For nearly a decade EMC has been engaged in a highly active Mergers and Acquisitions
strategy (M&A) that has encompassed ~70 acquisitions, and enabled the company to
evolve into the industry’s foremost information infrastructure provider. In that time,
EMC® has acquired and leveraged specialized technology, innovation, and talent
complementary to its own; significantly expanded its portfolio of product, service, and
solution offerings; and tapped into new markets. This influx of acquired resources has
helped contribute to EMC’s record growth and strengthened its competitive stance,
enabling the company to more fully address its customers’ information management
challenges in an increasingly dynamic and connected world.
Playing a fundamental role in EMC’s overall M&A integration strategy during this period,
EMC IT accumulated considerable expertise surrounding the technical and operational
aspects of the integration process. A specialized EMC IT M&A integration team began
working together, developing and refining an IT integration approach that could be used
and reused to help streamline and secure the success of subsequent M&A integrations.
Today, an agile IT-specific integration framework is leveraged to guide the process. It
can be tailored to the varying circumstances surrounding each acquisition—whether that
be assimilating an entire company or division into EMC; working with a company that
will operate primarily as a stand-alone subsidiary with only minimal IT integration points
necessary; or a hybrid integration for an acquisition that falls somewhere between.
This white paper provides a high-level overview of the multi-step process, key best
practices, and core methodology that EMC IT M&A has developed to support the
company’s successful M&A integration strategy.
Figure 1: EMC Strategic Acquisitions: 2003-2011
Each strategic acquisition aligns with EMC business to support and strengthen
EMC’s position as the industry’s leading information infrastructure provider.
THE VALUE IN
Bringing in a dedicated IT M&A
integration team just after the
letter of intent is signed by a
potential acquisition is
a best practice for EMC. Because
IT integration is core to any M&A
integration effort, the team’s
presence helps broaden the
conversation and illuminate
potential areas of opportunity as
well as operational challenges and
The benefits of leveraging IT M&A
integration due diligence efforts
early on will provide M&A
• Clear intent/strategic
objectives: the business value
to be derived from the
acquisition is explicitly
articulated in measurable terms
and is clear to everyone
• A greater understanding of
the effort and expense
required: what it’s going to
take to migrate a company,
division, or even product line
over to EMC from a time and
The establishment of a
Governance Model: high-level
details about the roles and
responsibilities necessary to
successfully manage IT
Mergers and acquisitions are risky propositions. In fact, studies have shown1 that a
significant number of M&A investments fail to achieve the synergies anticipated
(70 percent) or create the return expected (58 percent). Poor planning, indecision,
and delays during the M&A integration process often result in considerable impact to
productivity, talent egress, decreased customer satisfaction, and less-than-expected
business value from a merger or acquisition.
In contrast, EMC’s track record with mergers and acquisitions has been highly successful.
Its acumen in proficiently assimilating and optimally leveraging strategically acquired
assets to fill gaps, expand its range of solutions, and extend its competitive reach is well
known and respected across industry sectors. Although EMC draws upon the expertise of
multiple teams to support the many facets of a successful integration, EMC IT plays a
critical and integral role.
Drawing from the EMC IT M&A team’s extensive integration experience in the technical
and operational arena, this white paper provides helpful insights about setting IT
integration objectives, fine-tuning plans, speeding execution, and optimizing outcome at
every stage. A three-phase approach is outlined that encompasses considerations and
best practices for:
Due diligence to gain a comprehensive understanding of the particulars of a specific
acquisition and define a high-level integration strategy and corresponding budget.
Detailed integration planning that leverages the information and insight from
the due diligence phase and digs deeper with a formal gap analysis and assessment
in order to define a target operating model and detailed integration plans.
A streamlined and smooth execution supported by a transparent, decisive,
and sound decision making process.
Figure 2: Phases/Major Activities Deliverables
Information is also provided about the role EMC IT’s integration methodology plays in
the overall process. Comprising checklists, estimating models, and playbooks perfected
and proven over years of development and use, this integration methodology offers
overarching support and guidance for all phases of the IT integration process—but
especially during execution.
Mark Herndon, Parkwood Advisors, LLC
SETTING THE COURSE WITH DUE DILIGENCE
A high-level understanding of the factors that surround a specific merger or acquisition
helps lay the groundwork for a solid plan and ultimately, successful execution. A key
best practice is to get IT involved in the integration process early on—months before the
acquisition papers are signed.
IT due diligence discovery efforts should ideally begin after a Letter of Intent (LOI)
negotiating a potential acquisition is signed by the target company, but before the actual
deal is concluded and the acquisition is made public. During this period, the goal is to
understand as much as possible about the potential acquisition’s business and operating
models, any potential risks or gaps that would require capital investments in IT, and
operational expectations for the business and its resources once it becomes a part of the
parent company. All of this intelligence is then leveraged to create a high-level
integration proposal or “Plan of Record” for the target state.
The challenge is that many assumptions need to be made in a short period of time, and
with access to a limited number of contacts. The timeframe between LOI and a publicly
announced acquisition can be as little as 30 to 45 days. In addition, non-disclosure
agreements, meant to eliminate the risk of a stock run, tend to keep the audience to a
minimum and information on a need-to-know basis.
Prior to the actual acquisition, one of the primary sources of information comes from a
comprehensive diligence questionnaire, which is submitted to the prospect by EMC’s
corporate development team. The questionnaire is used to secure a wide range of details
on everything from finance and taxes, to business functionality, applications, and IT
infrastructure. Once completed, it is disseminated to the core M&A integration teams—
including the IT M&A team—for analysis and preliminary planning.
“The due diligence assessment helps us put together a ‘Plan of
Record’ that allows the company to model out the purchase offer
and make sure that the purchase price is appropriate given the
integration costs we see down the road.”
