Planning for a Successful M&A Transaction

Agility and responsiveness are key to realizing merger and acquisition benefits: A case study
As the insurance marketplace evolves, merger and acquisition transactions are becoming primary growth strategies for many organizations. Capturing value quickly is typically a key transaction goal—but one that is more often than not hard to achieve, particularly in “carve-out” situations that create a new stand-alone entity.

In this article, we examine a carve-out case study that highlights several critical success factors—including program management and technical expertise—to consider in planning for a transaction.

The business issue
The client was a newly independent organization still heavily reliant on its parent company for IT services and support, as well as for shared services such as human resources and legal services. The company’s leadership recognized the need to reproduce services formerly provided by the parent company and stand up independent internal operations as quickly as possible.

Goals for the separation initiative included:

  • Establish the business as a stand-alone company prior to performing any optimization initiatives
  • Ensure that employees can perform their jobs as efficiently after closing as they could before the transaction
  • Implement transition initiatives over time as opposed to using a “big bang” approach
  • Minimize risks associated with the transition
  • Ensure transparent and open communication to employees both at the company and department levels

The solution
To help the company achieve its goals, we worked closely with the project director and team leads to:

  • Develop a program management office (PMO) that was a strategic link to the steering committee and project teams
  • Develop an IT transition plan, vendor coalition, and roadmap
  • Develop and implement our own program and project management standards
  • Develop a program governance model and IT steering committee to oversee all IT projects
  • Develop a budget reporting tool for managing the program budget
  • Define, identify, and plan contingencies among all project work streams
  • Create an IT steering committee to ensure proper program oversight
  • Deliver a change management plan for system and process changes, as well as go-live communications for IT and business leaders to deliver to stakeholders

The impact
The company was able to develop an IT transition strategy, governance, and structure for the full transition services agreement (TSA) period. This, in turn, enabled the company to:

  • Identify best-in-class system integrators for all IT services, including infrastructure, front office and back office systems
  • Build out an organization structure that supports current and future IT operations
  • Negotiate effectively with integration, business, IT, procurement and legal stakeholders

For more information about this client example, please contact Laura Yorks at lyorks@westmonroepartners.com.

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