Blog

IT considerations for a successful M&A

Overlooking IT during an M&A deal can lead to hidden costs and integration challenges. Learn which technology components you must consider to maximize your success.

minute read

Last Updated October 31, 2024

Share

As a leader in the accounting profession who has witnessed numerous mergers and acquisitions, I’ve seen firsthand how important technology is to M&A success.

The challenge is, most leaders involved in the deal often focus on high-level practice valuations, compatibility and synergies; IT is frequently overlooked. But technology across the combined entities shouldn’t be underestimated. In fact, it should be one of the first things leaders address when evaluating the deal.

In this post, I’m sharing:

  • The hidden costs of overlooking IT.
  • Technology components often get lost in the M&A “shuffle.”
  • An easy-to-use checklist to identify any gaps in your M&A technology strategy.

Hidden costs of overlooking IT during an M&A evaluation

Consider these scenarios:

  • You’ve just merged with a firm that seems perfectly compatible on paper. However, you soon discover that their workstations can’t effectively run your standardized software, forcing you to unexpectedly replace dozens of computers within the first year.
  • You’re about to finalize an M&A deal with a similarly-sized firm. Just when it’s time to sign on the dotted line, you discover that the combined data volume exceeds your primary storage capacity. The deal nearly collapses at the unexpected and costly SAN upgrade.
  • You’re well into the first year of working as a combined entity and staff is still struggling with productivity issues because of the strain on your existing remote access solution. The resulting frustration leads to lower client satisfaction and unhappy employees.

Incompatibility between systems costs more than money; lagging disintegration leads to wasted time and sometimes even loss of clients and staff.

5 technology components most likely to get lost in the M&A shuffle

Time and time again, I see the following technology components getting overlooked during a merger:

  1. Hardware: Before signing any agreement, conduct a thorough assessment of the target firm’s hardware. Set realistic minimum requirements for monitors (resolution, screen size) and workstations (processor type, RAM, storage, etc.). Plan to replace or upgrade machines that don’t meet these standards immediately.
  2. Remote access infrastructure: Robust remote access is crucial. Evaluate whether the current solutions can support a larger user base or if you’ll need to invest in technologies like Microsoft Remote Desktop Server or Citrix, or alternatively, use a cloud hosting provider. Using a cloud provider makes managing the expansion of your workforce and infrastructure requirements easier, both technologically and financially.
  3. Data: “Data” comes in different formats and languages, depending on which software you use. And even if both firms use the same software, data conversion can be tricky. Some vendors have limited availability for merger-related conversions, especially during year-end. Factor in potential delays and consulting fees for data integration.
  4. Software: Create a unified set of applications for the merged entity and mandate adoption within a specific timeframe. This includes tax, assurance, practice management and collaboration tools. Be prepared for potential resistance and plan for training costs.
  5. Contracts: Identify any long-term, non-cancellable contracts for software or services. These can become a significant financial burden if the acquired firm’s systems aren’t compatible with your existing tech stack.

While the above list provides a good overview of the most common components often forgotten during an M&A deal, it’s not exhaustive of every technology consideration you must make. Get more details about application, software, hardware and infrastructure considerations, here.

Successful M&A begins with you

Remember, successful mergers are about more than just combining practices, they’re about creating a unified, efficient operation.

Technology plays a crucial role in this process, and neglecting it can undermine even the most promising partnerships.

Whether you’re at the beginning or tail-end of your deal, read through our checklist of M&A considerations to ensure you’ve covered your technology “bases.”

By prioritizing technology considerations in your M&A strategy, you’ll be better positioned to navigate the complexities of integration and realize the full potential of your merged firm. In the digital-first accounting world we live in, this approach isn’t just advisable—it’s essential for long-term success.

Subscribe to our blog

Get Rightworks articles delivered straight to your inbox.
Privacy(Required)