Technology plays an increasingly critical role in all firms, yet information technology departments are generally the last to know when a firm is merging with another - or being merged.Why?

IT is typically not part of a merger checklist and frankly, most people negotiating mergers know little about IT. Nevertheless, technology (or the lack of it) is one of the principal reasons firms merge.

The other primary reasons are a lack of leadership and lack of a funded retirement program or succession plan. Sure, growth drives mergers, but your firm may be missing a great opportunity to ensure a smooth transition, as well as cultural transformation, with some planning ahead, rather than merely reacting after the deal is done.

Over the years we have witnessed the largest and smallest of firms among the Boomer Technology Circles enter into mergers, and based on these observations have compiled a list of best practices.

Many firms have initially ignored IT during mergers, only to discover that they should have done due diligence and are amazed at the cost (in time and dollars) of integrating a merged firm. In the old days, firms simply let the merged firm continue to operate using its old systems until it was time to upgrade, or hoped for a convenient occasion. What they typically found, however, was that it was never convenient, and those with political power don't want change. Some merged firms still employ this strategy, but they generally experience significant cultural differences, inefficiencies and frustrations. Often these are the mergers that don't work.

It is impossible to share resources among offices if they utilize different systems and, more important, if people are trained on and familiar with different processes and systems. In today's economy, firms cannot afford management inefficiencies. Poor management will be exposed quickly. Far from a minor consideration after the deal is done, IT should be addressed in due diligence during pre-merger planning sessions.

In some cases, it could even become a deal-breaker!

Let's look at an abbreviated checklist to illustrate some IT issues that arise during mergers. We will follow that by examining some best practices from experienced firms.

Even the best firms often fail to conduct due diligence when merging IT departments prior to signing a deal. Too often, they consider IT a part of the administrative transition, but this notion is completely wrong.

IT is not an administrative function, and firms often make costly mistakes that can be avoided with proper planning and getting the right people (internal or external, if your firm doesn't have the time or capability) to conduct a technology review. This can typically be accomplished in a couple of days if the reviewer is experienced and has access to the right people in the firm (the CEO, the COO, the CIO and the learning director).

The primary areas of a technology review are:

* IT governance, including IT directors, committees, plans and budgets;

* Hardware, including servers, backup devices, desktops and notebooks, mobile devices, bandwidth, Web sites, phones and remote access;

* Software, including operating systems, applications and licensing;

* People and skills inventory in the IT department;

* Standards, policies and procedures (documented and enforced);

* Training capabilities and learning ladders; and,

* IT spend and budget. (Has the firm "milked" or "maintained" its systems?)


1. Is your firm digital? (Document management, records management and e-mail management.)

2. What are your firm's policies regarding records retention, e-mail management and data?

3. Are these firm policies enforced?

4. Who is responsible for technology leadership in your firm?

5. Does your firm encrypt e-mails and notebook computers?

6. What security measures does your firm have in place to ensure security and privacy of client information?

7. Are you using client portals to securely transmit sensitive client data?

8. Do you support new technology initiatives with an adequate training and learning program?

9. Are you intimately familiar with your state's laws on data privacy and notification?

10. Do you use task forces to gather end-user input before making technology decisions?


Now let's examine some best practices that firms are using to ensure cultural transformation and IT integration. Some of you will be surprised and may even resist, but my advice is to strongly consider the options and time saved when firms employ these strategies and practices.

1. Rip and replace all non-conforming hardware and software immediately. Most issues are behavioral, rather than technology-related. These issues can easily be addressed with the proper training and communication. The longer a merged firm continues to utilize non-conforming software and hardware, the longer the transition lasts. Sell the used hardware on eBay; this is exactly what many of your peers are doing. It takes much less time to configure standard hardware and software on a new machine than it does on existing hardware that does not comply with firm standards. Ensure that all sensitive data is thoroughly purged from equipment prior to selling or disposing it.

2. Assess the IT skills of partners and staff in the merged firm. Conduct orientation and training sessions immediately to ensure a smooth transition. Train to the firm's standard learning ladders.

3. Include representation from the merged firm on the IT governance committee.

4. Make sure IT personnel from the merged firm report to the firm's CIO or IT director.

5. Budget $10,000 per person for this transition. This includes hardware, software, infrastructure, training and labor for the transition.

I can hear many of you saying, "No way. We can do it and have done it for much less."

Believe me, I have witnessed the challenges and outcomes that many firms have already experienced. Most challenges can be eliminated or reduced significantly with proper planning, leadership, orientation and training.

Ask the managing partner or IT director at firms that have successfully merged others into theirs. Most will admit that technology and culture are two of the biggest issues in mergers. Also, don't be surprised to learn that some small firms are farther along with technology than the firms acquiring them. (Note that these small firms are not normally looking to be acquired unless they have succession and leadership issues.) Mergers that require the acquired firm to take a step backward with technology generally do not work.

Due diligence and proper IT planning will pay huge dividends. There can be great IT synergy in mergers if handled properly.

Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.

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