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The importance of IT integration in mergers and acquisitions

IT integration in mergers and acquisitions (M&A) is basically a process of integrating systems and procedures to allow new and old systems to be operated optimally and safely.
It is the collaboration of several people and organizations in order to create a global solution that covers all business processes and IT areas.
In any merger or acquisition, there are two conflicting needs for IT systems integration: the business unit wants to start selling its products and services as quickly as possible, and the IT department, on the other hand, wants to spend the time and the effort required to effectively integrate the systems.
Both of these goals are critical to the success of the merger, and once achieved, you can begin to create incremental value for the business.
However, for the results to be favorable, we need to define critical aspects, such as what platforms the new organization will run on or what is the best form of IT integration. 
Managers often fail to make the right decisions around these variables and focus on the wrong things, including low-priority projects that may continue to run independently or through an ad hoc connection.
If you want to know what are the best strategies for an adequate IT integration in mergers and acquisitions, continue reading this material that we have prepared for you.

What is IT integration?

IT integration or systems integration is the connection of data, applications, APIs, and devices in an organization to increase efficiency, productivity, and agility.
When it comes to business transformation—that is, fundamentally changing the way they do business to adapt to market changes—integration is key because it enables everything in IT to work together. 
Integration not only connects systems but also provides the functional advantage of connecting disparate systems.
It is a collaborative process involving various company departments that includes the business and information technology areas. 
In addition, the cooperation between the business and IT areas is considered an important part of IT integration in mergers and acquisitions.
It is a process that involves employees at various levels, who are vitally important to achieving the company's business objectives.
IT integration involves the following groups of collaborators:

Business:

Areas such as Sales, Marketing, Finance, etc.

IT areas:

Departments and individuals such as Software Development, Network Administration, System Administration, Security, Process Administration, etc.

Support areas:

Departments such as Accounting, Legal, Human Resources, etc.


Why is IT integration important in mergers and acquisitions?

Mergers and acquisitions are growth phases that have specific impacts on the IT structure. 
One point that is often underestimated at this stage is the integration of the information technology structure of the company. 
An IT integration project includes everything from the concept and architecture of the migration to the complete integration of management and operations systems.
Experience has shown that poor IT planning is often one of the factors that lead to failed mergers and acquisitions.
Profits may be hampered by technical constraints that could affect the execution of plans when the business is closed.
The challenges of technological integration include two areas: the BackOffice system for administration and solutions for the management of the company's Core Business.
The degree of integration required varies from case to case, especially if the two companies involved in the operation are from the same branch of industry.
Once an agreement is reached and the transaction is closed, the company has to integrate the IT systems of the new company with the existing ones.
This is the part of the merger that allows the two companies to merge into one and continue to function as such.

How to achieve a good integration?

For these transactions to be successful, organizations must meet a few criteria:

Develop a strategy:

You need to develop a plan and define your vision for the coming years.
Identify target companies – This will help realize your vision and find acquisitions or mergers of organizations that fit that vision.

Conduct due diligence :

It is important for your company to assess the organization you intend to acquire in order to arrive at the correct valuation.

Negotiate and close the deal:

The main objective of the negotiation is to reach an agreement that is beneficial for both parties.

It is important to highlight the steps that should be considered before proceeding with an M&A:

Identify synergies:

Take into account the characteristics that create value for the company.

Transaction planning and execution:

Mergers and acquisitions must be planned in detail to execute a merger successfully.

Communicate with internal and external stakeholders:

Clear information and timely communication are key.

Validate the cultural changes:

Some deals fail because the integration happens between two companies with very different cultures.

It should be noted that significant weaknesses in acquisitions or mergers are related to culture shock, poor or nonexistent pre-purchase IT due diligence, undetected issues, and overly optimistic evaluation of the process.

The merger or acquisition should be the result of a strategic plan and prior evaluation that will give you a better understanding of the companies you want to acquire and, ultimately, make the best decisions.
It is worth remembering and emphasizing that the information technology area must participate during all the above processes to guarantee a correct IT integration in mergers and acquisitions.
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Topics: IT Due Diligence