What Does Merger Acquisitions Mean?
The term M describes the merging of two companies. If this occurs through a fusion or merger, this process is called a Merger. If, on the other hand, shares of a company or an entire company are purchased, this purchase is called an Acquisition. The IT sector plays an important role in this.
M IT: Proper Preparation with Due Diligence
During a company acquisition, due diligence involves the precise examination and evaluation of the target company, considering its financial, legal, tax, and economic condition. The IT Due Diligence provides information on strategic, operational, and financial opportunities and risks of IT, which feed into the purchase decision, price negotiation, and subsequent Post Merger Integration.
By analyzing the IT of the target company, also called the Target, and creating business plans, we can make reliable statements about the IT condition and possible restructuring scenarios at an early stage.
Increasingly, software and technology play a major role in the M environment. Decision-makers often face the challenge of finding the right technology for their use case.
digatus has many years of experience in advising and evaluating technology or software-heavy transactions. We conduct Software Due Diligence with the help of our partner Cape Of Good Code. Learn more about Technology Software Due Diligence.
Determining the Current State: Optimization of Contract License Management
Optimizing contract and license management is essential for cost-efficient IT. Even before the Carve-Out (spin-off), we provide support with IT-related questions regarding the Sale and Purchase Agreement (SPA) and the Transitional Service Agreement (TSA). In our opinion, TSA and SPA consulting are particularly important, as they establish the contractual framework for ensuring the continued operation of IT. It also regulates which hardware and software will be transferred.
An initial analysis, categorization, and evaluation of existing contracts provides a comprehensive overview of costs, contract durations, and contract types within a very short time during the Carve-Out.
The determined current situation serves as the basis for the individual concept proposal and subsequent implementation with the client.
Cost synergies can be utilized through license model adjustments and harmonizations as well as the use of bundling effects. Often, an initial analysis also shows potential for “downscaling” – i.e., canceling service level, maintenance, and license agreements that are no longer needed or are oversized.
Spin-off of the IT Area Using Carve-Out
Whether Carve-Out or standalone projects – separating a business unit is a complex process for both the divesting and the receiving side.
This process encompasses legal, contractual, procedural, and financial aspects. Throughout the entire transaction process, the uninterrupted business activity of the Target must be ensured. We take care of the conception of the spin-off or separation of entire IT architectures of company parts with active change management for processes and organizations.
Rapid independence of the Target creates the prerequisite for process and cost optimizations while simultaneously offering the opportunity to align IT with the long-term corporate strategy.
The Proper Integration of IT Processes Within IT M
Professional advice and implementation regarding the necessary activities within Post Merger Integration (PMI) are often lacking for realizing the synergy effects identified in the Business Case. Here, the integration of IT organizations and processes into existing structures is essential.
At the same time, technologies are consolidated according to the ‘best of both’ approach to leverage the technological strengths of both units. We ensure that the entire IT, including ERP systems, applications, and IT infrastructure are considered. To ensure the most efficient and smooth integration process, we also focus on conducting training and clear communication with all stakeholders.
Completion of IT Merger Acquisitions Transactions: IT Operations
Following the transaction process, the target is transferred to the optimized IT operations. For us, consulting services and implementation go hand in hand. As a consulting and service group, we optionally offer comprehensive operation of IT infrastructure and applications in addition to consulting services.
Christoph Pscherer
He has been working in the IT environment for almost 30 years, gaining experience in various roles and areas. Through his years of experience as a Service Manager, he knows the challenges and needs on the customer side. He has been applying this deep understanding and knowledge at digatus for more than eight years. As Head of BU IT M&A and Transformation, he and his team support all IT topics along the value chain of M&A projects. This includes due diligence, carve-out, and integration projects.
