How to manage a merger? Ask the CIO who's done it 21 times

Mitel CIO Jamshid Rezaei, a veteran of 21 M&A deals throughout his career, shares tips on adding value and avoiding trouble
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The phrase “mergers and acquisitions” tends to conjure up images of late-night boardroom meetings, where execs hammer out details while investment bankers dig into the financials.

These days, however, M&A activity should just as quickly call to mind containerized enterprise applications, hybrid cloud infrastructures, and other facets of modern IT organizations. As IT plays an increasingly pivotal role in defining and driving business goals, the CIO plays an equally important part in any merger or acquisition activity, from the early stages of a deal through completion and integration.

Just ask Jamshid Rezaei, CIO at unified communications provider Mitel, which recently completed a $530 million purchase of competitor ShoreTel. The deal makes the new Mitel the second-largest UC-as-a-Service (UCaaS) provider globally, according to market share data from Synergy Research Group.

For Rezaei, it’s also an individual milestone: Mitel’s acquisition of ShoreTel marks the 21st M&A deal he has been a part of in his IT career.

“Being a CIO for a company that is in acquisition mode, and doing acquisitions frequently, I would say you either love it or hate it,” Rezaei says. Fortunately for Rezaei, he loves it. “It is fun. It is challenging, but at the same time it’s very exciting as you’re helping the business move forward.”

In a recent interview, Rezaei shared his insights on the CIO’s role in M&A deals, along with advice for his fellow IT leaders on navigating the complexities of bringing two distinct organizations – and two distinct IT shops – together.

[ Merging two companies will inevitably change workplace culture, but it doesn’t have to bring it down. Read Culture change: CIO shares skills, tools, and tactics to get it done. ]

“No matter how many you do – whether 20 or 100 or one – one thing I can say from experience is that every acquisition or merger or divestiture has its own nature,” Rezaei says. “You get better at it every time you do due diligence and integration planning and subsequent projects and programs, but every deal has its unique situation.”

That stems from all manner of variables, many of them directly IT-related: The acquisition target could have a very different IT operating model, for example, or a different organizational culture. You could even encounter language barriers in global M&A activity. And we haven’t even mentioned the actual portfolio of applications and infrastructure that needs to be integrated in a sensible way.

These kinds of deals are quite common, as Rezaei’s own career experience shows. Let’s dig into some of the CIO’s key insights and advice for fellow IT leaders, broken into two overlapping categories: Before the deal is complete, and after.

Early stage to deal completion: Due diligence

That aforementioned image of investment bankers poring over Excel spreadsheets and dealbooks? “Due diligence” brings that to mind, too. But it’s not just a matter of finance and accounting, Rezaei points out, it’s an area of enormous significance for CIOs from the early stages of an acquisition.

(Note: From this point on, we’ll focus on acquisitions, but much of the advice applies to other types of M&A activities as well.)

Due diligence sounds straightforward, but it is ultimately a deep learning effort.

“Understand what the IT model is in the target company,” Rezaei says. “How do they operate? What are their major objectives and major programs that are active in the target company? And how does that actually relate to the existing business strategy?”

Then the CIO’s due diligence becomes a matter of identifying projects, programs, and other areas that will have significant value and positively impact the new combined company. This also means making note of any initiatives that no longer make business sense going forward.

“Understand what the IT model is in the target company. How do they operate? What are their major objectives and programs? And how does that actually relate to the existing business strategy?”

Rezaei performs the same analysis of his own existing IT department during this process, again identifying the initiatives and projects that still align with the combined organization’s goals, and de-prioritizing those that no longer make sense.

Here’s a real example from Mitel’s acquisition of ShoreTel: The latter had been in the middle of a significant upgrade of its ERP system and a corresponding optimization of the business processes that the ERP system enables. But Mitel had recently completed its own major ERP consolidation. Given that, it does not make sense to continue investing resources into the ShoreTel project – the new Mitel can leverage the new ERP platform without significant retooling.

