When it comes to the phases of the acquisition activities the basic flow goes something like this:

  1. The acquirer gets an idea in their head that it is time to buy.
  2. They send out an initial request to the company being acquired.
  3. If all is well, then the acquirer starts obtaining access to the company financials and assess the legal standing. This is the start of the typical Due Diligence period.
  4. If the acquirer likes what they see, then the deal may be announced with a more formal letter of intent. Depending on the size of the company, approval of the board, and regulatory approvals required, this can be from 0-14 months, and more in-depth analysis conducted.
  5. When all is well and everything is signed, then the deal is considered closed. This is day 0. This is also when most of the integration work should be underway.
  6. First attempt to report joint numbers, and other terms of the agreement post-close such as any outstanding transition service agreements. This is the day 1.
  7. Post-Day 1 activities to on-board customers, align branding, fully realize the purchase.

At the end of the day, when we look at the tech side of the fence all of the work is done in the integration phase starting around steps 5-6. At this point, the budgets and personnel are allocated, timetables set, and the integration work is underway.

I won’t comment on finance and legal’s involvement as that is obvious. It makes sense for other groups such as HR and marketing to get an earlier jump to align on branding, messaging, and on-boarding/off-boarding people mainly because they are all marching towards a hard cut-over deadline to match the announced acquisition. However, I’ll also argue that once everything is ready, their job is done.

I will argue that IT’s involvement should be closer to between step 4-5. Unlike most of the other work, IT has two issues they get to deal with:

  • The short term integration work to on-board the integrated business
  • The longer term support of either the new components and user base

These issues feed directly into not just the planning/budget discussions that will happen after close, but also go directly into the negotiated contracts and transition service agreement discussions that legal will be having with both parties to negotiate what the transition path looks like.

From the resource/skills perspective, it will also assist the acquirer’s IT department to identify where their gaps are and remediate it by purchasing hardware, finding skills, whatever it takes. Especially since things like hardware will take time to procure it isn’t guaranteed that the acquired company will be conveying all of their hardware as a part of the deal.

THIS is why the Tech Diligence should be a part of your due diligence phase.

cab