As a result, many businesses are failing to maximize the potential of mergers and are missing out on substantial financial benefits, according to the report, "Keys to the Kingdom: How an Integrated IT capability can increase your odds of M&A success."
When it comes to merger activity, corporations are acutely aware of the challenges of integrating other aspects of their businesses, such as their organizational units and their employees. But Accenture's study finds that too few companies are giving the same level of scrutiny to the integration of their technology operations - a critical lapse in today's IT-driven enterprise.
Opportunity for CIOs
For CIOs and other enterprise IT leaders, the disconnect presents the challenge- and the opportunity- to raise the profile of the IT organization and signal its importance prior to the start of merger and acquisition activity - and squeeze additional value out of mergers.
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"The truth about M&As is that about half of them either fail outright or else fall well short of the value they're expected to bring because when viewed unilaterally, IT integration can wind up crippling rather than enabling the new organization," says Gary Curtis, partner in Accenture's Strategy practice.
Accenture studied 57 M&A projects in North America and Europe in the late 1990s (target companies: $100 million to $500 million in revenues) and monitored them post-merger, paying attention to the integration efforts surrounding IT operations and the effects on the company.
The study found 58% of the companies did not get IT involved in integration planning until after the plan to merge was announced. Twenty-six percent got involved during the deal, and only 16% got involved pre-deal.
Additionally, less than half the companies surveyed performed detailed IT integration planning. Among the companies that performed IT due diligence, 70 percent said subsequent integration was a success, compared to 18 percent for those who did not report the deal a success.
Seventy-three percent of companies that called their mergers successful had a full-time IT manager assigned to the integration effort, compared to 40 percent who did not call the integration a success.
8 Keys to M&A Success
To help companies get on the right track and reach the full potential of mergers and acquisitions, Accenture developed eight imperatives for corporations to follow. They include:
David Aponovich is senior editor of CIN.