Winning with an

IT M&A Playbook
What brings repeated success in mergers and
acquisitions? What ensures that IT does not cause
a deal to falter? A playbook that makes IT integration
faster, better, and future-proof.

Winning with an IT M&A Playbook

Information technology plays a crucial role in any M&A. When IT fails in M&A, the repercussions
are felt far more deeply than the failure of any other function, not least because IT is the lifeline
of nearly every aspect of business operations. Our global merger integration survey found
that more than one-third of failed acquisitions are the result of unaddressed IT issues. IT issues
can sink a perfectly good acquisition, cause post-deal crises, lead to acquisition aftershocks,
and result in missed opportunities to innovate (see sidebar: IT Implications in M&A).

An M&A playbook is much like

a coachs playbook, setting out
the strategies each player must know
during the game.
We believe a core competency approach to IT in a merger or acquisition is required not only
to enable a business integration, but also to establish an IT organization fit for the future.
Companies can achieve these dual objectives by creating their own IT M&A playbook.

The IT M&A Playbook

In sports, a playbook sets out the plays and strategies each player must know during a game.
An M&A playbook is much the same: a plan or set of strategies that outlines a particular
campaignbe it a merger, acquisition, or divestment. The playbook brings together all of the
activities that an M&A integration team and all other relevant parties need to perform across
the deal lifecycle.
IT has three important objectives in an M&A: (1) ensure from day one that the merger causes
minimal disruption to its stakeholders (including customers, suppliers, and employees);
(2) play a major role in delivering and enabling synergies; and (3) contribute to developing
the companys long-term IT operating model.

IT Implications in M&A
IT is never the sole reason for an
M&A, but it can easily be a deal
breaker, or at least a delayer. One
European services company
postponed an acquisition by
more than six months because
of the substantial investment
needed to integrate the targets
IT into its own centralized IT
organization. In another case,
the merger of two banks failed
when they discovered that
combining their respective
IT systems would require too

large an investment to make

the deal worthwhile.
IT lead times are usually longer
than the time needed to complete a deal, and IT resources
are already stretched to support
business as usual. So the risks
of failed integration can be very
real. For example, on the first day
after the merger of two European
banks, bank tellers did not have
access to a common set of
banking services.

Paying inadequate attention

to sustainable IT integration
can result in an IT environment
that reflects the companys
acquisition trail. This forces
chief information officers (CIOs)
to embark on a never-ending
journey of simplification and
optimization.

Winning with an IT M&A Playbook

Each objective is important to an acquisitions success. Although many organizations merely

expect IT to be an enabler, an acquisition can in fact be a prime opportunity to improve
overall IT capabilities. ITs mandate to capture synergies quickly often focuses so much on
consolidating the IT functionincluding applications, infrastructure, and headcountthat the
targets potentially valuable niche IT capabilities are missed. So while capturing synergies
improves operational efficiencies and lowers IT costs, it does little to foster innovation or mold
an IT organization of the future.
However, we have seen some forward-looking examples where M&A had served as an umbrella
project for a broader IT transformation. One European engineering services company used
an acquisition as the catalyst for fundamentally improving its IT and taking advantage of the
acquired companys systems, infrastructure, and people where these were superior. In another
case, a U.S. consumer goods company chose to replace its own IT staff with the top talent from
an acquired organization. Both companies understood, before acquiring their targets, that
IT was a vital component of their businesses and made it core to their acquisition strategies.
The IT M&A playbook an organization develops must take into account each of these objectives,
and it should be tailored to the organizations specific context. All playbooks must ascribe
to five main principles:
Involve IT early. ITs role in any M&A should begin at the deals outset, not justas is sometimes
practicedduring post-merger integration. For example, giving IT a seat at the due diligence
table will bring a more realistic understanding of the risks and what it would take to execute
the deal. A holistic playbook recognizes this, covering the entire M&A life cycle from target
selection and due diligence to merger planning, post-merger integration, and synergy
realization (see figure 1).
Address various acquisition scenarios. Because no two acquisitions are alike, they should
not be integrated in the same way with the same approach, nor should they follow the same
set of priorities. The playbook should not be merely a prescriptive set of processes and activities.
It should be flexible enough to handle different scenarios.

