Scaling up for fast growth is a key challenge for many small and medium-sized businesses and they often acquire or merge with other businesses in order to meet growth demands. But so-called "M&A" activity can be tricky, particularly when it comes to integrating disparate systems and IT employees -- often times across many time zones and continents.

As a small or mid-sized firm prepares for an acquisition, there are steps that executives or technology managers can take to better prepare staff and systems. Business executives who have managed an IT department through a merger say that the overall experiences of employees and customers are often the most important consideration in the planning process.

 “It is critically important that our new employees understand how their daily activities may change and why, in order to minimize disruption for them and ultimately our customers,” said Dave Goff, chief information officer of technology provider Emulex Corp., which acquired Aarohi Communications and Sierra Logic within six months of each other. The merged business now maintains operations and design centers in Bangalore, India, as well as two locations in California – Roseville and San Jose.

Communication is key

Good communication with employees and customers during a merger or acquisition is critical to success. The day after an acquisition is the most challenging from a planning and execution perspective, Goff says. As always, it’s the small things that matter in these instances.  “Our new employees want to know that e-mail, scheduling, four-digit dialing, voice mail, access to the company's Intranet and [virtual private network] access will work seamlessly during the transition," he says. “In many ways, this is one of their first impressions of the company and it's important we hit a home run.”

Joe Davis, President and CEO of Coremetrics, a San Mateo, Calif. provider of online marketing optimization solutions, acquired IBM’s SurfAid Analytics division in 2006. He agrees that communication is key during an acquisition. In addition, he stresses that it is important for technical leaders to:

  • be experienced and have good technical and project management skills;
  • set reasonable expectations and set consistent and timely review sessions (don’t create situations where you try to get it all done in one day);
  • and decide what systems (infrastructure, personnel, payroll, billing) will be the surviving solutions.

Technology matters

In his recent merger, Davis had to manage and integrate two disparate systems with two distinct clients and installed bases. “The strategy from the beginning was to not rush a technological integration, but to implement a gradual plan that ultimately combines the best of both solutions but at the same time does not cause breakage for our clients,” he says.

After the merger, Davis focused on billing and merged only those IT systems that could be successfully integrated in the first year.  He set as his goal combining all billing processes within 12-18 months after the merger. He left the data centers separate for the first year and built a plan to integrate them physically within18 months post merger. In terms of solution offerings, he first identified those features and functions that promised to deliver the most rapid return on investment and then integrated them into the surviving solution.  Over time, he plans to implement an over-arching infrastructure that combines the best of both solutions.

During the Emulex integrations, Goff used an Internet-based virtual private network (VPN) along with the standard firewall, routers, and base infrastructure like domain name server (DNS) and network information service (NIS) to provide connectivity to the acquired firms. Goff says that the Internet VPN usually had a shorter lead time and worked well until the company was able to get a Multi-protocol Label Switching (MPLS) circuit in place.

Goff suggests that IT execs at small or mid-size businesses provide a "Welcome Kit" to new employees as they prepare for a merger or acquisition and develop a playbook for IT. The "Welcome Kit" is designed to provide a listing of the most commonly used services and tools with the most common tasks and supporting screenshots for IT employees. The playbook is a master list of all pre- and post-close activities. While each acquisition has its own personality, the playbook is intended to be adapted to reflect the needs of that integration. Just as importantly, the playbook should be refined before and after each and every merger in the spirit of continuous improvement.