The merger and acquisition (M&A) process is a blend of activities that involves strategy, evaluation, negotiation, and the combining of corporate assets with the goal of preserving and building business value. As IT professionals, we focus primarily on due diligence and integration, but there are other important reasons for us to be involved throughout the M&A process.\nTo better understand the M&A process, let's review the phases and activities associated with a typical transaction:\n Cognitive Diligence, LLC \n\nThe phases of a merger or acquisition\n\n\n \nWithin each phase of the M&A process, an opportunity exists for IT to add value. The following phase summaries illustrate how these opportunities can be fulfilled:\nPhase 1 \u2013 M&A strategy\nDeveloping a successful M&A strategy compels the acquiring firm to ask itself several questions, such as:\n\nWhat business are we in?\nWhat is the scope of our business?\nWhat is the overall direction that our business intends to take toward its market?\n\nOnce these questions have been answered, M&A strategy becomes an extension of the enterprise strategy because it furthers the overall goals and objectives of the business. Participation by the senior IT executive in these strategy discussions will be very helpful when its time to formulate a plan for IT due diligence and integration.\nPhase 2 \u2013 Target screening\nThe target firm screening process begins by appointing a search team to identify and screen potential target firms. Having identified potential acquisition targets, the team then assesses how well and to what extent the targets meet the acquisition criteria.\nThe next step is to schedule a meeting where the parties can discuss a possible M&A transaction. If they agree to move forward, a confidentiality agreement that protects both parties is executed. This sets the stage for the due diligence phase.\nThe Target Screening phase provides an excellent opportunity for the acquiring firm\u2019s IT leaders to plan the scope and depth of IT due diligence and identify the IT due diligence team members.\nPhase 3 \u2013 Due diligence\nThe due diligence phase involves investigating, evaluating, and assessing the target company in as much detail as possible prior to finalizing the deal agreement.\nDuring the due diligence phase the M&A IT due diligence team should identify IT assets at the target firm that offer extraordinary value, along with those components that represent significant risk\u2013particularly integration risks.\nUpon conclusion of the due diligence phase, the findings are reviewed by the M&A executive committee and the various integration leaders and committees. During this review, attention is given to any risks or other issues that would be considered \u201cshow-stoppers\u201d to going forward with the deal. The due diligence findings are also used to define negotiating terms, offering price, and integration issues.\n\u00a0Phase 4 \u2013 Transaction execution\nTransaction execution begins with developing a valuation for the target firm. Once a valuation has been developed, negotiations ensue regarding the valuation, role of the target firm\u2019s senior managers in the combined entity, and other operational, cultural, and legal issues surrounding the deal.\nThe transaction execution phase provides an excellent opportunity to begin planning for the IT integration challenges that lie ahead.\nPhase 5 \u2013 Integration\nThe final phase is planning and executing the integration of the two firms. Answers to questions such as how much to integrate, how fast to integrate, what approach to take, how to protect customers and employees, how to maintain daily operations, and how to communicate integration plans and progress are addressed. Integration\u2013particularly IT integration\u2013is crucial to transaction success.\nIn my next post I\u2019ll discuss some of the things that can go wrong in the IT area during an M&A transaction.