TitleEvaluating IT Integration Risk Prior to Mergers and Acquisitions
Publication TypeJournal Articles
Year of Publication2016
AuthorsKhazanchi, D, Arora, V
JournalISACA Journal
Date Published2016

Integration of IT systems and IT management processes is one of the major challenges in the mergers and acquisitions (M&A) process that affects all aspects of the merged business and is, therefore, crucial to the overall success of the M&A process. The purpose of this article is to highlight various types of IT integration risks and the associated costs that must be considered and factored in with the predeal negotiations in each and every M&A. This is important, especially because of the huge costs involved in integrating incompatible systems and meeting the mandatory regulatory compliance requirements. The article suggests looking closely at technical, managerial and user/application level risk factors as part of the M&A pre-merger due diligence. This effort would also evaluate the potential real costs of IT integration post-merger and contribute to the overall M&A valuation. Some of this approach is already widely recommended by M&A advisors and major consulting firms. The article recommends going even further by creating a national M&A IT integration database that provides anonymous inventory of IT integration risk factors and costs before and after an M&A to better understand how IT integration risk impacts the valuation and success or failure of M&As.