The ERP example could come down to a simple question of platform in some cases, regardless of any ongoing projects. On either side of the deal, the existing ERP platform may no longer suit the needs a much larger organization with different goals and processes. (Of course, the same analysis could apply to other enterprise apps as well.)

This works in both directions. Mitel had been evaluating options for implementing a new global service management tool, for instance, but ShoreTel had recently completed a multi-year implementation and deployment of a state-of-the-art service management platform that the new combined company can use going forward.

“You really need to look into the details and [ask]: ‘OK, does this make sense now?’” Rezaei says. “Very detailed due diligence will benefit you down the road when you’re trying to do your integration activities.”

Moreover, there’s a strategically elevated role for the CIO that comes with this process.

“The CIO can be the bridge [during] due diligence between the rest of the senior executives, [and] flag if there are any projects or programs that will have a major impact to what the company is trying to achieve from that acquisition,” Rezaei explains. “We all know that IT touches every corner of the business.”

After the deal closes: Integration time

After an acquisition, the CIO’s role pivots from due diligence to integration. And it’s integration in every sense, from applications and data to infrastructure and, ideally, an influx of new talent from the target company into a new combined organization.

While it’s a pivot in the process, the two phases are inextricably linked: As Rezaei notes above, intensive due diligence will make integration much smoother and more productive.

“My message to every CIO would be this: Understand what the [acquired] business is about, understand their processes, and engage with the major stakeholders to make sure that the integration activities, migration projects, and so on are really in line with what the [new] business is trying to do, and really in line with the goals of the acquisition,” Rezaei says.

A successful integration of two IT departments and two broader businesses relies on smart strategic planning. “Plan for Day 1,” Rezaei advises. “[Actually,] plan for Day 0, then Day 1, then Day 2… don’t try to boil the ocean on Day 1.”

“Plan for Day 0, then Day 1, then Day 2… don’t try to boil the ocean on Day 1.”

If this sounds fundamental, that’s because it is – and it’s the CIO’s responsibility. “Plan for business as usual on Day 1,” Rezaei explains. That means no hiccups with major enterprise applications and other mission-critical systems. The integration of two companies can and will take time, but the business still needs to run today.

Of course, you don’t want people in the target company to feel shut out. Make sure they can contact you and have appropriate access to systems and information from Day 1. Welcome them into the fold. But the major technical integrations and migrations should not jeopardize the next quarter’s results because you’re in a hurry.

More wisdom for ongoing success

The ultimate success of such a deal will be a long-term story. Here’s some more advice from Rezaei for IT leaders navigating corporate M&A activity at any point in their career:

  • Understand the target’s security and compliance model. “The moment the deal closes, you will be bombarded with requests to connect networks, systems, platforms. You don’t want to put your combined company at risk with any security mismanagement or compliance issue that may exist.”
  • Pay attention to people and communicate effectively. “Understand the talent that exists within the target company, especially on the IT side, and how the IT operating model will [evolve] after the deal is complete,” Rezaei says. “Every merger or acquisition will bring uncertainty, and it is very important to be clear with messaging, to be up front and ensure there is a proper line of communication to retain the talent that you have.”

Bonus communication tip: Rezaei notes the importance of aligning your message with the rest of the executive team. Sure, there might be specifics that are department-level in nature, but the CIO’s message, especially around business goals and strategy, should not sound much different than the rest of the executive team’s communications.

Be the business: There’s no place for a siloed CIO in a successful M&A deal.

“You’ve got to make sure as CIO that you’re bridging all of the gaps among different departments and groups, and that you are leading through change,” Rezaei says. “You’re leading through the activities and making sure the business processes and requirements are understood before anything kicks off.”

Kevin Casey writes about technology and business for a variety of publications. He won an Azbee Award, given by the American Society of Business Publication Editors, for his story, "Are You Too Old For IT?" He's a former community choice honoree in the Small Business Influencer Awards.