MERGERS AND ACQUISITIONS IT STRATEGY: The Impact of technology on M&A

[Music] welcome chromecast check it out i'm sam major commercial director of chrome technologies and joined once again by rupert mills my business partner managing director cto and general dog's body warning sam um topic for today i think quite an interesting one and something we're certainly seeing a lot of not just in our industry but uh across all verticals is is mla mergers and acquisitions yep now we're seeing a lot obviously huge amount of consolidation in our in our vertical with a lot of big distributors sort of dating and vendors etc etc but also we're seeing it in our customer base more and more we're being involved in that kind of the diligence part of assisting people in that m a journey and obviously something i know you've done an awful lot of work with uh not just recently but throughout the years but as it has accelerated um it's been i know it's taken up a lot of your time recently yeah absolutely there's kind of a land grab going on uh in our industry in particular at the moment people sort of consolidating things together there's lots of people out there buying up small products here and there and turning them into one big product which is happening a lot lots of people out there buying up four or five of our competitors and turning them into one company which has its challenges i'm sure um but then yeah the the industry at the moment with where um especially since the uh sort of the advent of brexit and with the dollar rates being where they are against sterling and all the rest of it at the moment yeah it's making buying things in this country very attractive for people so yeah absolutely sentencing a lot of it and you mentioned it's got two things there's the the smaller guys being hitting up by the bigger guys and then some of the bigger guys doing the big acquisitions yeah absolutely two very different sets of challenges and i guess lots of different considerations when we're assisting people doing both of those yeah absolutely i mean a few years ago you've got dell buying emc i mean that was absolutely monumental but i haven't seen one that big for a while but certainly as you say the top end of that market but we've got it going on with clients so we've got a number of customers who are acquisitive so to speak but also somewhere for example dispersals and things like that so they're actually taking part of a business and saying let's separate this piece out and sell it off as a separate entity or whatever so and you've always got massive i.t transition going on in those scenarios so you've got systems being needed to be merged you've got two companies with two different sets of policies needing to work together for a period of time or you've got how do we take this data out of this system that it's been in for the past 20 years so that that legacy problem of we've got that box over there that no one's thought to touch for 20 odd years because it's death about what we do with it and then how do you then integrate that into the into kind of new code if you're going to do that that full integration yeah i mean that can be all sorts of things two examples which i've worked on relatively recently one was okay we're doing the due diligence on a company that one of our customers was going to buy and in the corner over there there's a sko unix server that no one's turned off for 20 years because no one knows anything about it please don't touch it okay how do we make sure that's going to keep ticking once that once the company changes hands and everything carries on working that was that's that's one end example of it and the other was a large financial institution getting separated into two institutions and they were looking at the uh basically historic sap data and what do they do with some of that data and the costs of duplicating it and running two seps sap systems were astronomical all they needed was the historics of it so again that's where people like our store octane can come in and help um so there's different elements to the whole thing but there's it's a massive set of moving pieces um so we get involved in a lot of either the pre-pre-acquisition due diligence or pre-disposal due diligence um or it could be actually during that transfer services agreement phase so sort of the purchase happens and then you've got this period in the middle where two companies have got to work together they're trying to achieve a common goal that's the tricky bit a lot of times you've got that kind of uh an acquisition has happened we've got a date where new co is taking over let's say but you kind of have to run in parallel because often doesn't lend itself to just depend on type of company i guess if you're buying it lock stock and barrel you just you own the whole thing you can manage the systems as is but if you're as we've seen with certain customers they're buying let's call it a slice of a company you have to work out how you you cut out that bit of oracle or that bit of sap or whatever it might be and and manage it through that transitional period yeah and cost effectively and compliantly yeah absolutely i mean that's it we've seen one of our larger customers who's gone round and bought up lots of very small businesses now to integrate those with a very large corporate that they are to then turn around and say okay we want to put that corporate policy so we've done interim support for those small businesses as they've acquired them and looked after them in that hand handover phase and helped them transition onto the corporate it model and then pass them into the large corporate we've done that that's that's one way of doing it as you say if someone's acquiring a business completely we've got another customer who tends to buy up businesses internationally that fit their model because they're moving they're expanding their international footprint they didn't tend to buy the entire business so it's then okay doing the due diligence on what they're buying and how's that going to fit in with the corporate model in the long in the long run but it's a bit bigger than that just buying up lots of small businesses and then the other way is buying a piece of a very large company at which point you've got two very large companies trying to play together and and often we sort of help in the middle to to try and to to do the transition so there's all sorts of different factors at play you've got software licensing you've got hardware you've got security security is a really big one yeah all those things that you've got to take into consideration and every different software vendor has a different method of how do you transfer the license is the license even transformational um so yeah and and all of those different pieces that you've got to tie together can they they need to be fairly tightly managed projects so yeah we do we do get involved in a lot of them that's a huge amount of due diligence a lot of heavy lifting i guess up front and i know that's certainly a lot of work you do with our customers is actually the is the planning before you get into that that kind of transformational stage because if we don't know everything before we get into trying to do or undertake that transformational journey that's fraught with