Life in the M&A fast lane

There is a lot to be said for the way that high street banking giant the Royal Bank of Scotland orchestrates its IT integration following a major acquisition – even though for those caught up in the maelstrom, its ‘take no prisoners' approach may be somewhat unnerving.

The underlying – and incredibly successful – strategy relies on getting all IT systems migrated to RBS's array of platforms as fast as is technically and humanly feasible.

One side effect is that innovative functionality developed by the target companies can be lost for ever. For example, back in 1998, NatWest had invested heavily in upgrading its ATM network, and had developed additional features, such as being able to buy theatre tickets via the hole-in the-wall. One hostile takeover later and the ATM machines were quickly converted to the standard RBS system.

By having such a single-minded acquisition strategy, RBS has been able to avoid some of the integration pains that have bedevilled deals of a similar size at other companies. It is well documented that most acquisitions fail to fulfil the expectations set by the acquiring company's board – growth and savings targets are often missed and financial markets left disappointed. And avoiding that can be down to acting swiftly and decisively – especially when it comes to merging the IT.

The longer it takes to merge systems, the harder it is to complete the integration. That is just one of the lessons highlighted in our cover story, ‘M&A impact'. As Andrew Morlet, an M&A expert at Accenture, puts it: "Inertia kills mergers."

The upshot of this is clear: CIOs and other senior IT managers are under intense pressure to ensure that IT is not an inhibitor on the acquisition process.

What is their success rate: well, studies show that there is a higher level of attrition at the CIO level in the months following a major acquisition than for other groups of senior managers – including the CEO.

The good news? M&A activity is not necessarily a career death sentence: pull it off and your CV is gilded (at least until the CEO dreams up the next deal).

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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