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If you have just acquired another business – or are thinking about doing so – you’ll be thinking about synergies. Consolidating business systems and IT might be on the list. More significantly however – you might need to do some systems/process integration before you can get after the other synergies that underpin your business case for the acquisition. Speed can therefore appear to be of the essence – and imposing your existing systems can look like the fastest answer. However – haste can also create some cultural issues. New employees (within the acquired business) generally don’t love new systems being imposed upon them – particularly if they are those their new parent use - without them being a part of the decision-making process. Staff churn can represent a significant risk to the success of an acquisition – so (having done our fair share of acquisitions) we would like to advocate an alternative approach.
1) If your business plan is to grow through M&A – then you should prepare your infrastructure and business systems in advance of doing so. Get your business systems fit for the future purpose you have in mind. If, for example, your ERP system isn’t giving you the data you need to run your existing business (a business you know well)– don't expect it to help you get your arms around a business that you don’t.Identity management, security, ERP, CRM, HR, and web content management will likely be your priorities – in that order. Given the requirement to scale - cloud solutions will be the answer.
2) On the day after the acquisition – or in advance if the target acquisition will allow – get a joint Systems Integration team together. When we say joint – we mean properly balanced. Token representation from the acquiree will only compound the cultural problem that you are about to create. You should ask that team to do some objective requirements analysis. When this is signed off – you should then get the team to hold the existing systems (yours and theirs) up against this specification. If you’ve pursued the approach outlined in 1 above – then it is very likely that rolling your existing systems out will be seen (by all) to be the best option. If you’ve not – and the acquirees systems look like a credible option – then being seen to consider this option will be received very positively. Good people want to operate in a meritocracy – where the best ideas win. Our size fits all is generally a cultural disaster.
3) More often however the conclusion will be that neither your system nor their system are capable of supporting the combined businesses or the organic growth that you now want to drive. At this point you may need to ask the joint team to initiate a project to select and implement a new system. You will also need to make a big call. Do you ask the newly acquired business to come onto your existing systems on an interim basis – before you then move to the new system. Our strong recommendation is not. Asking people to move systems twice within a relatively short period of time is another cultural disaster.
How TSG Can Help
Over 20 years we’ve made 40 acquisitions – and made the most of the possible mistakes. We’ve left acquisitions alone – on their own systems – when we should not. We’ve forced acquisitions to adopt our own sub-standard systems – when we should not. Now – ahead of us executing some more M&A – we’ve got great internal systems that look best in class.
If you have acquisition in mind – or underway – we’d be happy to join your internal project teams – to provide an independent view of requirements and options.
