Midsize IT companies are the usual suspects who fall to acquisitions and mergers. These are the easy fallen prey to the industry financial crisis and they do not have the necessary funds to back them in such crisis. Despite these hiccups, midsize companies are growing rapidly since they are flexible and adapt according to the customers’ needs. The bigger companies keep an eye out for such mid tier firms and are always looking out for acquiring them in the long term.
The acquisition basically happens for industry growth, technology acquisition, venturing into new business domain, rights to intellectual assets and vertical integration and so on. Mergers and acquisitions are happening all over the market but the difference between a successful merger and an inappropriate acquisition lies in its execution. A successful integration is a sensitive matter and needs to be done through a diligent process in place. For example if an IT organization that provides IT services acquire a firm which provides contract management as a service. After the merger is done, the first task is to understand their business process and structure and later on do due diligence on their market strength, visibility, revenues & profit margins, risk analysis and other obligations which come with the acquisition. The next step is gathering all the information of the company’s assets, departments and their related vendors. These can be done through –
- Annual company reports – this might show you the revenue details, profits margins and loses if any
- Files/Databases – will provide the information for the various contracts and their due dates
- Assets – look for the important assets that you own and any other obligations surrounding them
Once you have collated all the information, the next question is where you store this data. The common approach is spreadsheet. But in the long run it is certainly not good enough. For year on year data you might want to have repository systems wherein you can feed in all the details and their documentation. The spreadsheet method is a far gone by and it consumes a lot more time since most of the work is manual. The best way to overcome this is switching to one of the online tool applications wherein you can access it 24/7 anywhere. There are many advantages to it as well. You can purchase a tool available from the market itself or you can build your own tool by selecting the metrics that you want to track. This gives you flexibility and a customizable approach through which you can define your fields to track.
The tool will also enable you import and export your support documentation and reports. You can also put in the contracts into the systems, which will also eliminate the process of maintaining the hard-copies. This can be covered by assigning digital signatures to the contracts. Also when you are done with the acquisition, the initial stage is not to directly deal with contracts i.e. transfer, renew, and cancel. But your first step will be consolidating the existing data into one spot and then deal with their contracts accordingly. Some contracts might be expiring in the next thirty days which will require immediate attention whereas some might not be due for the next year or two. This can dealt with in the later stages of their tenure. Hence it is important to have a contract management tool in place or else you might end up doing the entire work again if someone asked you to back to a particular record. The main challenge in the entire acquisition process will be to integrate the people and process and to transition them to the new tool without going back to the old files.