IT in Mergers and Acquisitions – what should you concentrate on?

IT can often be the forgotten relative in M&A deals, lost amongst legal and financial wrangling. We think it’s more important than that – so if you’re planning on buying or selling a business, here’s why.

Here at Waterstons, our Mergers and Acquisitions team are kept busy for much of the time performing ‘technology due diligence’ projects. We spend time with buyers, and indeed sellers of businesses on deals often worth tens or hundreds of millions of pounds. Despite this, we’re still aware of and surprised by, the number of deals which proceed without much attention being paid to the existing and planned technology and systems landscapes of the businesses involved. We think this is a situation that needs to change – as a minimum there are some things that are material to any deal. Every deal is different, but here are our top tips that apply to all:

1. Focus on the future state of the organisation

Design what your core systems and underlying infrastructure will need to look like for your future operations and move towards that. Put in place systems and technology that align with the ‘to-be’ business and don’t get hung up on the ‘as-is’ state.

2. Understand the full systems picture early

Alongside the obvious – ERP, Finance, Infrastructure - what are the other key systems? Think of security and regulatory needs. Don’t forget this is an opportunity to standardise, rationalise and modernise. Pay close attention to any bespoke systems, and any which are sub-licensed from the divesting parent company.

3. Get the people right

Your IT staff, and your third-party support contracts need to be able to deliver that future state and operate it well. Take the opportunity to review the current team, and don’t overlook existing staff members when recruiting for any new positions. There may be stars waiting to shine!

4. During the transition

a. Do not neglect today’s business

You may need trusted interim staff – CIO, desktop support or anywhere in between – to allow you to concentrate both on today and tomorrow. Hire them if you need to – but look inside the business as well. Make sure any interim staff integrate well with your in-house people. The cost is small compared with your business failing.

b. Be bold

Don’t worry if you have to write off some obsolete kit or systems – make the case and get on with it. Any deal represents an opportunity to improve; you wouldn’t be buying the business if you didn’t see a future in it.

c. Prioritise key issues

There are always a hundred priorities. Focus on simple headlines like ‘Can we despatch?’ and ‘Can we invoice?’. Identify those areas which simply cannot fail, and prioritise them over those that could create temporary issues if they do.


This is the first in an occasional series of postings on IT in deals. The second takes a step back and looks at more aspects to consider before putting pen to paper on your deals . We have other ideas – information security? Insourcing vs outsourcing vs a combination? – but let us know what you’d be interested in.

Hear Andy Bates, Lead Consultant in AEC and Dan Burrows, Executive Transformation Consultant speaking at DCW 2019

17 October 2019 , ExCel London

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