danger yeah i think i think you have to accept you're never going to know everything but it's trying to get as much as possible uncovered and on the table and also make sure that you get a good working relationship with both sides so you can actually resolve them because you've got that day one when completion happens and the deal is done that there's always challenges on day one and it's making sure you can put some sort of hyper care support in place to help around that and then moving forward to sort of the end of the tsa if that's in place how you deal with that as well to make sure that everything is tested thoroughly before you get there things like i was talking to you earlier about things like software licensing with all the new csp models from microsoft and cloud services from azure aws that sort of stuff you no longer have to say well let's take an estimate how much we've got to buy of everything at this point and then we run the business and find we didn't need all of that spend and we overspent massively you can buy things on a monthly subscription now so you can say actually let's turn this all on we can change it at the drop of a hat literally more licenses can be added almost instantaneously more into the classroom yeah and then allow you to right-size that environment throughout the transfer services agreement to do whatever you need to do correctly and lock into long-term contracts at the end of that so that's a that's kind of a new model with the new services available in the market that's coming about but it's it's it's doing all of those different things as a massively moving puzzle moves around that's very true i was thinking do we i guess it's in your opinion this i guess the way we now consume i.t the fact that we can use things like the cloud we can burst and so on is making some of this uh the way we transform the way we transition is easier potentially historically where it would have been big bang you're going to have to put all this infrastructure in all these new licenses and you know hope that that's the right size the right spend for x amount of time and actually we can now with uh subscription services and whatnot best guess and then adapt as we as we need to and use that interim time before i guess we to go wholesale into new ownership to to sizing to plan properly yeah i mean we worked with a company a few years back who a few years probably it's probably half a dozen now when those sorts of models didn't exist where we literally were sat outside the business with all of the hardware they needed for day two in in a van um to get a load of systems up and running waiting to go in and implement that at the point the ownership changed and the night before something fell out commercially in the deal and the whole thing was off and okay so what do you do with all this equipment you've got now um so so that was a challenge but these days things like that are moving away um which is really really good it's certainly making a difference to how things can be done as you say the sort of on-demand model yeah is helping things like that be a much smoother transition doesn't really solve the okay what are we doing with all the historic data stuff because you've still got that data footprint but that's something we're very familiar with from uh working with the store up team i was about to say yeah you obviously the compliance angle you've got even though you own the company you're then responsible for the retention of that data for whatever it might be seven fifteen to life all that sort of dr regulations all of that stuff yeah now that wasn't a few years ago exactly so you inherit all of that so it's having the right tool set and and employing the right knowledge to consult these people to to make sure that during that period that that's all taken care of because as we know uh getting that wrong can be very costly as well yeah absolutely it's a bit like a much more complex version of an office move because changing all the systems at that same time it's uh it's it's fun so there's obviously huge amounts of considerations and we've talked i guess at quite quite a high level uh on some of this i think it'd probably be good if we could obviously we can't know names of people we've worked with but the process kind of doesn't really change and we have to do an awful lot of invested work and auditory work and and deep diving to make sure we get it right helping people mitigate risk we're working with people that whilst we've done this a number of times we're often working with teams that never done it before and often their guidance so i think it'd be useful for our audience um like i say we're not naming names but just our process kind of doesn't change if you could talk through um almost kind of day one to how do we get to ensuring that we have a successful transition to into newco and i guess that journey in between yeah there's a whole bunch of different things we need to do so there's upfront assessment what's what's there what's the existing landscape look like so we can use auditing tools there's various different software asset management tools we use to put in place there's things like dell's live optics tool that we can use and audit hardware infrastructure we can put various things in place to look at firewalls sort those out and look at what security rules are in place all of that sort of stuff can be done as an audit and then there's a big phase of sort of meetings in the middle where you sit down and look at what does the existing company have and what does the new company need and you kind of do a mapping of one to the other and say right we don't need that we don't need that we don't need that we do need this then once you've isolated the things you do need you can work forwards with a okay how do we look at the vendors that are in play there and then make sure is that transferable is it not transferable is that asset staying with the old business do we need to replace it or is that asset being transferred to the new business and we're going to own it does that even work in the if it's legacy is it transferable into the new world and how do we take care of that problem yeah absolutely things like warranties okay so you're transferring it's it's important when you're buying a business for example if you're buying a big hardware landscape and you know that actually you don't need to replace that for the next five years that's fine but if you need to replace it next year and you're buying it this year then actually that's something that goes into the financial considerations so it's all feeding into the business case for that actual acquisition as well in in those scenarios so using those various tools to right-size everything then looking at the vendors just negotiating with some of the vendors so we've been in situations where a large accountancy or erp solution vendor might say no no you can't transfer that you need to buy it all new and it's going to cost you x number of millions of dollars you look at that and you say well actually we don't need that component that component and that component because they were in use in the previous company but that's for something else that they were doing in another area of their business it won't be in use in this business so those