Mergers & Acquisitions: Day 1 - Process

Introduction 

Day 1 is when you take full responsibility for the acquired organisation.  

In my previous article, I summarised the CIO’s Day 1 priorities in terms of People, Process, Technology and Data. 

In this article, I expand on the second of these focus areas – Process. 

Context 

When two organisations come together via an acquisition, decisions need to be made about how things will be done. Does each organisation retain their own ways of working or do you standardise? And which processes do you use for cross-organisation activities? 

Much will depend on the Business strategy and the strategy underpinning the decision to acquire this organisation. 

Preparation 

During due diligence and leading up to Day 1, your organisation will decide how processes will operate from Day 1. 

Cross-organisational processes 

For activities affecting both organisations, a consistent approach will be needed 

• Some processes – e.g. authorisations - financial & organisational and communication will impact all parts of both organisations 

• Others – e.g. incident reporting and escalation and management of potential and actual breaches (data and security) may be more Technology specific 

Organisation- specific processes 

For activities managed within each organisation, there is more flexibility 

• In the short term, will the acquired organisation continue with existing ways of working or will immediate changes be made to standardise processes? 

Governance 

As summarised in my article on the People aspects of Day 1, there is also a need to decide which forums and meetings should  

• continue unchanged 

• stop or be replaced with other existing forums 

• expand to include both teams  

• change the required inputs and outcomes  

• start 

and who should attend each event. 

Where Day 1 changes are agreed, you will make sure there is appropriate documentation to support the change.  

Using your Business Strategy – particularly in terms of integration and business operation, you will also develop plans for the long-term approach to operating the acquired business.  

Specifically, you will decide which processes each part of the organisation will follow – e.g. continue existing ways of working in both organisations, standardise to one organisation’s ways of working or adopt best of the best once assessment has completed.  

Whilst it will be a priority for the CIO to make decisions about Technology specific processes, the CIO also has a key role in developing and agreeing the strategy for wider business ways of working because this will have a significant impact on the requirements (and therefore cost and timescales) for the Technology integration and ongoing roadmap. 

Day 1  

Immediate changes 

You are now officially one organisation and decisions you made about processes in the lead up to Day 1 will need to be put in place.   

You will need to ensure clear communication about these changes to ensure a common understanding. Make sure relevant documentation is shared with people affected by the changes and that they know where to get help. 

You will also need to finalise the plan you have developed to move to the end-state ways of working.  

The agreed approach to end state ways of working will have a significant impact on the scale, and therefore cost and timescale, of the Technology changes you will need to make. As a result, the CIO needs to be involved in the wider organisational decisions about ways of working, in addition to moving to the end-state operation for Technology processes.  

Moving to the end-state operation 

Retain existing ways of working 

If the decision is for each organisation to continue existing ways of working, then the focus will be to ensure the immediate cross-organisational changes have been bedded-in and any interim steps are replaced with final processes. Otherwise, the organisation has already moved to business-as-usual and can consider opportunities for further improvement – e.g. there may be forums that can be introduced (or existing forums expanded) to bring the wider organisation together to discuss and agree best practice and opportunities to learn from each other. 

Standardise ways of working 

If the decision is to standardise to one organisation’s ways of working, then there is more planning to be done. The first decision is to confirm which organisation’s processes will be adopted and then work with both organisations to develop plans for change.  

It is important to be clear and transparent about why the decision has been made - for example, if the acquiring organisation is significantly bigger and already works in a standardised way then this may be the most cost-effective approach. You also need to explain what the impact is likely to be on affected parties. In the example above it may mean that the changing organisation will need to take a step backwards in terms of optimal ways of working – because some of their processes are better than those they will be moving to – but overall, the combined organisation will have optimised cost-effectiveness. 

Effective change management will be key to ensure the new ways of working are understood and adopted in the changing organisation. Engaging key representatives within both parts of the organisation to support and drive this change management will be key to adoption. The organisation that continues with existing ways of working has the knowledge of how to operate these processes and should work closely with these representatives and the change management team of the affected part of the organisation to provide key knowledge and support throughout and beyond the implementation process. 

Adopt best of the best 

If the decision is to adopt best of the best on a process-by-process basis, the organisation will need to complete an objective assessment of each process in each organisation and from this information-gathering determine which processes will be adopted going forward. Work will also be required to determine how these different processes will operate together. Implementation then needs to be planned.  

All the change management and communication points above apply here – but at increased levels for both organisations. The change is more significant because it is likely that most people across the organisation will be affected to some degree; even if a specific process is not changing, there will likely be changes in interfaces to other processes that are. 

Conclusion 

There are always some cross organisational processes changes in any organisation. The degree of change will be dependent on how centralised v devolved the parent organisation is.  

The level of change for other processes will be heavily dependent on the approach taken; the three main options are 1. to retain existing ways of working, 2. to standardise ways of working or 3. to adopt best of the best.  

Each approach requires different levels of analysis, planning and preparation. 

The approach taken will also have a significant impact on the work required to deliver the end-state Technology outcome across the two organisations. 

And of course, the people aspects of each option will require different levels of engagement, involvement and support. Clear communication of decisions and implications will be key to a successful outcome.