In M&A value is either enabled, or quietly eroded, by IT.
You can have a perfect strategic fit and best-in-class due diligence, yet still miss synergies due to integration complexity, regulatory missteps, or underestimated technology debt. Conversely, a clear integration thesis, a right-sized technology roadmap, and decisive Day 1 readiness can unlock value within the first 100 days.
From experience, Envosight has identified a series of typical IT challenges in M&A – and how to handle them optimally. While we acknowledge that the complexities of IT M&A cannot be portrayed at granular level in a short article, we have made a simplified overview of the challenges most frequently encountered, outlined our experienced take on frequent red flags to take note of, as well as signs you’re on the right track.
Many deals prioritise financial and operational synergies but neglect IT strategy. Without clarity on whether to fully integrate, carve out, or selectively merge systems, IT decisions become fragmented. This results in delayed Day 1 readiness, increased technical debt, higher integration costs and missed synergy targets.
Mitigation:
Define the IT Integration Thesis during due diligence: What integrates, what stays independent, what gets retired. Align IT decisions with business priorities (speed, cost, or compliance) and establish clear timelines and governance for execution.
Different ways of working (agile vs. waterfall, product vs. project, insourced vs. outsourced) create friction and slow the integration, delaying the realisation of merger synergies.
Mitigation:
Stand up an Integration Management Office (IMO) with a product-centric model and clear decision mandates. A product-centric model entails structuring the integration effort around products and value streams, rather than traditional project-based or functional silos. For example, instead of having separate teams for ‘network migration’ and ‘ERP consolidation’, a product-centric model would create a ‘Finance Operations Product Team’ responsible for delivering all IT capabilities needed for finance integration including network, ERP, data, and reporting, under one governance structure.
Carve outs often rely on Transition Service Agreements (TSAs) that act as a bridge to maintain business continuity while the buyer sets up its own systems and processes. TSAs often cover hundreds of applications and processes, making them hard to manage while sellers typically charge a premium for TSA services, and even higher charges for extensions.
Mitigation:
Treat TSA exit as a programme with milestones, measurable run-rate savings, and an application-by-application exit plan. Define milestones and timelines for each service/application and assign ownership and governance through the Integration Management Office. Prioritisation should be given to high-cost services (focus is typically on migrating ERP, finance, and infrastructure first). Negotiate flexibility including provisions for early termination and cost caps. Track run-rate savings and quantify benefits of TSA exit to maintain executive focus.
Even ‘good’ integrations fail if people don’t adopt new processes and tools. Organisational Change management is often deprioritised during M&A, as leadership often focuses on organisational and financial integration. Without structured change management, employees lack clarity, training, and engagement, leading to resistance and confusion, which can cascade into reduced ROI, and operational inefficiencies.
Mitigation:
Treat organisational change management as a prioritised workstream, including stakeholder mapping, role-based enablement, and adoption KPIs to be tracked and communicated closely throughout the post-merger.
Each company often has its own master data structure for customers, products, suppliers, and financial accounts. Furthermore, there is often inconsistencies in the applied standards, variations in naming conventions, hierarchies, and coding systems (e.g., SKU formats, customer IDs). Older legacy systems may lack proper metadata or lineage tracking, making it hard to trace data origins. Industries like pharma or finance require strict data lineage for compliance, which becomes challenging when merging disparate systems. The differing master data models slow down integration and create inaccurate reporting, compliance risks, and operational inefficiency.
Mitigation:
Define a Canonical Data Model, a unified structure for key domains (finance, customer, product, regulatory) and stand up a Master Data Management (MDM) workstream early to harmonise critical data sets. Apply a Data Governance Framework to assign data stewards, enforce standards, and implement lineage tracking tools, and leverage automation where possible. Your initial focus should be on finance, regulatory, and customer data to enable Day 1 reporting and compliance.
Vague decisions on core platforms (e.g. ERP, MES) on lift-and-shift vs. re-platforming lead to delays and sunk costs. Furthermore, lack of application rationalisation results in duplicated systems, increased technical debt, and further IT costs. Post-merger, organisations often delay rationalisation due to competing priorities and fear of disrupting operations.
Mitigation:
Use a decision matrix (value, risk, regulatory, time-to-benefit) for each core platform to determine lift-and-shift vs. re-platforming. In parallel, run a rapid application rationalisation programme: tier apps (Run, Transform, Retire), quantify savings, set decommission SLAs, and enforce architecture guardrails. Explicitly plan interim coexistence. While it can be tempting to engage in various application transformation activities, these can cause further delays and complexity, and should be kept limited to the extent possible.
