Tag Archives: m&A

IT Due Diligence and Assimilation class

presentation_8Last week I held a 2-day class on IT Due Diligence and Assimilation based on the process and tools I developed from managing the IT focus in over 40 company acquisitions.

When I joined a small company many years ago to manage the IT Department, I had never heard of the term “due diligence”. I was about to get a heavy dose of it as we grew this $30 million company in 5 1/2 years to over $650 million in revenue by acquiring over 35 companies.

We were an “acquisition machine”!

Since I had no process or tools to conduct an IT due diligence, I had to develop them along the way, , , not so much a conscious decision but more by necessity simply to get the job done. In retrospect, without the tools and process I developed my company would have “run flat over me” as we generated tremendous change by acquiring so many companies so quickly. These resources “saved my bacon”.

I have two more classes coming up this year in Dubai, UAE to deliver content on IT due diligence and assimilation.

  1. Oct. 20, 2013 — 1-day IT Due Diligence and Assimilation Overview session preceding a 4-day IT Manager Institute. The 1-day class is being provided to accommodate a few who want the material but can’t afford to return to Dubai for the class we have scheduled in November (see below).
  2. Nov. 20-21, 2013 — 2-day IT Due Diligence and Assimilation Program.  This is the complete version of the class. Learn more

Brochure_IT due diligence classDownload the Brochure

Can’t attend the class? CLICK HERE to check out our IT Due Diligence and Assimilation BUNDLE of digital training and products, , , this is the most comprehensive set of IT due diligence materials in the industry.

due diligence bundle

Three types of IT people in a company acquisition

If you work on a company acquisition and have the opportunity to help transition the new company into the parent (acquiring) company, , , congratulations. You are on the right side of the deal.

Completing the deal is the easy part. All the heavy lifting comes after the companies agree to merge, , , now it is time to begin the transition.

Even if your company decides to let the new company operate pretty much “as is”, there will still be transition objectives. At a minimum your company will want one Payroll, Human Resources, Accounting, Accounts Payable and Purchasing functions most likely, , , and probably one e-mail system.

But let’s assume the objective is to eliminate the new company as we see it today and merge everything into the parent company’s operations. This includes all technology platforms and the IT organization.

When you look at the transition effort ahead, the new company you have just acquired has up to three types of IT employees in the IT organization:

Group 1 – No longer needed
This group includes people who are no longer needed either for temporary support, transition project work, or for the long term. You will determine a way to let them go sooner than later.

Group 2 – Transition employees
This is the difficult group. You need these people for only a temporary period of time, , , either to provide ongoing support for the old systems you plan to replace or to help in transition projects. Once the technologies are converted to the parent company’s platform you will terminate them.

Group 3 – Long term keepers
You want these people to be part of your company. They are the thoroughbreds who are capable of doing great things, , , you want them to stay with you.

In my next post I will discuss how you develop an incentive plan for the Group-2 Transition employees so they stick around to help you even knowing they will lose their jobs when the transition is completed.

Merger and acquisition overview

I’ve been involved in 45 company acquisitions, leading the IT due diligence in all of them. Prior to 1990, I had no idea what “due diligence” was, , , since then I have gained more experience in this area than possibly any IT manager or CIO.

Here is a merger and acquisition (M&A) overview that might be helpful to you one day:

An acquisition begins with a Letter of Intent from the acquiring company to the targeted company. When accepted, due diligence begins.

The model above shows each department in the company being involved in due diligence, , , orange box. To complete a successful merger of the two companies it is important for each department to conduct discovery in order to develop an appropriate transition plan.

It is vitally important the IT organization be involved in due diligence because many of the things that must take place immediately after the deal is completed will be dependent upon the IT support organization.

Once due diligence is completed, final negotiations take place and the companies agree to a merger.

When the deal is completed, assimilation activities begin, , , green box. The IT organization will be busy even if the company decides to leave the acquired company alone and to operate it as it has been operating. Even so, the parent company will want to merge Payroll, accounting and accounts payable into the parent company systems.

In addition, the company will want everyone to be on the same email systems and all company offices networked together for communication purposes, , , requires IT support to make it happen.

The assimilation box also shows every department being involved in assimilation activity.

Once the key transition projects are completed, the merger is done and we now operate as one company.