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IT change management in mergers and acquisitions

July 7, 2017
by Greg Nicholas
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Guest Blog

I have been personally involved in performing due diligence and integrating IT infrastructures in more than 60 long-term care mergers/acquisitions and divestitures. Every single one had its own set of unique challenges and circumstances.

As a “newbie,” I was blindsided many times by murky documentation and fidgety sellers hiding massive problems—from virus-plagued PCs to faulty data cabling. Over the years, I’ve learned how to identify the common elements of IT integrations that proceed smoothly and efficiently. It begins with assessing the landscape.

A tale of two acquisitions

To understand how widely IT integration projects can be, consider the following polar opposites—two long-term care facility acquisitions that occurred at generally the same time in different places.

Acquisition #1

My team was given roughly three weeks to perform due diligence and integrate the IT systems of 14 soon-to-be acquired buildings in Texas. The first morning, we met with the team of three employees. We proceeded through our checklist to determine what was working and what potential issues needed additional investigation. Our staffing due diligence went great and we built rapport with key employees.

In between breakfast, lunch, dinner and meetings, we’d review the technology stack from top to bottom. We covered every single element in one day. At the end of the day, I generally felt good about things, and the team seemed to be happy to be part of the transition and the acquisition.

At the end of the first day, I laid out a road map for the existing IT staff to show their current roles and how, if any, those roles would change or expand. I explained to each individual that their current responsibilities would essentially remain unchanged, but I also identified opportunities for them to grow with the acquiring company. This is a key component of my operational change management effort I employ during every project.

They were very optimistic in their ability to integrate the technology they had. They had a lot of pride in ownership.

I discovered later that two of the three individuals who ended up leaving the company were not entirely forthright in describing the technology they had shared with us. Some of it ended up being unreliable, and some of the models and integration points didn’t integrate very well.

Acquisition #2

The other project was quite different. Its 20 acquired buildings had a blended IT staff. The closing timeframe was long, so we were given two months to complete the integration. This worked greatly in our favor. We were eventually granted an additional month because of minor closing glitch.

In the end, the rapport we built with the team and the amount of due diligence we were able to perform completely changed the dynamic with the existing staff. The integration not only went relatively faster with fewer blips, but the existing IT team remained with the company. Through the entire process, we all worked hard at building trust and transparency. They were honest and we were honest with the state of things and what our long-term plans were for the team. And those three team members are still with the company today.

IT integrations may focus on switches, routers and cables, but it’s the people who need the greatest care and diligence. Ample time needs to be built into due diligence and IT integration projects with merged or acquired long-term care facilities. Rushing the process leads to existing staff feeling pressured and marginalized, not to mention rash decisions being made about critical equipment and infrastructure issues. Six to eight weeks should be the minimum, with any facility.

Ample time in the second example above saved a great deal of money across 20 buildings, and it assured zero attrition in the invaluable and experienced IT staff that helped guide the integration process through completion. And with that and the promise of new positions after the integration was complete came a bonus and increased compensation. It worked perfectly.

People first

Too many long-term care companies run their entire organization with help-desk-level talent. IT is as much or more complicated than clinical care. You can’t run a portfolio of long-term companies with PC and laptop engineers. It takes a broader set of skills to run enterprise-level services that are secure, reliable and fault tolerant in order to keep these companies up and running. This is especially true for cloud-based computing because your network and security must be twice as good as it was before moving to the cloud.

Making people your first priority during an IT integration will pay off in multiple ways. Projects I’ve worked on that involved high IT staff attrition ended up costing more initially, and for months and years after the transition. These costs were simply unavoidable because the most critical part of IT infrastructure—the human expertise—didn’t survive the transition.

Talk is not cheap

It’s a tried and true axiom: an essential element of successful M&A IT integrations is communication. Honest and direct heavy doses of it from beginning to end. This is how you engage valuable people who work with you to make good things happen and build trust.

During the first week of any integration project, daily communication with the IT team and the broader project team (and at the very least, the business unit leaders themselves) of the acquiring company is critical. Everyone is aware of our plan, and we regularly measure each deliverable of the plan from day one through the end of the process. Everyone is kept informed of when components are transitioning, what services are going to be turned on or off and when.