A record $2.8 trillion has been spent on M&A in the first half of 2021. Achieving a positive return on this massive M&A investment means IT teams must keep employees happy and productive during post-merger integration.
Turbulent post-merger integrations (PMI) are responsible for over half of the often-quoted deal failure rates. For myriad reasons, the success or failure of post-merger technology integration is often tightly correlated with the success or failure of the merger overall. One key reason is that approximately half of business-related synergies are tech-enabled, according to a recent report by Bain and Company.
As a result, mergers and acquisitions IT integration plans are garnering more attention from M&A practitioners. As integration planning begins earlier and due diligence strives to focus on technology and not just financials, some strides are being made; however, there are still PMI mistakes causing headaches for employees and hurting employee productivity and retention.
In fact, one of the most common post-merger integration mistakes is not spending enough time on retaining key talent, and the link to retaining talent and technology integration is often left undiscussed. Below we will explore three common post-merger technology challenges and how these can be addressed so key talent is retained and synergies are captured.
No single source of truth during post-merger integration
Across all stages of a deal, a single source of truth that is reliably updated in real-time is of utmost importance.
When two companies integrate, work often becomes siloed as new and old talent fall into their technology comfort zones to complete their work. The passing back and forth of Excel spreadsheets, which can at times be outdated, and using only email to share critical data and information are incredibly dangerous practices that can negatively affect productivity and prevent maximization of deal value.
To address this pain point, the acquirer needs to leverage a tool that can house all information and tasks, providing a single source of truth for all employees and stakeholders. Ideally, a project management platform, such as Midaxo, that is intuitive and user friendly is utilized. This allows newly acquired employees to work in an efficient, transparent, and easy-to-navigate manner.
In a similar vein, newly acquired employees need to have a solid understanding of how quick communication takes place within the acquirer’s culture. Is it email? Slack? Google chat? Some project management platforms also boast chat features within their product offering.
Navigating two technological worlds during post-merger integration
Another post-merger tech challenge that hampers communication and efficiency is one that is all too common, but rarely gets attention: acquired employees having to navigate two email systems and, therefore, two calendars.
When acquired employees are onboarded, they often must navigate for some time two email accounts and, as a result, two calendars. This flip-flopping between two accounts wastes time, causes frustration and confusion, and produces scheduling nightmares. When the two accounts’ calendars are not in sync and kept up to date in real time, missed and double-booked meetings are too often the result.
This problem is exacerbated when the buy-side and sell-side are using different platforms such as Google versus Microsoft. A calendar syncing tool, such as CalendarBridge, addresses this problem by allowing employees navigating two worlds during integration to sync their calendars. Even better during PMI, CalendarBridge is easily set up and centrally managed with nothing to install, avoiding additional strain on IT departments.
Lack of a clear technology transition plan
A detailed post-merger IT integration plan is critical. The plan should identify which tools and systems will be kept, which will be replaced, and a timeline for the replacement. Once the tools are determined, a specific, tailored training plan is needed as generic training is often not enough to keep employees content and motivated. Talent on both sides of the deal have their own workflows that make them feel productive. The acquirer should be ready to provide training on how to replicate high-impact workflows as much as possible on the new systems. When allocating time and budget for this training and transition, do not underestimate or undervalue the strongly held beliefs that often surround choice of technology. For example, asking acquired employees to switch from Mac to PC, or Google Workplace to Microsoft 365, or Zoom to Teams can sometimes feel like asking them to switch religions and thus sufficient reassurances in the form of high-quality, tailored training are needed
On that note, when developing the technology transition plan, many practitioners fail to realize they do not need to force integration in some cases as it simply is not necessary. Sometimes it is in the acquirer’s best interest to allow the target to keep certain tools and technology for the sake of productivity and synergy capture.
It is said that the first 100 days of post-merger IT integration are critical, and while it is unrealistic to accomplish everything at once, having insight into commonly reported pain points for employees during post-merger integration will allow acquirers to support key talent, avoid information gaps, and work towards maximizing deal value. Fortunately, the above challenges can be addressed through technological offerings without overworking IT departments and tying up employees’ valuable time.