4 essential steps – mergers & acquisitions

09 Oct, 2023

Four essential steps for tech teams facing mergers and acquisitions

At its heart, a decision to merge with or acquire another organisation is often made possible by operational savings. Unfortunately, these big decisions can gloss over the nuances and not-so-subtle challenges of integrating two different sets of technology systems and infrastructure.

From initial negotiations right down to signatures on the dotted line, the operational and technical teams are generally not involved. Instead, they are handed the decision, and the work of successfully merging the organisations begins.

The most important thing to remember is that these changes reach beyond the technology. People’s roles and the processes they participate in have to change too. People are emotionally invested in what they do and how they do it, and there are opportunities to change the power dynamics in a changing environment. The emotional side of mergers and acquisitions should never be ignored.

Step 1: understand the nature of the merger

Phil Yeardley is a Principal Consultant & Director with 9Yards. He has extensive experience helping superannuation funds and banks to navigate these types of changes. He believes that the most important starting point is to understand the type of merger or acquisition and to factor in the dynamics at play.

Phil divides mergers and acquisitions into two different types. There are mergers of equals and conversely, acquisitions where one party is taking over another party.

If you’re in a situation with a big player taking over a small player or assimilating them in, then your key stakeholders and your key decision makers are probably going to be from the larger organisation and their decisions may not be welcomed by members of the acquired organisation’s team.

He explains the part 9Yards plays in these circumstances, “Our role in this process starts with understanding the type of acquisition it is and the types of key stakeholders that are involved. Then we tailor the messaging and the approach to suit the situation.”

Step 2: consider the emotional impact of the merger or acquisition

Regardless of whether we’re talking about a merger of two equals or the acquisition of one organisation by another, the integration of two companies will have an emotional component. Often emotions can derail any technology integration decisions that don’t take them into account.

Phil Yeardley warns “Before the merger, you may hear one set of opinions about whether the technology infrastructure and business operations at each organisation are working well. After the merger, opinions can change dramatically, because of who is listening, rather than the facts.”

In these situations, emotions can run high, sometimes even to the point of anger. However, experience has shown the 9Yards team that ignoring emotion and looking at the situation as purely a technology problem can cause the approach to falter and lose its way.

Phil notes that 9Yards consultants focus on some simple techniques and models that can help remove some of the emotion and allow for fact-based decisions.

Step 3: start at the beginning

The key, says Phil, is to step back further than you first thought. Where there’s duplication of technology or even operational capability, he recommends going right back to basics and asking the question “Do we need two of these systems or processes to perform this business function? Or do we need one?”

To some of the stakeholders, it may seem like an obvious question with an obvious answer. However, everybody needs to agree that the merged organisation will have just one system for this function before approaching the decision of which system to use.

Step 4: tread carefully and take time to decide

Even if everybody agrees that the merged organisation should only have one IT solution architecture and operating model, the step of deciding which one to go with should not be rushed.

9Yards has developed an approach that reaches an endpoint that’s based on facts and taking the time to gather information.

Phil admits, there’s also the challenge of being an external organisation coming in during a time of change.

“As external consultants, we have deep experience in mergers, acquisitions and the sensitivities that come with them. We listen carefully and focus on the facts, because we understand that what we’re doing goes beyond technology.”

The 9Yards team has provided expert mergers and acquisitions advice for a range of industry types including banks and superannuation funds.

Phil stands behind the 9Yards approach. “Our tried and true approach gives us a framework that helps us work through the process smoothly and sometimes more quickly than would be possible without a framework.”

Remember: core systems ain’t core systems (like oils ain’t oils)

There’s an old advertisement for motor oil from the 1980s that provides a great analogy for how systems that seem to be performing the same function can be quite different when you look more closely.

Two systems may look on paper like they do the same thing. That’s very rarely the reality. For example, take the case of a bank merger, with two banks using what’s effectively the same system, purchased at the same time. Bank A’s core system configuration performs 12 separate functions for the bank with multiple additional ad hoc functions bolted on. Bank B might have purchased their core system at the same time, and at some stage, with customisation and additional functionality took a different direction.

Setting up for success

9Yards uses tried and tested techniques to gather the information and step outside the emotion that can interfere with the success of a merger. The 9Yards approach treats each situation as unique, working to a systematic approach with the right people in the room.

Are you a banking or superannuation CTO or CIO facing a merger or acquisition and wanting to reach the best solution for the business and your team? It might be time to get the 9Yards mergers and acquisitions specialists involved and start the conversation.

READY TO TRANSFORM YOUR ORGANISATION?