sorts of things can lead to huge cost savings and yeah and again right sizing for that implementation uh there may be increased costs in some areas okay so that was provided by a shared service over here and that won't be there anymore so you've got to buy something to do that element that but essentially doing all of those sizing activities is really really important and at the end of it you can come out with okay this is this is what the landscape looks like well then it still needs to be an area of contingency in there because there's always guaranteed to be a something that pops up and shows its head we normally end up visiting the site with our customers as well because there's there's little substitute for actually going and talking to the people who you're involved with and doing a site audit because ultimately those those people who are in the business day-to-day will probably give you a different picture to the picture that comes from the sort of managerial top down especially if it's a global business you find that often the people you're talking to managerial top down maybe not even in the country let alone the office where you're you're talking about for some time um that happens a lot yeah and and so actually doing a site audit as well as a physical site audit as well as a virtual site audit is useful it allows you to get a good feel for how well things have been maintained i've walked around sites with with customers where things have been absolutely dreadful and then and sites where things have been immaculate and and you can kind of get a good feel for how much work you're going to have to do after day one yeah by a lot of that so i'm so that helps as well okay oh yeah the whole thing then as we're looking at the the staff involved as well because obviously it's not just the business it's the people and then and in some cases some staff won't be around others will be retained and they'll be part of that transformational journey as well so it's working with those people and it's leveraging their skills or upskilling transferring of information all that sort of stuff yeah especially in businesses operating a shared services model a lot of them will have okay that's fine it help desk is over here but you're buying this piece of the company helped us go don't go with that as a good example um or sometimes it will be and sometimes you'll be okay you're going to take these 57 people but you don't need 57 people in the it department over here now you need five yeah so it's trying to add all of those elements together and it's something that is really done with just getting involved getting deep into the project and working with customers so it's something as you say that myself and a number of the other tech team members will get deeply involved on these projects with our customers and become part of the customer's team yeah so we effectively operate as the customer and work with them to try and get through to the the end game and help them facilitate what they want out of that either acquisition or disposal or whatever but but try and work with them to get them to a situation where it's successful at the end as you said earlier of course yeah and i guess from our side uh just to kind of frame the sort of team we put on that is obviously yourself kind of as a technical lead in this but you'll be working with maybe program director or ba and pms and all this sort of stuff to make sure we've got the the right team to put all this information together and the right tech so you know underneath myself on the on the tech side of the business we've got um various teams so security teams you've got infrastructure teams you've got software teams those various different elements i can give a good level of um understanding to most subjects broadly yes but i'm certainly i'm not the expert in a lot of them these days and that's where we can pull in our experts okay i'm working on one at the moment we were discussing it earlier and we're going to bring in one of the security guys specifically to talk around the security piece of the project and work out exactly what the right solution is there now i can hypothesize on what the high level stuff is or so can ben for example who also works at at my level but actually ben is a better example than me in terms of security these days he can get involved in the deep area of that but we've got lots of other people that we can draw on as resources so it's being able to pull the right people from our teams because we are a fairly broad operation in terms of the subjects we cover we can pull on the various people in those areas to say okay let's pull that person in to be the subject matter expert here this one over here simple things like creating new office 365 tenants or um new azure tenants that sort of stuff we do email migration so so often for customers in terms of upgrades it's very similar in this sort of scenario okay how do we migrate from one environment to another that actually our experts on office 365 for example are great to pull on and say how we're going to achieve this for two different businesses rather than upgrading inside the same business a lot of the skills are similar awesome lots of interesting stuff lots to consider uh and i'm going to do so often did you on this podcast uh kind of you know your top three things to consider uh or to make sure are right when entering into a into an m activity um i would suggest looking at levels of access first of all you're going to need the access to the data you need from the existing environment you need access to the people you need from the existing environment basically being able to gather the data you need to to make it a success at the end of the day subject matter experts to work with you so we're experts in a number of areas but for example we're not in something like an sap environment or something like that so you need someone to handle that for you but the right subject matter experts to work across each area of of it that you're taking on and then finally time scale so for me it's often okay how do we get this done by such and such a date and you can do things quickly but actually if you've got the time to do it properly um it it would mean a more successful output at the other end yeah cool yeah so prepare properly give yourself the time for it and i guess define what success is before you crack on yeah absolutely brilliant thank you welcome and thank you for joining us on this edition of chromecast if there's anything you'd like us to cover in future episodes please leave that in the comment section below like subscribe and share and join us again on chromecast take it out [Music]

Channel: Krome Technologies

Views: 190

Keywords: Mergers and Acquisitions IT Strategy, The impact of technology on M&A, M&A, how to make a successful acquisition, it planning before buying a business, running two businesses in parallel, making a successful acquisition, it planning and strategy, challenges of mergers and acquisitions, pre-acquisition due diligence, business acquisitions, mergers and acquisitions, it integration after acquisition, mergers and acquisitions impact on it, making an acquisition, M&A checklist, merger

Id: i4VQ-iCoHGU

Length: 18min 11sec (1091 seconds)

Published: Tue Oct 19 2021