Figure 1
A holistic playbook covers M&A from planning to completion

Identify IT risks and deal-breakers

Estimate integration lead time and costs
Establish IT baseline

Create a vision of the future

g

nin

rg

an

me
ri

nt

eg

er

pl

Implement target IT services and

operating model
Manage transition service agreements
Conduct systems integration
Migrate data
Execute retention and severance plans
Shift to business as usual

Reduce risks

Du
ed
il

Po s t-

Execute plans

on
ati
liz
a
e

ce
en
ig

Execute decommissioning plans

Track synergies
Implement long-term IT transformation
programs

Syn
erg
yr

Reap benefits

rati

on

Me

rg

Establish IT integration framework

Finalize IT synergies
Develop high-level target IT operating model
Plan and deliver day one
Migrate and transition essential data
and systems
Develop decommissioning strategy
Agree on transition service agreements
Create integration budget

Source: A.T. Kearney analysis

Winning with an IT M&A Playbook

The playbook should not be merely a prescriptive set of processes and activities.
It should be flexible enough to handle
different scenarios.
IT requirements vary depending on the type of acquisition. The most common M&A scenarios are
shown in figure 2business extension, bolt-on acquisition, full acquisition, and merger of equals.
In addition, M&As may also need a simultaneous divestment or an IT carve-out to satisfy
regulatory and competition commissions, and the playbook will need to accommodate this.
An IT integration team must be able to apply the playbook, whatever the M&A scenario. Different
acquisition scenarios can be factored through route maps, which provide a navigation path
through the playbook, making it easier for team members to comprehend the scope of their
work. Based on the acquisition type, a route map guides the team through configurable
processes, tools, and accelerators that can be adapted to specific needs of the M&A.

Figure 2
Four scenarios for merging IT organizations

M&A
scenario

1. Business
extension
(diversification)
Acquirer

Target

2. Bolt-on or
carve-out
acquisition
Acquirer

Target

3. Full company
acquisition
Acquirer

Target

4. Merger of
equals
Acquirer

Target

Mainly
data

A+T

Typical IT
integration
model

Loosely coupled IT

Adopt acquirers IT

Select IT
of one party

Best of breed IT

IT
implications

Limited IT synergies
Minimal impact on
IT operations
Consolidation of
data required for
financial and
management
reporting

Low IT synergies
Low impact on
IT operations
Data migration
crucial

More involvement in
day-one planning
efforts
Acquirer IT work
typically unaffected
and current
challenges remain
De-commissioning
of IT systems
Revoking of licenses
that are not required

High synergy
savings opportunities
Future IT involving
common infrastructure, central core
support, and
distributed valueadded IT capabilities

As-is acquirer
IT organization

Acquisition targets
IT organization

Source: A.T. Kearney analysis

Winning with an IT M&A Playbook

Incorporate connectors with other business functions. IT does not work in isolation during
an integration, and its interactions with other work streams are crucial to M&A success. These
interactions, or connectors, work best when they take into account the needs of other business
functions to ensure alignment and to facilitate coordination (see figure 3).
In an advanced level of the IT M&A playbook, connectors provide a plug-and-play approach
to help manage the overall M&A. Increased efficiency is the biggest benefit of this approach, as
it shortens the acquisition cycle and hastens the capture of synergies. Without these connectors,
IT integration programs suffer time and cost overruns. Since IT has become the backbone
of virtually all business enterprises, having these connectorsand getting them right at the
appropriate junctureis imperative for M&A success.
Accelerate the process. Aimed at shortening the M&A timeline, accelerators are checklists,
tools, and templates needed to manage the M&A effectively. Ranging from IT due diligence
questionnaires to IT synergy-realization templates and benchmarks, the accelerators span all
four phases of the M&A life cycle. The playbook should include examples of these accelerators
from previous acquisitions to help integration teams jump-start their activities and to accelerate
the learning curve for new team members.
Live by lessons learned. Every integration is unique, so it is essential that integration teams
learn from past lessonsboth positive and negativeand update their approach for future
deals. The lessons range from important missed activities to poorly timed interactions with
other functions, communication methods, benchmarks, and contractual arrangements. Keep
in mind that it isnt just your own M&A that offers valuable lessons. There is much to be learned
from watching other mergers or acquisitionseven those in other industries.

Figure 3
IT connects functions and work streams during integration
Illustrative

Function or work stream

IT focal point

Sales and marketing

Website migration

Procurement

IT contract rationalization
synergies

Human resources and organization

Retention and
severance

IT people movement

HR policy changes

Facilities

Future location
strategy

Future IT services
demand

Cutover synchronization

Finance

IT synergy estimation
and tracking

IT integration budgets

Tax and legal

New tax structures

and models

Legal policy changes

Project management office

Overall integration
framework

Roles and responsibilities

M&A team

Deal logic

IT due diligence

Communications

Town hall briefings

On-boarding
communications

Branding

Source: A.T. Kearney analysis

Winning with an IT M&A Playbook

Cases in Point
The value of a structured IT M&A process is illustrated by some examples of companies that
reaped substantial benefits and credit the playbook approach for turning integration from
an art to a methodical science. The playbook allowed each company to do it quick, do it right,
and keep IT going (see figure 4).