Each company may use different cloud platforms (e.g. AWS, Azure, GCP), creating multi-cloud sprawl. In SaaS environments (e.g., Microsoft 365), both organisations often have separate tenants, complicating collaboration. Furthermore, different network architectures, VPNs, and security policies lead to latency and connectivity issues. Maintaining multiple clouds and tenants without rationalisation inflates IT spend.
Mitigation:
Select Tenant-of-Record early, i.e. the tenant will be primary for collaboration tools (e.g., Microsoft 365). Establish standardised landing zones for workloads to ensure governance and security. Define how networks will interconnect securely and efficiently. Enable interim solutions for Cross-Tenant Collaboration (e.g., guest access in Teams, shared SharePoint sites) for Day 1 productivity and harmonise identity providers and implement single sign-on (SSO) where possible.
Different control baselines and regulatory frameworks can stall integration and expose compliance risks. These plays an even more important role in regulated industries, for example MDR/IVDR/GxP (life sciences), PCI/PSD2 (FS/insurance), or export controls (manufacturing).
Mitigation:
Run security due diligence equal to financial diligence; map controls to target regulations with Day 1 / Day 30 / Day 100 hardening steps.
Many deals promise cost savings, revenue growth, or innovation synergies, but IT is rarely given a structured role in tracking and delivering these benefits. Without clear linkage between IT initiatives and synergy targets, integration programmes risk becoming cost centres, rather than value drivers. This often occurs because synergies are defined at a business level, but not translated into concrete IT deliverables (e.g., system consolidation, shared service to reduce headcount, etc.). Furthermore, IT cost baselines (IT costs prior to integration), and exit savings post TSA are often poorly quantified. Consequently, there is no mechanism to track synergy realisation beyond financial reporting, limiting ITs ability to demonstrate its contribution.
Mitigation:
Tie IT initiatives to synergy cases and create a Synergy Dashboard. Embed synergy KPIs in IMO governance with each workstream showing its contribution to synergy realisation. Use automation and analytics for efficient tracking and communicate to the stakeholders regularly.
Obviously, addressing these challenges with one-liner mitigation actions will show an oversimplified view. While the mitigation might be known, their application requires diligent and persistent tactics. From working on previous engagements, Envosight has learned that applying a pragmatic, risk-based approach, that balances methodical vigilance with speed and agility, will garner the most success in IT integration.
Having explored the common IT challenges that often derail M&A efforts, it’s clear that success requires more than reactive fixes, it demands a structured approach. To address these complexities and turn IT into a driver of value rather than a source of risk, we’ve developed a pragmatic IT M&A Playbook. This framework provides actionable steps from Day 0 through Day 100, ensuring IT becomes a critical enabler of integration and growth.
From experience, we have identified some indicators, that can help you assess whether you are on the right track or need to readdress some potential pitfalls.
• TSA Exit: Percent exited vs. plan; monthly TSA run-rate savings.
• Security: Multi-Factor Authentication (MFA) coverage, high severity findings resolved, mean time to detect/respond.
• Data: Percent golden records established for key data (progress in creating a single source of truth); reduction in reconciliation time; time to month-end close for financial reporting.
• Apps/Platforms: Number of apps retired; platform consolidation milestones; cloud spend variance vs. FinOps target.
• Experience: Employee NPS on Day 1 tools; customer service SLAs maintained or improved.
• Synergies: Opex/capex realised vs. signed case; working capital improvements.
Obviously, associating metrics to any M&A activity should be done vigilantly. The aim should be establishing a baseline to track against and monitoring the trend rather than chasing a numerical value.
• “We’ll decide the IT model after close.”
• No TSA exit milestones or owner.
• Identity consolidation deferred; vendor access unmanaged.
• No single source of truth for finance/customer/product data by Day30.
• App rationalisation postponed “until the new ERP is live.”
• Security baselines vary plant-to-plant or country-to-country without a remediation plan.
• No measure for value realisation or synergy tracking exists.
IT is not a back-office afterthought – it’s the operating system of the deal. The winners treat integration as a product, not a project: clear integration thesis, sharp Day 1 mechanics, disciplined data and platform decisions, and a change narrative that people can rally around.
Curious to learn more about the Envosight Consulting IT M&A Framework, or interested in concrete client examples? Contact us today to learn more.
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