The CIO's Survival Guide to M&A, Part 1: The Merger - Page 2

May 17, 2011

Matt Podowitz

Relate everything IT to the rationale and expected benefits of the merger - Psychologically and practically, a merger becomes the primary focus of executives from the moment due diligence begins until the transaction is scrapped (which sometimes happens) or the integration is completed. Whichever position a CIO is in, that CIO’s ability to protect their own interests, budgets and teams and ultimately come out of the merger on top is contingent on their ability to demonstrate how they and their departments will contribute to the success of the merger.

For each element of the rationale and each benefit that is being used to justify the merger, the CIO should determine which elements of the IT function (people, process and technology) can influence the realization of that outcome and how. A simple two-column matrix (with rationale or benefit on the left and the applicable IT elements on the right) can become a roadmap for discussions with the business to obtain or protect budgets, with employees to secure their temporary or ongoing commitment and to identify those people or bits of technology that can be let go in the name of short-term cost savings.

The more IT (whether people, process or technology) can demonstrate that contribution in terms of the rationale or benefits used to justify the merger, the more likely the more the CIO will be able to influence the merger and its IT outcomes.

Be ready to let go of the past and focus on the future - Mergers are to business as tumultuous and life-changing event as a marriage is to individuals. Once two companies have walked down the proverbial aisle, both will be irrevocably changed and equally incapable of maintaining the status quo that existed before the merger.

CIOs who work for the acquiring company and believe they are likely to remain in role should be prepared to abandon projects, eliminate technologies and give up people that may not make sense after the merger, and fight for the resources they will need to make the merger successful both short- and long-term.

Conversely, CIOs whose companies are being merged or who otherwise don’t expect to remain in role should concentrate on maximizing their importance to the success of the merger and thus their ability to negotiate favorable terms (for example, stay-bonuses) on behalf of themselves and their people.

CIOs who focus instead on “keeping things the same” are less able to contribute value to the merger and so may find themselves at increased risk of losing their budgets and people and potentially their own positions faster or less profitably than might otherwise be the case.

Head in the sand

The one strategy universally to be avoided is “blissful ignorance,” whether of how mergers really work, or of the potential for their company to be involved in a merger. The more CIOs can learn about the merger process before they are involved in one the better positioned they will be to implement these strategies when the time comes.

Where CIOs once had little opportunity to influence their own fate in mergers, in the post-downturn economy CIOs can position themselves to be heroes.

Future articles in this series will explore the opportunities and pitfalls for CIOs in other types of strategic transactions such as consolidations, restructuring and turnarounds.

Matt Podowitz is a strategic management consultant assisting entrepreneurial, middle market and Fortune 500 clients maximize returns on investment in operations and information technology and address business considerations in strategic transactions such as mergers, acquisitions and divestitures. He is a Certified Management Consultant and Certified in the Governance of Enterprise Information Technology, and specializes in leveraging business functions that historically have been viewed as cost centers to create tangible value for the business. Matt can be reached via the contact page on his personal business blog,

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