By Barry Lewington | Bushey

Our last Merger and Acquisition (M&A) Programme had an interesting start, we had done the usual scoping and proposal activity whilst the final discussions at business level were progressing. There was limited technical information provided and we were unable to glean much else from research. When there was light at the end of the tunnel our client asked us to start and prepare the technology teams developing the high-level designs, but then came the drag as we went months waiting for the deal to be signed.

Fortunately, as we got to speak to the technology team who were to join our client details of the current state started to drip through. It was limited and very protective.

Six months after starting the deal was approved and we could start the process of separation from the existing owners environment and migrate to the new client platforms. As a regulated environment the regulator gave us six months to separate, a task we had planned to do in twelve. Emergency meetings were drawn and nice to haves were shelved and only the items that were priority one were maintained. But with tight planning, sound communications and basic stance of focused support for all of the technology teams, we were able to keep a business of more than 2,500 staff across more than 30 branches continue to run whilst we slowly shifted, updated and stabilised the business on a standalone platform, where the team could prepare the environment for the Integration Stage.

Now, I have spent a significant part of my career working at the intersection of technology and business change. Every M&A Programme is different, the M&A integration sits at that intersection in one of the most demanding ways imaginable. The pressure is immediate, the complexity is high, and the tolerance for delay or disruption among the people who funded the transaction is low. In that environment, technology is rarely the story that gets told in the boardroom before the deal closes. And that is precisely why it becomes the problem that dominates the conversation afterwards.

Acquirers model synergies and build business cases that identify cost savings, revenue opportunities, and operational efficiencies. What those models frequently underestimate is how much of the projected value depends on technology integration, and how much that integration will actually cost to achieve in terms of time, money, and management attention.

The gap between, what was the assumed cost and the real cost of technology integration is one of the most consistent sources of value leakage in M&A. It is not unusual to see organisations that have closed a transaction with well-defined synergy targets find that a significant portion of those targets are effectively inaccessible until systems are integrated, data is rationalised, and processes are aligned across what were previously two separate operating environments.

In our M&A Programme, the deeper we dug the more we found the need to pull out and replace as it would not integrate with the acquirers environment, and this went from Laptop to core network and security platforms.

Achieving the required state takes longer than was ever planned, after all changes generates Issues and issues need to be fixed before we can move on, and its still the same faces day in day out, supporting BAU and Projects.

Managing the programme budget as costs come in and in most cases, it costs more than was ever budgeted, and while it is taking longer and costs mount, the business is absorbing the distraction of the integration while still being expected to perform. Yes, the regular meetings with the business asking when will they get access to global applications, when you know the security projects are in flight and the network connections haven’t been delivered yet.

None of this is inevitable. But it is common, and the reason it is common is that technology integration is too frequently treated as an execution problem to be managed after the deal closes, rather than a strategic question that should shape the deal itself.

Technology due diligence in M&A has improved considerably over the past decade, I remember engaging on one project after the deal and the client had undertaken the due diligence. I was sure the documentation provided was for another environment. It was conveniently dropped and I created a new pack after undertaking a week long set of onsite workshops with the acquired teams.

This now forms part of our technical assessment (due diligence) as part of the pre-close process. The challenge is always, that the scope of what gets assessed, and the questions being asked, do not always reflect the full complexity of what integration will actually require.

A standard technical due diligence tends to focus on the condition of the target’s technology estate, and the age and supportability of core systems, the level of technical debt, the security posture, the licensing position. These are important questions. But they are questions about the asset as it stands today.

Having run many of these we also identify how the asset will behave when it needs to be connected to, or replaced by, or run in parallel with the acquiring organisation’s own technology environment. We run scenarios with the team asking them to play through the scenario and provide us with their best assumption of what would happen. In these environments expect a lot of equipment past their life and a general lack of investment over the past few years, this is common for a business who will be sold off, investment is withheld and assets sweated, with the problem left to the new owners.

The questions that matter most for the integration are different. How dependent is the business on its current systems for the day-to-day activities that generate revenue?

Identify where data structures are incompatible and where it will make consolidation genuinely difficult?

Which integrations exist between systems that will need to be rebuilt rather than simply redirected, or migrated?

What does the target’s technology team look like, and is it capable of supporting a major integration programme while continuing to run the business? These questions require a different kind of expertise and a different kind of conversation.

Getting this right before the deal closes changes the integration planning significantly. It informs the sequencing of work, the resourcing model, the timeline, and ultimately the targets themselves. Acquirers who invest properly in pre-close technology integration planning consistently achieve better post-close outcomes than those who treat it as something to figure out once they have the keys. But as ever it does depend on the co-operation of the business being acquired.

The post-close period sets the tone for everything that follows. The energy and excitement is very clear when we start and it is important to be upbeat and for the team to recognise early wins, to maintain the momentum. The technology also needs to know that the Programme Team are supporting and covering them.

Decisions made in the first hundred days, specifically about which systems to prioritise, which processes to align, how to structure the integration team, how to communicate with employees on both sides, will have a compounding effect throughout the remainder of the integration. Getting them right is disproportionately important.

What I observe in integrations that perform well is a clarity of prioritisation that is often absent in those that struggle. The leadership team has a clear view of the two or three technology workstreams that are critical to realising the deal thesis, and those workstreams receive the attention and resource they need. Everything else is sequenced deliberately around them. There is a difference between an integration plan that lists everything and an integration plan that makes explicit choices. The organisations that make explicit choices tend to move faster and with more control.

There is also a people dimension that is consistently underestimated. Technology integration is delivered by people, and those people are frequently going through significant uncertainty about their own futures as part of the process. Retention of key technical staff in the months immediately following a transaction is a genuine risk, and it is one that requires active management rather than assumption.

Private equity firms that are active acquirers have, in many cases, developed more disciplined approaches to technology integration than their corporate counterparts. The investment horizon creates a clear incentive to plan integration rigorously, because the value created or destroyed during the hold period is directly reflected in the return at exit.

The best PE-backed integrations I have been involved with treat technology not as a support function to be rationalised, but as a value driver to be shaped. They ask what the technology estate needs to look like at exit to maximise optionality, and they work backwards from that to define the integration roadmap. That is a fundamentally different framing from ‘how do we consolidate these two IT environments,’ and it produces fundamentally different decisions.

This is the thinking that sits at the centre of Bushey’s M&A Technology Transformation Practice. The work is not simply about integration execution, though we do that well. It is about helping acquirers, boards, and integration leaders see their technology decisions in the context of the value they are trying to create or protect and then structure the programme to serve that purpose.

If you are planning an acquisition, preparing for integration, or managing a portfolio of transactions, the technology conversation is worth having earlier than feels comfortable. Not because the technology is the most important thing about the deal, but because it is often the thing that most directly determines whether the value the deal was designed to create is actually captured.

The mergers that win are the ones where the acquiring organisation walks into day one with a clear technology integration strategy, a realistic understanding of the complexity involved, and the capability to execute under pressure. That combination is rarer than it should be. But it is entirely achievable, and the difference in outcomes between organisations that have it and those that do not is, in my experience, substantial.

The deal itself is rarely where transactions fail. It is everything that comes after it.

Barry Lewington is a technology strategist and Managing Director at Bushey, working with organisations across Australia, APAC, Middle East and the UK to align their technology investments with business outcomes. He has been writing and speaking about enterprise technology for over 25 years.