by Jarina D'Auria

When Your Company is a Target

Jan 06, 20092 mins
Mergers and Acquisitions

Three ways to prepare in case your company is acquired

A merger or acquisition takes two. And any company can be an acquisition target. Even if you don’t see an acquisition coming your way today, it doesn’t mean you’re in the clear, says Albert Eng, former senior advisor with Cerberus Capital Management, the private equity firm that acquired an 80 percent stake in Chrysler last year. Eng conducted IT due diligence for Cerberus.

You can increase the chances that your IT department (and maybe you) will survive when another company has yours in its sights if you’re prepared. Here’s how Eng suggests you get ready for integrating your company into another.

    1. Run the numbers: The acquiring company is going to want to assess your IT organization, says Eng. If you’re prepared, structuring the deal will make the process more efficient and support a more accurate valuation of your company. Document and refresh your IT strategy, systems architecture, projects under development, analysis of past projects and, of course, IT costs.

    Eng wants to see long-term and detailed budgets in order to know how well the IT organization is performing. Most importantly, make sure you can show quantitatively how your department adds business value. “Most IT leaders falter at this part of the process because they don’t have the experience to align costs with business value appropriately,” he says.

    2. Understand all your assets and intangibles: When you’re joining two businesses, you’re also integrating two groups of people. It’s not enough to understand the capacity of your systems—you have to know the strength and weaknesses of your employees, too—and be able to communicate them to the acquirer.

    3. Get rid of bad habits: When being acquired, it’s an opportunity look in within your IT department for inhibitors to a cost-effective integration. Obsolete or undocumented technology, poor management of your IT budget and inflexible workers can hurt your chances at a successful merge.

Read More: What IT Leaders Need to Know About Getting Mergers Done Right