

Securing those synergies by quickly integrating the firms is a challenge

The Price of Being Unprepared

An M&A is like a marathon: you need to prepare extensively well in advance. Not planning ahead can cause three major problems:

Synergies will take longer to generate

Superior business processes and systems that provide a competitive advantage might be discarded in favor of inferior systems

Valuable IT people might be lost to the competition

Unlocking the Synergies

IT is often ignored during due diligence, even though IT infrastructure and applications power critical business activities

Integrating the IT infrastructure is the biggest challenge after an M&A

To unlock the synergies, companies need to first focus on quickly integrating the IT-intensive business processes and functions

Become an M&A Powerhouse

1. Build an M&A CoE

2. Measure synergies

5. Narrow the integration focus

4. Standardize systems and business processes

3. Know the infrastructure

6. Embrace M&A

1. Build an M&A Center of Excellence

Build a CoE to increase the chances of success, especially when mergers become routine and involve IT-related processes

CoEs should employ core staff and build skills critical to the function they support

The team should learn from every deal and refine best practices

2. Create Metrics for Synergies

Time is a great killer of potential synergies, especially in merging IT-related operations

Organizations need to move fast to gain from and retain benefits from integration

Set up an aggressive timetable to ensure integration efforts are swift and effective

3. Know Your Infrastructure

Starting to look for this information during the integration process can add months to the integration timetable

Organizations need an in-depth understanding of their infrastructure to ensure their best processes are not lost in M&A

Document the different components of the infrastructure to save up to 40% of the time taken to integrate after an M&A deal

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4. Standardize Enterprise Systems

M&A deals bring together different kinds of customized software

Integrating such systems is time consuming and difficult

Adhere to a policy of standardized enterprise systems to make IT integration easier

5. Narrow Your Integration Focus

Only a few processes truly matter to a company’s marketplace performance

In most companies, 70% to 80% of their processes and systems are commodities—infrastructure that does not distinguish the company

Identify processes and systems that are in the core 20% to 30%, then spend 70% to 80% of your time deciding how to integrate them

6. Embrace Continuous Improvement

For companies in mature and fast-consolidating markets, M&A is unavoidable

Mindsets must change—M&A is a necessity to keep companies competitive

Organizations need to have a positive outlook and constantly upgrade their knowledge about IT

Companies with M&A as a key growth strategy need to prepare rigorously for the day when they buy another company

They need to hone their integration skills and learn to capture synergies quickly

Companies that rise up to this challenge will have a powerful advantage in a world driven by scale and cost advantages

Winning the M&A Race

Copyright © 2017 Tata Consultancy Services Limited

Training for the

M&A Marathon

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