Mergers and acquisitions (M&A) are high-risk approaches to revenue growth — but with that risk comes reward. Even amid a tumultuous economy, and despite a global pandemic, opportunities for deals abound. Bain reports there were 28,500 deals made worth $2.8 trillion in 2021.
For companies who do choose to grow through acquisition, closing the deal is just the beginning of a complex process. A key metric of a successful M&A includes integrating IT operations between both parties.
The tried and true IT model for navigating acquisitions and mergers is ripping out the acquired company’s systems and replacing them with the acquiring company’s systems. While this “rip and replace” method mitigates the complications that can prevent two systems from working together effectively, the outdated approach adds time and cost to a merger, delaying and reducing ROI.
For an example, take a retailer with more than 10,000 stores which used the rip and replace method when acquiring smaller chains. For those acquisitions to become profitable would take many years because of the expense involved with replacing IT systems. Things such as the hardware, personnel and training all add up.
Now if that company completes a deal with another company to acquire a chain, they need to design an IT process which merges the IT operations of the two companies more quickly and affordably. In this instance, our solution, dubbed the “home office first” approach, can help retailers save money during a merger, reach profitability earlier and retain their best employees during what is typically a time of upheaval.