M&A Technology and Integration
LCG’s M&A Technology and Integration practice provides services across the transaction life cycle for Pre-Close, Day 1, Post-Close and ongoing portfolio IT improvement. We work with Private Equity, lenders, and corporate buyers to identify technology and integration risks, opportunities and costs that can have a direct impact on the investment thesis, Transaction Service Agreement terms and fees, and the ongoing operational and financial efficiency of the platform.
Transaction Support: Pre-Close
IT Due Diligence (DD)
A target’s IT landscape may present significant risks, existing issues and opportunities to the buyer. The IT DD will investigate all aspects of IT, including business applications, custom applications, infrastructure, IT support, key vendors, IT spend, the IT roadmap and the IT organization. We will inventory all the risks, issues and opportunities with supporting detail in context of the investment thesis. Additionally, we will create a list of prioritized projects and their cost estimates for pre-close and post-close consideration. Ultimately, we will raise the red flag on any significant risks and issues as soon as possible so the buyers can determine any implications to the investment thesis.
Cyber Due Diligence
Cyber due diligence is underpinned by a risk-based approach to identify risks or existing issues that need to be remediated as a condition to the deal closing and/or as a post-close activity. The cyber due diligence can reveal deal-breakers, deal-changers or more mild risks that can be prioritized for the longer-term. We will inventory all the risks and issues with supporting detail in on how remedy with associated projects and cost estimates.
Acquisition Integration Planning
Integrations vary greatly in complexity from a merger of equals to smaller tuck-ins. Regardless of complexity, certain activities need to be planned for successful post-close integration. An integration strategy and detailed plan is required so all functional workstreams and stakeholders are clear on their activities, dependencies and deadlines. In addition, a governance structure with executive reporting and stakeholder management across the platform, target and financial sponsor/PEG is needed to manage expectations, accountability and communications. Integration planning is critical to set the path for efficient integration execution (post-close) and help ensure the financial and operational investment theses can be met.
Carve-outs can be very complicated due to the entanglements of technology, processes, people / roles, data and assets of the “carve-out” entity and the ParentCo. The “carve-out” typically uses many shared services of the ParentCo that require deliberation on the future operating model and a separation strategy. This sets the stage to build a detailed post-close project plan, Day 1 cut-over plan, risk and mitigation plan, TSA framework, stranded cost analysis, and a governance model with executive status reporting. During post-close, we manage all the separation activities to expedite exiting the costly TSAs as soon as possible.
Transaction Support: Post-Close
Acquisition Integration Execution and Integration Management Office (IMO)
Integration execution needs to be strategically and tactically planned, organizationally structured and governed by the leadership from the platform, financial sponsor/PEG and target. An Integration Management Office (IMO) is established to fit the needs and level of complexity of the integration and oversee all aspects of execution. This includes the master integration plan and detailed project plans, TSA exit plan, stranded cost management, synergy tracking, risk and issue management, executive status reporting, and stakeholder communications and management. Urgency and accountability characterize the effort needed to expedite an efficient integration to exit TSAs and achieve the target operating model.
Carve-out Execution and Separation Management Office (SMO)
Carve-out execution is complicated and rich with risks and unforeseen challenges. Carve-out execution needs to be strategically and tactically planned, organizationally structured and governed by the leadership from the platform, financial sponsor/PEG and target. A Separation Management Office (SMO) is established to oversee all aspects of separating the target from the ParentCo. This includes the master separation plan and detailed project plans, TSA exit plan, risk and issue management, executive status reporting, vendor management, and stakeholder communications and management. Carve-outs require proven senior experience and technical expertise. LCG brings this talent to every engagement.
Interim Chief Integration Officer
LCG has senior professionals to play part-time, interim Chief Integration Officer roles. We bring the needed experience to coordinate the integration of technologies, processes, and people into the platform. The scope of these roles varies depending on the velocity and volume of acquisitions for the platform.
Integration playbooks are a repeatable set of processes, tools, plans and governance for platforms undertaking serial acquisitions. This is most often applicable to PEG platforms or corporate acquirers that have the internal capabilities, resources and capacity to plan and execute integrations, but lack integration expertise and tools. The playbook will be customized specifically for the platform in context of the typical target size and scale, deal volume and investment operational and financial theses.
IT Assessments give insights into the risks and opportunities of the current state IT landscape. The assessment will gauge the health and direction of technologies, IT vendors, the IT organization, IT governance / management processes, and the IT roadmap. Typically, the assessment is the beginning of a process to improve business capabilities by understanding where IT is deficient in supporting the business and where IT can help optimize the business in the future.
IT Strategy and Roadmap
IT Strategy and Roadmap outlines a comprehensive plan on how IT can support the business and help the business achieve its goals. This is a collaborative process between IT and business stakeholders and is underpinned by the IT strategy delivering new and/or improved business capabilities. The roadmap outlines specific initiatives, dependencies, sequencing, and timing to deliver the needed business capabilities. Additionally, the roadmap will have details per initiative for budget, scope, key activities, resources, and deliverables.
M&A Technology and Integration