Jon Peirce, Senior Vice President, IT Global Infrastructure Services
DEFINING THE INTEGRATION STRATEGY
To support streamlined due diligence and planning, the EMC IT M&A team has developed
and refined an Acquisition Integration Strategy Framework. The Framework provides a
structured approach for reviewing predefined options for IT applications and
infrastructure integration based on guiding principles, IT constraints, and key
considerations. It is designed to guide discussions between the IT M&A team, business
stakeholders, and EMC’s Integration Management Unit (IMU), to raise awareness about
the complexities, effects, and consequences of M&A activity within IT, and facilitate
appropriate decisions based on that knowledge.
Figures 3&4: The figures above depict integration option considerations for both
applications and infrastructure within EMC’s Acquisition Integration Strategy Framework.
ESTIMATING MODELS AID PLANNING
Over time, EMC IT has honed its ability to more accurately estimate integration costs
using top-down estimating models. The models start with baseline costs and provide
additional levers for key variables that most significantly impact the effort and cost.
As part of their continuous improvement efforts, the IT M&A team reviews actuals
from previous acquisitions—both in terms of the size and type of target company
(i.e., hardware, software, or service) and makes updates to the estimating models as
FINALIZING THE PLAN OF RECORD
The EMC IT M&A team’s Plan of Record represents the culmination of due diligence
efforts. It offers preliminary IT integration recommendations and strategy, along with
time and cost assessments.
Depending upon the integration aspects surrounding a particular acquisition, the Plan of
Record details the strategic objectives necessary for achieving the target operating
model based on one of the following integration options:
Full integration and complete assimilation into EMC IT operations.
Partial or hybrid integration where some systems and processes will remain as is
and others incorporated into or replaced by EMC operations.
Independent applications and operations where only a few points of integration
might be involved such as human resources, legal, messaging, and security.
The Plan of Record, along with initial input from other M&A integration teams, is then
leveraged by EMC’s corporate development team to effectively negotiate the terms and
offering price for the acquisition.
SETTING UP A GOVERNANCE MODEL
In addition to the Plan of Record, the preliminary attributes of a Governance Model are
laid out by Corporate Development and the EMC IT M&A team at this stage. The
Governance Model identifies, from a hierarchical perspective, the various roles and
requirements that will be necessary to successfully guide IT integration efforts.
Key to establishing critical executive sponsorship at this time is the assignment of
senior-level leaders from both the acquiring and acquired companies. Representing core
constituents of the steering committee for the M&A IT integration effort, they provide
the necessary high-level backing and leadership required for success during the design
and execution stages.
Further evolution of the Governance Model occurs as the integration progresses; it gets
formalized with specific names assigned to corresponding roles and responsibilities in the
planning stage, and mobilized during the execution phase.
To the extent possible, EMC
leverages the same resources as in
previous engagements for
acquisition integration. Capitalizing
on expertise is vital to successful
IT M&A integration efforts because
it offers a proven, consistent, and
repeatable process carried out by
Offer expertise from previous
acquisitions and know what’s
Understand what assumptions
to make or avoid
Comprehend the inherent risks
and offer options on different
Figure 5: EMC IT M&A Integration Governance Model roles and responsibilities
BUILDING OUT AND REFINING INTEGRATION
Once the acquisition is finalized and the agreement signed, the purchase becomes public
knowledge. Restrictions are lifted and people from both the acquiring and acquired
companies can share information and resources. At EMC, information exchange is
initiated through joint kick off meetings followed by more in-depth interviews over the
course of several weeks.
Using the initial assessment outlined within the Plan of Record as a baseline, gap
analysis and evaluation is conducted at a more granular level to better understand the
current operating environment of the acquisition, clarify what the target model will look
like, and what it will take to get there. At the end of this stage, a comprehensive,
concise, and coordinated integration plan is formulated providing specifics on the various
applications and supporting architecture that will be integrated as well as what new
functional processes need to be put in place. Typically, both short-term integration
strategy and long-term plans are laid out.
Again, the refinement of integration plans is aided by the use of EMC IT M&A team
workbooks, templates, and time-and-cost estimating models that have been developed
and distilled though years of IT integration experience.
COMPLETING THE GOVERNANCE MODEL
The Governance Model, initiated in the due diligence phase, is now completed with
the names of those assigned to the various roles and responsibilities specified earlier.
The size and number of participants who will support governance, especially during
execution, typically fluctuates in accordance with the size and complexity of the
acquisition to be integrated.
SVPs, business process owners, process leads, and program and process managers are
chosen to populate the more business-focused integration slots within the Governance
Model on the applications side. Senior executives from such areas as security,
infrastructure services, and services delivery are also selected to represent
infrastructure integration (although some overlap exists with applications). In addition,
various managers are chosen as part of the functional integration team.
Leveraging the best and most experienced people to populate this structured and
hierarchical Governance Model, and facilitating dynamic, cross-functional
communications among all participants, lays the groundwork for making the right
integration choices. It also facilitates a level of decisiveness that helps keep integration
efforts moving forward to successful completion.
INTERIM-STATE PROCESSES DRIVE IMMEDIATE
Despite the varying levels of integration that occur during the execution stage, several
interim state processes are typically required for EMC and the acquired company to work
together and conduct business immediately after the sale—such as jointly selling the
acquired company’s offerings. Typically, systems that need to be integrated right away
include: financial processes, human resources, messaging, networks, and security
which need to be on par with EMC standards.
A defined methodology and approach, supported by experienced groups that have been
a part of multiple integration efforts, are called upon to quickly get these interim-state
processes up and running.
Documents you may be interested
Documents you may be interested