Du-u-um Dum Dum Du-u-um! Legal Day One is THE BIG DAY for mergers and acquisitions (M&A)! It is the day two organizations become one. It is also the day the sins of Day Zero activities—or lack-thereof—come home to roost.
As we saw in Part 2 of the C-Suite Series, there are many pitfalls executives walk right into that sink expected M&A cost synergies down the road. Legal Day One (LD1) is down the road. This is where lack of IT due diligence during Day Zero cost analysis and timelines hits the bottom line; and we learned in Part 1 that IT integration has a big impact on the bottom line, bringing in up to 50 percent of M&A value and cost savings.
In Part 3 of the C-Suite Series, we’ll explore some of the pitfalls of LD1 that can destroy M&A cost synergy goals as well as where to go to get more information to avoid these and other M&A pitfalls.
LD1 pitfall #1: Lack of integration planning
Legal Day 1 and the 3-6 months after are all about getting the two organizations to work together to migrate and consolidate directory and communication systems without disrupting the new collaboration efforts. That’s a tall ask given that LD1 is a set-in-stone date with strict transition service agreements (TSA) assigning fees for any delayed system cutovers proceeding LD1.
This is why IT involvement in Day Zero timelines is so important because the IT team will give executives a realistic timeline for these projects. Even with IT due diligence performed before the deal is signed, lack of integration planning for LD1 and the system migrations that follow will continue to sink your expected cost savings and revenues and undermine the perceived success of the deal to the marketplace.
For example, if you fail to fully define network connectivity requirements, critical business processes might be unable to access customer data, disrupting services and shaking consumer confidence in the new company. Without a complete application inventory and recommended endstate portfolio, you might inadvertently fail to support applications that are needed for important business functions, as well as miss out on true rationalization opportunities.
LD1 pitfall #2: Lack of communication
This quote sums up LD1 pitfall #2 perfectly:
"In any acquisition or divestiture, there are a lot of moving parts and parallel execution. If any one of them is late or doesn’t get done right, it can create heartache on everybody’s part down the line. You have to get the right people involved upfront, people who understand the nature of the transaction and what’s going to be needed."- Jarrod Roark, Professional Services Director, Quest Software
Just like executives need to include IT decision makers in Day Zero activities, so too do IT decision makers need to create effective channels of communication to and from business stakeholders to ensure actual LD1 services like email, free-busy, shared calendaring, and instant messaging are working. They must also ensure that essential business processes necessary to the security of the organization or the goals of the M&A are maintained and prioritized during the LD1 transition time.
Learn more about the pitfalls of LD1 as well as throughout each phase of the IT Integration process and how to avoid them in this e-book: “C-Level Guide to M&A IT Systems Integration”.