To Meet M&A Day 1 Requirements, Don’t Skip These Steps

To Meet M&A Day 1 Requirements, Don’t Skip These Steps

Day 1 can make or break any M&A IT project. A successful Day 1 sets up the new entity for success and gives employees and customers confidence that the merger or acquisition is good for them. On the flip side, if the transition isn’t managed correctly, invoices, payroll, contract management, and other critical business processes are all at risk.

Of course, the IT department isn’t solely responsible for ensuring a smooth transition. Finance, legal, accounting, and HR teams all play essential roles in starting the new entity off on the right foot. But they all depend on IT to access the systems and tools they need.

That’s a lot of pressure for the IT team to shoulder. Ensuring a successful Day 1 requires careful planning, due diligence, and experience with the hurdles and surprises that can come up during M&A projects. Read on to learn about commonly overlooked issues that prevent you from meeting Day 1 requirements.

What Makes for a Successful Day 1

There’s no single blueprint for what makes Day 1 successful. Every merger, acquisition, or carve-out is different. But there are some common requirements that you’ll see for every transition. In addition to migrating systems and being ready to go live, IT must usually be prepared to accommodate the following needs on Day 1:

  • Help desk infrastructure, including a knowledge base accessible to all support staff
  • Device interoperability across both entities’ networks
  • Common information security standards
  • VPN(s) 

Outside of IT, departments throughout the business need training and support to ensure that critical business processes stay on track. Because of the scope and complexity of the transition, these Day 1 must-haves are typically the items most essential to ensuring the continuity of day-to-day business:

  • Consolidated financial reporting for finance and sales teams
  • Time tracking, payroll, and benefits administration
  • Customer invoicing and payment
  • Security, access, and identity management

Communication is also an essential aspect of Day 1 readiness. Employees, customers, and potentially even vendors need to know what is changing and how it will impact their work processes. Some employees will also need training to get up to speed on new systems and any temporary workarounds they’ll need until the transition is complete.

Commonly Overlooked Transition Steps

Even though Day 1 requirements are boiled down to the most essential aspects of the integrations and migrations, the transition team still has to manage many moving parts. The road to Day 1 comes with potential pitfalls, many of which you can avoid. Here’s how:

1. Ensure TSAs serve all parties’ best interests

Transition Service Agreements (TSAs) are becoming increasingly popular to accommodate shorter M&A timelines. If an experienced expert doesn’t oversee the TSA, both the seller and the buyer may find themselves unsatisfied with the terms of the agreement. Vague language can leave both parties unclear about their roles and responsibilities. The seller may find themselves obligated to provide support for longer than expected. And the buyer may find themselves without adequate support for ongoing operations. A collaborative, communicative TSA development process, with advice from M&A IT experts, can prevent you from encountering these obstacles.  

2. Assess software licenses and hardware assets early

By performing IT-specific due diligence upfront, you can identify gaps and deficiencies in both entities’ hardware, software, and infrastructure. For example, software licenses don’t always transfer to the new entity. Performing a pre-assessment licensing review will help you determine whether you have enough seats and which software assets carry the most value. 

Also, many organizations limit their technology investment in the years leading up to a merger or acquisition. Often, transition teams discover these issues too late, leading to delayed timelines, rush orders for new hardware, and interruptions in service. With a detailed technology assessment, you can determine whether the hardware is up to date, secure, and compatible with the systems used by the new entity. Upgrades or replacements can be accounted for and processed early, so budgets and schedules stay on track.

3. Anticipate changes to cultural norms

M&A transitions can upset a company’s cultural norms. For example, if users are used to walking over to the IT department to address technical issues, that may not be feasible with the new organization. Making a shift from in-person support to a phone- or ticket-based help desk can be frustrating for them. Some may attempt to bypass the new process, especially if they don’t yet trust the new team.

Identify these cultural disruptions as early as possible. Be prepared to explain why the change was necessary and arm the new support team with as many resources and tools as possible. If they can answer user questions and resolve issues effectively, that will give employees confidence in the support team and the transition as a whole.

Be Ready for Day 1 With the Right Team

Performing due diligence, creating a mutually beneficial TSA, and preparing for disruptions to cultural norms should all be part of a thorough, detailed project management plan. A team with expertise in M&A IT projects can relieve the heavy burden of planning, documenting, executing, and testing, all of which internal resources would have to do on top of their day-to-day tasks. 

At SubjectData, we understand the nuances of M&A-related IT projects and can help you navigate around common pitfalls to ensure Day 1 success. We act as an extension of your team to ensure all aspects of your IT transition are carefully considered and executed. With us as your IT project management partner, your internal teams can focus on day-to-day tasks without having to stress about Day 1 requirements.

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