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In this Podcast, How to Integrate Technology After Mergers and Acquisitions, we discuss…

5:30T-Shirt Sizing

Steps When Acquiring a Company
6:02Step 1 – Flyover
6:48Step 2 – How Many Users, Business Critical Applications, or Customizations
Learn More: Mergers and Acquisitions and Microsoft 365


Danny:Today we’re going to talk about mergers and acquisitions with Rob Horton. Hello, Rob Horton. How are you? That sounds so formal.


Rob:How are you? Hey Da… I’m doing good, Danny, how are you?


Danny:I’m doing great. Thank you so much. Yeah, when we were preparing for this and sort of preparing for the year. I think this was one of the things that was of interest. Because we’ve been working with a lot of companies in the mergers and acquisitions. I think a lot of stuff with regards to people having to consolidate tenants. Like one company buys another one. They sort of put them together, all sorts of topics about applications, existing applications that they have and just even today, we ended up for this year getting a really big project. With a huge healthcare organization where one purchased another. And this just seems to be really sort of this business event of a merger and acquisition has been something that seems like we’re getting more and more work around and something I know you’re excited about.


Rob:Yeah, definitely. Yeah. And it really we’ve been doing for many years, we are doing content migrations from one on-prem location to another. And then we started doing a lot of migrations from, content migrations from on-prem to online. And now we’re seeing when, we’ve got a lot of clients that maybe they’re acquiring another company and they’re both already online, but they want to have a consolidated tenant. They don’t want to have two different tenants, so.


Danny:Yep. Yep. So what I wanted to talk with you today was just sort of like early on what maybe somebody is looking at and maybe from the perspective of a VC firm and someone looking at usually, when one company’s buying another, they’re going to expect some efficiencies out of the corporations that have been put together. But they’re also, they’re going to have some expectations about, around integration costs, which is where we sort of come in and integrate the two organizations together. Just want to talk with you about some initial things, how do we come up with sort of a high level estimate on the different things that would go on with that integration? And maybe some things just that people should think about for integration costs as one company wants to buy another company.


Rob:Yeah, that’s a good starting point because when, if you’re evaluating purchasing another company or you’re in the business of helping companies acquire other companies, the efficiencies that you gain, they may come directly from consolidating IT stacks or technology stacks. It may come from, you have two different, two companies that manufacture the same widget and you want to, you think you can do more with both those companies together and then their technology stack really doesn’t, may not factor in. And the investment to consolidate tenets or to consolidate the technology on the back end, maybe that’s not a winning proposition. So, we would help a client from the get go, we would help a client determine if it even makes sense to merge their technology stack. If they both have a Microsoft tenant in the cloud already.


Does it even make sense? And to start with, to size that we would probably look at the complexity of it to begin with. Do either of the companies have business applications that are highly customized and uniquely tailored to their company and do those business applications need to be merged? That would be, that would add to the complexity of a merger. Or are they simply using Microsoft Cloud services for content management that may be a more direct, straightforward merger that would reap benefits right away and be a low cost solution.


Danny:Yep. Yep. And I guess you’re looking at sort of like the criticality of these different, applications and at a higher level the different platforms that are being used for those. Sort of taking a look at that and then looking at, I guess the benefits of putting them all in one versus keeping them separate. There’s some, I guess this at this point in time and you sort of probably have to do a high level inventory of everything that’s out there and then start talking about where you could get some of the efficiencies out of it. And then along with that, what are the costs to do that?


And usually with stuff like this, because I have to work often very early, in the early stages of projects and I use a method called t-shirt sizing. So it’s a small, medium, large and just sort of have a way of looking at these different things and, and giving somebody an initial size of that thing. I think it helps people with sort of like, well we see a huge amount of benefit in doing this integration and it’s a small that makes… Let’s go after that. So is that sort of approach that people will usually take with things like this?


Rob:Yeah, certainly. That’s sort of the first step and we’ve talked about this in the past. The first step is to kind of do a flyover. Take a look at things at a very high level is, if you’re trying to consolidate, for example, an on-prem company, somebody who’s using things locally in a data center that’s part of their business. And then the other company using G Suite in the cloud. The complexity is going to be really high there. So the sizing is going to be on the large to extra large size. And then you would want to evaluate the benefit to see if that’s worthwhile. Those are things you can identify without a whole lot of… That’s a real high level inventory.


The next level you would get into would be, how many users are there, how many business critical applications are there, how many customizations have been done. And that gets to a more accurate degree of just how much work is involved here. But that, evaluating that and coming up with those inventories, that requires work that requires effort and then consequently that would cost it would have, there would be costs incurred with that.


Danny:And I could see this too as being a oftentimes with this is there’s going to be timeframes put into place almost like a road, like a three year roadmap of how these things come together. Because it can’t all happen at once. But then you have, I think they call it day one stuff that has to be there in place, once it goes through. And I think really coming up with what that, what not just what initially has to happen for day one but also sort of where are we pulling things together long term is something that you having an outside firm like ThreeWill help out with that could be really beneficial.


Rob:Yeah, for sure. It’s… Yeah. When you talk about day one, and you talk plans in general, those, any plan that would be developed for a merger, it’s going to have a timeline and that timeline is going to impact the overall effectiveness and the overall cost. And what we talked about originally, which is, when are we going to capture those efficiencies, those costs savings so that we can start to pay for all of this effort it took to merge these two companies. And that’s scheduled, and it’s part of the valuation even to determine whether or not the merger is or the acquisition is a good deal. And if those types of activities don’t run to schedule, they run past schedule, that can have an overall impact on whether or not the merger is successful and profitable.


Danny:Yep. Yep. Good stuff. Anything… I know before we end I’d love to have a conversation, I know you know some folks in M and A, and I’d like to look through, I know some folks as well, I’d love to have more of a follow up conversation with some folks and invite them on and maybe have some questions. I know I have questions of general, is there a general cost around integration costs for a merger? If the acquisition is this big, then there’s typically this amount set aside or you just have some, a good dialogue with somebody about some of the things that are not so much about the technology but more about how is this done. And maybe how we can… Things that we could listen to that would make us a better partner for doing these types of things.


And someone who’s aware of yeah, I think for us it’s like we are often trying to figure out, does this need to be done by a certain date? What’s most important about this, the date or the cost or the quality. I think it maybe good for us to have some followup conversations with some folks specifically around M and A.


Rob:yeah, I think that’d be great. And I think we do have some plans for that.




Rob:And yeah, I’m looking forward to that as well. And the more we can listen to potential clients and understand what their pain points are and some of the hurdles that they’ve overcome, that just makes us better consultants. So.


Danny:Yep. Yep. Awesome. Anything before we wrap up? Any last minute comments or anything else you’d like to share at this point in time?


Rob:No, I think that’s it. I just, I do believe that this is a, this particular business event provides a good opportunity for our firm to help add value to our clients and even to a specific sector of clients. So I’m looking forward to expanding on this and really working on this, tackling it this year in 2020 so.



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