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The acquisition by Anheuser-Busch InBev of its main rival SABMiller for $104 billion will create the world's largest beer maker, with nine of the world's top 20 beers by volume and sales of $55 billion.
And when Dell agreed to buy EMC for $67 billion, it became the largest technology acquisition ever.
But just because these are huge mergers doesn’t mean they’ll go smoothly. In fact, the bigger the acquisition, the more chance they have of going south. Recall the disasters that befell the United/Continental merger, and the HP/Compaq merger.
There’s a common industry saying that goes like this: In any IT M&A process, it’s inevitable that first your customers will suffer in the process, and then your employees will suffer. Why? Because integrating the business processes of two merged companies distracts the business from their day-to-day operations.
So what can these two industry behemoths, one in the consumer markets and one in the B2B markets, do to avoid an IT M&A disaster?
They need to get their specialists involved early.
Specialists are the most valuable people in any business. They’re the ones who have specialized domain knowledge that nobody else has, and thus they’re in high demand. Consequently, there are less of them available at any given time.
Think of medical specialists: brain surgeons and anesthesiologists. Think of legal specialists: bankruptcy attorneys and personal injury lawyers.
The movies even have their own specialists. In the film Pulp Fiction, Harvey Keitel played the character “The Wolf.” He was the cleaner who had to clean up a messy situation. He was a specialist.
In the IT M&A world, you also have specialists. These are the Subject Matter Experts (SMEs) with the specialized vertical domain knowledge and expertise in your core business processes.
The SMEs are the ones who can help you avoid a disaster in your mergers and acquisitions integrations plan and strategy – and you need to involve them early and often in the M&A process.
But how can you plan for a successful M&A Integration and ensure you make the best use of your SMEs? Read on.
What Dell, AB InBev, and you need to keep in mind is that there are two types of SMEs: horizontal and vertical SMEs.
Horizontal SMEs are those with specialized technical knowledge: .NET, SAP, networking, etc. With all due respect, these folks are not your worry. While they’re not a dime-a-dozen, they’re pretty easy and quick to source.
The vertical SMEs, however, are a different story. They are intimately familiar with your business practices, whether transportation and logistics, production, finance or any other critical business function. Their unique domain knowledge makes them extremely valuable and scarce – to both the business and the integration process.
Without these folks, your post-M&A integration will most likely be fraught with problems.
As I mentioned in a previous article, one of the keys to a successful IT M&A is to get IT involved early. But what in particular do you need to share with your IT team? You need to let them know at least 12-24 months in advance what kind of acquisition you plan to carry out.
Will this be a market expansion of complementary companies like the AB InBev / SABMiller acquisition? Or will it be a competition-killing acquisition like the Dell / EMC merger? Or maybe this is a merge of two unrelated companies?
Knowing what kind of acquisition you plan to carry out will help you to plan what business processes you’ll integrate, and consequently what kind and how many SMEs you’ll involve in the integration.
Each scenario has its own integration challenges, and hence different needs for the number and types of SMEs to involve, as well as the types of technology platforms you’ll integrate.
In the first two cases, where you’re integrating two complementary businesses or absorbing a competitor, you’ll probably integrate all your business processes with the merged firm: logistics, distribution, production, finance and more. You’ll also need a full army of SMEs across the spectrum of business processes.
If you’re merging two disparate companies, you might just integrate your financial systems – in which case your need for SMEs is smaller.
No matter how large or small an acquisition is, the answer is always the same: keep the process simple, and involve IT and your subject matter experts from the very beginning. Why? Because integrating two companies can and will go south quickly, especially if not planned well.
If you’ve acquired a company and only get your IT department involved a month before the deal, you’ll be scrambling to get your specialists, the SMEs, involved. Getting them involved so late in the game will pull them away from the business and can hurt revenues.
But getting them involved early can help you focus. They can identify the core processes to integrate, the ones that impact company revenues, from the get-go. They’ll be far more efficient with their time and resources so the business – and the integration process itself – won’t turn into a disaster.
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