1. Make IT a Partner in Successful M&A Due Diligence
Get IT involved in the merger & acquisition process pre-close to help ensure post-close success.
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2. Table of Contents 1. Title 2. Introduction 3. Project Kick-Off
4. Execute the Project/DIY Guide
Phase 1: Launch Due Diligence
Investigate Challenges and Benefits
Gain Executive Buy-In for IT Involvement in M&A
Phase 2: Gather Information
Determine Current State of Target Organization
Consider Current State of Own Organization
Phase 3: Perform Analysis and Estimate IT Integration Costs
Define Resultant Enterprise
Close Gaps and Estimate Costs
5. Summary/Conclusion
6. Appendix

3. Our Understanding of the Problem
The CIO of an acquiring organization who is responsible for conducting effective due diligence.
The CIO who suspects a merger or acquisition (M&A) may be in the agenda next year and wants to understand how to be most effective during the due diligence phase.
Make the case for involving IT early in M&As.
Identify the critical issues and key decisions that need to be made during the due diligence phase of the M&A.
Conduct effective due diligence that emphasizes cross-functional communication and realizes optimal post-integration synergies.
IT Due Diligence Team
Enterprise Architect
M&A Team
Recognize the importance of IT’s involvement in M&As.
Understand the role IT should be playing during due diligence.
Identify how they should be working with IT during due diligence to make key decisions and assumptions.

4. Executive Summary
Many organizations are unaware of the essential role IT plays prior to executing a merger or acquisition. The involvement of IT in the due diligence phase is critical to providing a better view of risks, improving the ease of integration, and optimizing synergies post-merger.
IT-related activities are usually the largest cost items in an M&A, and when these costs are overlooked or underestimated, it can end up costing organizations millions in additional costs down the road.
To mitigate risks and create accurate cost estimates, the CIO must force their way into the M&A conversation before the deal has closed.
Gathering and analyzing information is an iterative process that is ongoing throughout due diligence. Update your assumptions, risks, and budget as new information is obtained.
Communication with the M&A team and business process owners should be constant throughout due diligence. IT integration does not exist in isolation.
Even if IT is involved early, the time between the Letter of Intent and the signed deal may be as little as a 3-4 weeks.
On top of this, non-disclosure agreements work to keep those “in the know” to a minimum and information on a need-to-know basis. This can make it extremely challenging for the CIO to make accurate cost estimates.
CIOs have to force their way into the conversation during the due diligence phase, before the deal is closed and it is too late to make changes or price adjustments.
The CIO has a line of sight into IT integration considerations that the business often does not consider or take into account. As such, the CIO has an obligation to explain the IT cost implications of the M&A to the business in order to ensure they understand the whole picture before they make their decision.
The CIO needs to collect information on both their own organization and on the target organization, analyze the information, and then make critical assumptions to define the resultant IT enterprise.
By doing this the CIO can provide the M&A team with the accurate cost information they require to make holistic decisions.

5. This blueprint focuses on the role of IT before the deal is closed
Deal Closes
This blueprint covers these three phases
Launch Due Diligence
Gather Information
Perform Analysis and Estimate Costs
Refine Integration Plan
Execute Integration
Investigate Challenges and Benefits
Determine Current State of Target Organization
Define Resultant Enterprise
Refine Target Enterprise
Execute the Plan
Gain Executive Buy-In
Consider Current State of Own Organization
Close Gaps and Estimate Costs
Develop and Prioritize Initiatives

6. Info-Tech mergers and acquisitions thought model
Business
Data & Applications
Infrastructure
IT People
CEO onboard the
S.S. Synergy
CIO
IT Processes
IT represents one of the largest costs associated with a merger or acquisition. Despite this, business leaders often underestimate the importance of involving IT early in the process and the difficulty entailed with effectively integrating IT.
The CEO and other business leaders are focused on the part of the iceberg they can see (the business implications of the merger) and often do not take the hidden part (the IT implications) into consideration.
The CIO is a shark under the water. The CIO has a line of sight into the hidden part of the iceberg that the CEO and other business leaders on the ship cannot see.
As such, the CIO has an obligation to explain the IT cost implications of the M&A to the business in order to ensure they understand the whole picture before they make their decision.

7. Step-by-step insight breakdown
The M&A team can forget about the hidden part of the iceberg (IT) when sailing towards decisions.
When making M&A decisions, IT costs can be underestimated and overlooked.
In Info-Tech’s thought model, the business is on a ship sailing towards an iceberg. From the ship, they can only see the business-related M&A implications that are above the water.
The CIO, on the other hand, is a shark under the water. The CIO has a line of sight into the significant IT costs associated with M&As.
CIOs have to rock the boat and force their way into the M&A due diligence conversation.
When it comes to getting involved in M&A due diligence, CIOs have no choice but to rock the boat and force their way into the due diligence conversation. To do this, CIOs need to make the case outlining all the benefits that IT brings to the table.
Once the CIO has received agreement for IT’s involvement in M&A due diligence, they should use a Due Diligence Charter to plan a course for the ship that avoids hitting the iceberg and sinking. This is a commonly overlooked step, but is important for setting the ground rules and for outlining what IT is offering.
The iceberg is so large that the CIO doesn’t have time to examine the whole thing.
The CIO should start with a high-level approach and continue to drill down on specific parts as they gain a better sense of what information is needed to accurately estimate costs.
The CIO may not have the opportunity to drill down deeper and ask for additional information from the target organization. In this case, it is better to have an end-to-end idea of IT in the target organization than to have detailed information about only one part.
Remember that this is an iterative process. Continue to update your risks, assumptions, cost estimates, and scope as you gain additional information.

8. Step-by-step insight breakdown, continued
Break the iceberg into manageable domains to help structure information gathering and analysis.
When looking for information to consider at each stage of the information-gathering phase (current state of the target organization, current state of your own organization, and resultant enterprise), the CIO should use manageable domains.
They should use the domains: Business, Data & Applications, Infrastructure, IT Processes, and IT People.
This allows the CIO to sort information into categories while, at the same time, keeping track of how everything fits together in the big picture.
Remember that all parts of the iceberg support each other to keep the tip afloat.
Even though the iceberg has been broken into parts, remember that each parts supports each other to keep the tip afloat. The CIO cannot lose sight of the relationships between the domains.
The CIO will have to look at all domains to define the IT merger state. They will not be able to make decisions in isolation. The CIO must remember that each domain will have implications on the other domains, so keep the relationship between them in mind.  
Once the ship sets sail, there will be no turning back. The CIO must stick to the budget.
The budget the CIO has outlined will be the budget they must stick to. They must be prepared to justify the budget to the business through risks and assumptions.
The CIO should create a trail in the IT Due Diligence Report that shows how the different lines in the cost estimate can be traced back to different assumptions and risks.

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11. Perform Analysis and Estimate Costs
Phase 1: Launch Due Diligence
Phase 1
Phase 2:
Phase 3:
Launch
Due Diligence
Gather
Information
Perform Analysis and Estimate Costs

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