Mergers and Acquisition game has been on the increase owing to the benefits attributed to it. In this sense, while engaging in a merger or acquisition game, companies have the full understanding that they have to carry out a financial due diligence for reasons of ensuring smooth running of transactions. Although they are careful to carry out the financial due diligence, ensuring that IT systems can be merged together successfully is a factor whose importance cannot be underrated. This is given to the reason that most of the M&A's operate under different IT systems which may challenge the management if they are to be operated at the same time. This calls for one to carry out the IT due diligence so that success may be realized in the operation of the M &A (McDonnell, 2006).
In the same line of thought, IT due diligence is an importance factor if it is incorporated since if it is not carried out it poses great challenge to the management given that the two companies merged or entering in an acquisition operate under different models of carrying out IT processes. IT due diligence is an important factor in ensuring that informed decisions and price negotiation decisions are made with precision. As well, banks and other related organizations are seeking for IT due diligence in order that they may fund Mergers and Acquisitions (M&A) (McDonnell, 2006). Technology has been the driving force for many businesses in almost all sectors of economy. Owing to this factor, great care should be taken to ensure that any M&A IT management is successful as well as the aspect of it not allowing room for mismanagement brought about by incompatibility of the business process models involved.
As such, IT due diligence necessitates the ability of the acquirers to learn pre-existing IT systems which may require modification, upgrades and thus set budgets that support such processes (McDonnell, 2006). There is a need for the M&A transactions to use the target IT operation information in the process. It is through IT due diligence that negotiations are made along with taking care of technology issues that may pave way either for business risks or opportunities in the larger perspective (McDonnell, 2006). From a general point of view, operational technology opportunities are brought out by IT due diligence since it reveals the stability of technology infrastructure under which the M&A has to operate.
It is not obvious for M&A to carry out due diligence in the IT systems and as a result many of the M&A fall in businesses' risks since the two IT systems cannot be merged. In order that effective IT management may be realized in an M&A, there is need to implement an integrated workplace management solution so as to cut down operating costs of the workplace and this makes the new role of CIO in a M&A (Moore, 2011). So to articulate, cases which have real estate as the driving force for a merger, presentation of the real estate IT portfolio is imperative (Moore, 2011). Accordingly, base underpinning components in relation to a real estate, requires IT services operation with the applications like networks, laptops, servers and databases altogether (Moore, 2011).
In the recent times, M&A have sought to have the best tools to solve the dilemma of merging two different IT systems. Subsequently, there has been the development of some solution and in this case it is important to cite service-oriented architecture (SOA) as a tool for effective IT systems merging (Satwah, 2006). In respect to this point, SOA has the capacity to give a foundation for a bank to effectively manage the environment of an M&A which is often filled with a requirement for compliance. At the same time, this can help an M&A IT management to retain information assets and so avoid business risks brought about by mismanagement of IT in a M&A. M&A have been faced by the problem of incompatible business models of processing and in order that this may be dealt with effectively, IT due diligence is very crucial.
According to Laudon & Laudon (2010), the success of any business in the current world of technology is determined by the level of information systems possessed by the management. Outstandingly, information systems are crucial in the making as well as the maintenance of firms which are competitive. As well, Information Systems makes customers services easy as well as the aspect of being the key tool for a successful management of a digital driven firm. Together with this point, Laudon & Laudon (2010) points out that information systems knowledge necessitates the incorporation of digitally-driven management by means of the use of enterprise applications which range from customer relations to the enterprise systems for efficient and effective management.
In reference to Paulson & Huber (2001), M&A involve the selling of technology rather that the finances. As such, there is therefore need for one to carry a due diligence of the technology of the target firm in order that the pit falls of failure and business risks may be avoided and as a consequence realize the associated business opportunities for the M&A.
In summation, there has been an increased operation of M&A aimed at ensuring the efficient operation of businesses. This is given to the reason that mergers and Acquisitions can operate with a combined financial and market efforts and thus attain competitive advantage. While this is the case, IT mismanagement has been the force that has been leading to failures and business risks. In order that this may be solved, there is need to carry out IT due diligence given that M&A involves merging of different cultures and IT systems of operation. IT due diligence has the capability to provide the target IT operation infrastructure and the required modifications, upgrades and the required budget to cater for the associated costs.