How to Avoid Common Merger + Acquisition Technology Integration Pitfalls

March 25 - 2024

Integrating business systems and technology is the top M+A pain point where companies make the most mistakes according to Robert Half. Many M+A efforts falter because of poor technology integration. In fact, Harvard Business Review reports that70% to 90% of mergers fail during the post-merger integration phase. 

The complexity and tight timeline of these integration processes often put IT leaders in a reactive state. To take control of the many moving parts, you must understand the top M+A integration pitfalls and proactively mitigate them. This post discusses the most common mistakes and how to avoid them. 

How to Avoid Common M+A IT Integration Pitfalls 

We asked our team, who has helped many enterprises orchestrate successful post-merger IT integrations, to share their from-the-trenches insights on the most common mistakes: 

1. Starting Too Late

The aggressive timeline of most M+A deals and the complex environments often prevent IT leaders from conducting comprehensive evaluations of all components. But there’s also an easy way to buy yourself more time and capture more business value: Start planning early.  

Over 50% of companies that define their IT strategies during the due diligence phase achieved their synergy objectives. Set a solid foundation and lay the groundwork for success by developing an M+A technology integration plan as soon as possible. 

2. Overestimating Synergies

M+A integrations can create synergies to reduce IT costs. However, the benefits don’t happen on their own. Without a comprehensive integration strategy, you risk increasing the complexity of your IT environment, driving up costs, and introducing cybersecurity vulnerabilities. 

Conduct a complete assessment of both company’s IT environments to understand the integration’s cost-savings potential. Also, you may not realize all the benefits immediately. Estimate the costs and time required to achieve the synergies to set realistic expectations.  

3. No Dedicated Team

Some companies may pull employees to work on post-merger integration while performing their day-to-day duties. However, this approach often negatively impacts business activities, destabilizes operational delivery, and diminishes integration outcomes. 

75% of successful mergers have a full-time IT manager overseeing the integration project. If you don’t have the appropriate internal resources, partner with a trusted third-party consultant to access the specialized knowledge and expertise you need to succeed.   

4. Data Migration Issues

Data is the lifeblood of modern enterprises. It’s also one of the biggest challenges in an M+A integration. Data inconsistency and poor data quality may affect your long-term ability to make accurate data-driven decisions, maintain high-quality customer service, or build a data culture. 

Perform a data quality assessment to address gaps and resolve discrepancies. Map and align data structures, formats, and definitions between the merging entities. Also, implement end-to-end encryption during migration to protect data integrity. 

5. Insufficient Resources

Unfortunately, many companies underestimate the scope and requirements of M+A technology integration. You risk finding yourself in a bind if you don’t have a realistic understanding of the resource requirements and fail to secure the budget and personnel to complete tasks. 

Establishing a comprehensive plan early with expert support can save you a lot of headaches down the road. Also, communicate budget and resource expectations with executives and get leadership buy-in to secure the appropriate resources for the initiative. M+A Campaign Graphics (1)

6. Cybersecurity Vulnerabilities

Merging two distinct IT environments involves re-architecting the infrastructure and reconfiguring systems and applications. These activities may result in vulnerabilities, exposing the new entity to the risks of cyber threats and data breaches. 

Assess both organizations' security policies and controls. Address security, governance, and compliance measures in your integration plan. Invest in security monitoring, employee training, and ongoing updates to improve the new entity’s security posture. 

7. Overlooking Change Management

IT integration between two organizations involves more than technical components. When combining workflows and processes, you may run into cultural integration challenges. Meanwhile, poor user adoption could impact the success of your effort. 

Include change management in your technology integration plan. Implement a communication strategy to engage stakeholders and get their buy-in. Also, offer employee training to drive end-user adoption of the new technologies and processes. 

8. No End-to-End Methodology

Making things up as you go isn’t the way to go in an M+A integration. A proven integration process is essential for performing the right tasks at the right time to meet tight timelines. It also helps prevent confusion, duplicated work, and wasted efforts. 

An end-to-end methodology helps you align tasks and resources to accrue efficiencies throughout the integration process. It also preserves core business procedures and maintains stability through effective risk mitigation and contingency planning. 

9. Taking Shortcuts

Designing an integration plan is only half the battle. Your strategy is only as effective as your team’s ability to execute the steps. Yet, the urgency to swiftly integrate infrastructures and realize benefits often leads teams to take rushed steps or shortcuts during implementation. 

Don’t succumb to time pressure — increase visibility and educate leadership about the risks of taking shortcuts, like the added time required for debugging and remediation, potential data loss and downtime, technical debt, and compromised long-term performance. 

Merger and Acquisition Technology Integration Done Right 

Starting your M+A tech integration initiative early in the process gives you more time to implement proactive measures to mitigate potential pitfalls, stay in control, orchestrate a seamless transition, and maximize the business value of the deal.  

Meanwhile, following a proven process helps you avoid wasting time and resources on duplicated or unnecessary tasks to focus on what matters. Partnering with a trusted partner gives you access to the specialized knowledge and expertise you need to cover all the bases. 

Enterprises trust Compugen Systems to help them navigate IT integrations at any scale. Our team of experts has decades of experience orchestrating M+A tech integration. You can count on our proven methodology to take the guesswork out of the process. 

Learn more and get in touch to see how we can help you plan, execute, and reach your desired future state. 

Mergers + Acquisitions: The Ultimate Technology Integration Plan: An IT Leader’s Checklist

Topics: M+A, IT Advisory Services

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