Figure 4
Turning integration from art to science

Do it quick

Do it right

Keep IT going

Complete IT due diligence within

two weeks
Integrate financial and reporting
data within four weeks
Decommission systems within
four months

Deploy seamless acquisition methodology and structured IT processes

Integrate M&A targets in six weeks
on average
Achieve an unusually high employee
retention rate of 80 percent from
target companies
Handle different acquisition types
efficiently

Ensure that continuity and

performance are never compromised
in an integration
Integrate acquired companies
rapidly while involving a large portion
of the IT staff
Involve more than 60 percent of the
IT staff in the integration process

Source: A.T. Kearney analysis

Do it quick. An engineering services company credits its IT playbook for its ability to complete
due diligence within two weeks, integrate all financial data within four weeks, and decommission
systems within four months. The companys senior leaders say the IT M&A playbook approach
has become the most significant component of their acquisition strategy.
Do it right. A global telecom company integrated its M&A targets within six weeks on average
by employing a highly structured process. The company also achieved an unusually high
employee retention rate of 80 percent in its acquired companies, thanks mainly to its seamless
integration processes. In another example, a major conglomerate used an integration complexity
grid within the playbook to identify unconventional aspects of any deal that might require
a customized integration approach.
Keep IT going. A global news organization incorporated a comprehensive IT integration
process to ensure that continuity and performance are never compromised during integration.
The company completes roughly one integration per quarter, with more than 60 percent of its
IT staff participating in the integration process.
In short, the IT M&A playbook not only increases the speed and reliability of integration, but
also helps reduce costs while ensuring a seamless acquisition and long-term success. This can
also generate important intangible benefits: better employee retention, a consistent process
driven by internal discipline, better development of core competencies, and an IT capability
that is reliable throughout the acquisition process.

Winning with an IT M&A Playbook

Making the Playbook a Success

Once the IT M&A playbook is formulated, its success depends on its active deployment and
continuous improvement. We recommend several steps to embed the playbook within the
organization and exploit its value fully (see figure 5).
Provide easy access. The best playbooks are modular and hosted on an internal wiki or collaboration portal that provides global access, where navigation is driven by the M&A phase, the
acquisition type, the function, or the work stream. The playbook deserves a prime position
on the organizations internal IT home page, where people access other important applications.

Make the playbook a success

by engaging and training the organization,
providing easy access, and seeking
continuous improvement.
Engage and mobilize. Because the playbook benefits the entire company, everyone in the
company must buy into it. People must be engaged early, with M&A teams providing positive
feedback and endorsing the playbook concept. Success stories from past M&As can help
position the playbook as a proven, practical tool kit. Capturing lessons learned will encourage
engagement and create a positive feedback loop.
Train people. A dedicated pool of IT integration experts, although costly to maintain, makes
sense for companies doing frequent deals. More often than not, these expert practitioners
already have a process in mind. However, a documented playbookcomplete with accelerators,
examples, best practices, and pitfallsensures consistency and the application of best practices.

Figure 5
Putting the playbook into effect

Sustain and improve

Integrate across functions

Provide easy access

Engage and mobilize

Train people
Source: A.T. Kearney analysis

Winning with an IT M&A Playbook

In other cases, rapid mobilization and incorporation of IT team members can start with
establishing a baseline understanding to build upon before the project starts. We find that
showcasing the playbook in interactive road shows is an effective training tool and an
excellent way to achieve initial buy-in.
Integrate across functions. An M&A playbook is a structured set of processes that brings all
functions together to help things run smoothly and quickly. An IT M&A playbook must be a subset
of the larger holistic M&A playbook. Some succeed in having M&A playbooks in place for various
functions, and their experience points to similar structures and implementation attributes
as key success factors. Similar structures refer to the breakdown by phases in the M&A life cycle,
relevant processes and activities, and supporting accelerators and examples in all playbooks.
Implementation attributes are the playbooks access mechanism, design, layout, and delivery
formatall of which should be consistent across function areas.
Sustain and improve. Continual monitoring and improvement will keep the playbook relevant.
Incorporating lessons learned and best practices from previous deals and using examples
to illustrate success stories are just as important as outlining processes and activities. For
example, pulling data from previous integrations into your cost and time estimations can
improve the accuracy of future estimates, and including retained staffs feedback will help
assuage anxieties and expedite integration and a return to business as usual.

Build Forward Momentum

While the IT M&A playbook concept offers a systematic and efficient approach to integrating IT,
it is not a standalone strategy. It is important to get the M&A basics right: resolving people and
power issues, retaining top talent, addressing cultural differences, ensuring effective communications, and managing relationships with partners. The playbook works best when combined
with superior planning and execution. This potent combination will create forward momentum
for future integrations regardless of how business and market conditions evolve.

Authors
Charles Hughes, partner, London
charles.hughes@atkearney.com

Farhan Mirza, principal, Dubai

farhan.mirza@atkearney.com

Shubradeep Ghosh, consultant, London

shubradeep.ghosh@atkearney.com

The authors wish to thank Amit Jhinzuvadia for his valuable contributions to this paper.

Winning with an IT M&A Playbook

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