Mergers & Acquisitions: Gartner's 5 Phases and Automation's Key Role

    Gartner Calls for Automation During M&A's

    Business mergers and acquisitions (M&A) are extremely common, and they take a significant toll on each and every department. IT teams face some of the biggest challenges out of every department during M&A and can sometimes be overlooked.  According to a Gartner research study, improperly addressed IT challenges after an M&A can lead to increased operational risks and higher costs. The merger can be painless; however, Gartner reports that during each of the 5 phases that a company undergoes during a merger or acquisition, there are specific IT-related actions organizations should be taking.

    Before the merger commences, Gartner reports that there are 2 pre-M&A phases. This means that these are steps the organization should be taking in the time leading up to the merger or acquisition in order to ensure that the organizations both are ready and accepting to the impending change. During and post-merger, there are two action phases. Phases 3 and 4 begin at the start of the actual merger and run for up to two years post-merger. The final phase, phase 5, occurs after the merger ends and when it is time to reflect on the transition. Let’s take a closer look at each of the 5 phases and the steps that IT should be taking to ensure a smooth transition process.

    Phase 1
    In the first phase of a merger & acquisition transaction, what Gartner refers to as the due diligence phase, the focus should be on assessment and analysis. The target company’s IT team should by assessed for staff skills, IT employment conditions should be analyzed, and key IT personnel should be identified. This will prepare the organizations for the merger and ensure that skills, IT working conditions, and IT management is kept consistent throughout M&A processes.

    Phase 2
    Post-signature Preparations for Day 1 centers around strategizing and design elements, according to Gartner. With challenges including defining and launching an IT severance plan, appointing a new leadership team, defining a new company culture, and more, this phase offers a chance for employee resistance. This must be recognized and the target company must communicate with employees that changes must be made in order to ensure harmony between the two organizations.

    Phase 3
    Called by Gartner the Day 1 and Welcoming Phase, focuses on the migration of target company staff and employment conditions. This phase is going to be extremely critical for IT as the migration to the new company’s systems and operations is going to rely heavily on the IT teams. This phase also will be extremely reliant on communications, not just from IT but from all members of the organization. Gartner advises that strong communication is absolutely necessary in order to create a unified organizational identity.

    Phase 4
    The fourth phase is the Integration phase, this phase can take anywhere from 9 months to 2 years. According to the research, this stage should begin with IT integrating operations and receiving new job assignments followed by IT staff management, IT training, and creating an IT steadiness. In addition to ensuring that all staff is equally trained and on the same page, this stage involves managing the old systems and coordinating them with the new systems. So for example Gartner tells us that most organizations have between 3 and 8 scheduling tools for applications within their organization. This means after an M&A transaction takes place, the organization will have between 6 and 16 scheduling tools to manage and coordinate. In a situation like this, it would be most beneficial for an IT team to look to an IT automation solution that can consolidate and coordinate these scheduling tools to centralize their IT environment.

    Phase 5
    Evaluation and lessons learned centers around exactly that —the evaluation of workforce integration success and review of communications effectiveness. Gartner recommends that CIOs and HR teams evaluate the migration process specifically among the IT team and take note of the success of cultural integration and staff communication. This will give the opportunity to improve M&A processes in the future and give the organization the knowledge to become a thought leader and be the company that others look to for knowledge and examples during mergers and acquisitions.

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