CIO Skills Gained from M&A Experience

How many acquisitions have you done and what has it taught you?

In the past eight years, I’ve been involved in 35 deals. I’ve learned how to look at companies and determine how I can help them grow, gain new efficiencies and cut costs. This didn’t happen overnight; it took years of acquisition experience.

How did you come to doing so many acquisitions?

Eight years ago, I took a job as the CIO for Hub Northeast, one of the largest insurance brokerages in New York. They did a few acquisitions each year. Shortly thereafter, their parent company, Hub International Limited, was acquired by a private equity firm. This provided the capital needed for rapid M&A growth. About one-and-a-half years later, I was appointed as the CIO for eight of their operating companies. With this new role, coupled with the PE funding, I had no idea of the volume of acquisitions to come; they just kept coming.

What was expected of the IT department?

The expectation was that IT would conduct a due diligence identifying the cost of amalgamating their systems and technology as well as infrastructure to be upgraded, how the acquisition would be supported by the IT department, and the strategy to integrate their accounting data. If the deal was approved, the acquired company’s systems and technology would be added, infrastructure upgraded, and their accounting was integrated.

Although this approach achieved business objectives, it wasn’t scalable for the long haul. So I formed an IT Steering Committee consisting of C-suite business executives and divisional presidents to establish the IT strategic direction. My first action was to garner support for a systems and technology consolidation strategy. The executives concurred and granted the funding. We successfully executed 21 conversions in just 3 years. I have to give credit to the great cross-functional business and IT teams.

Was it easy to gain the support of the business?

It can be difficult to influence a large group to take the same position all at once. I created a business case which I believed would stand on its own and I did some additional homework outside of the board room to gain support before putting it to a steering committee vote.

I developed a stakeholder analysis and tried to understand each executive’s stance, as sometimes votes are not based solely on the strength of a business case. Then I met with each steering committee member one-on-one and pitched the case. When the vote was called at the steering committee meeting, it was just a formality; each executive voted in favor.

How has the acquisition experience enhanced the value that you deliver as a technology executive?

Once I had the acquisition process under control and repeatable, I began to look beyond the basics. As I conducted each due diligence, I studied the company to determine what it was that made them better or worse than the others.

I spent time with the acquired company's executives to understand how they ran their operation and what their strengths and weaknesses were.  

As I learned of a strength--whether it was a system, technology, use of data, tool, or process--I shared it with former and future acquisitions. Similarly, when I discovered a weakness, I found that I could often provide a solution that I learned of from previous acquisition experience.

As my involvement with acquisitions grew, I became proficient in analyzing companies and determining how they could grow, gain new efficiencies and cut costs.

I was recently recruited to join a team of business executives to build a new insurance company in New York as the Vice President of Information Technology.  So far, as part of my role, I was asked to review two companies. Based on my acquisition experience, I was able to provide recommendations that will help one of the two companies grow, and make the other considerably more efficient.

What are some of the tools that you created or used?

There is the Stakeholder Analysis that I mentioned earlier. For the information gathering stage, I have also created an Excel workbook with multiple tabs containing questions. I’ve refined it several times and its contents typically include: company and business overview, website, transaction systems, non-transaction systems, network, security, data center, end-user technology, servers and storage, telecom, collaboration, hosting, disaster recovery, and business continuity.

The two deliverables that conclude the due diligence process are a report and budget. The report has an executive summary, major risks, opportunities, recommendations, and the integration strategy. There are many discussions that take place during the process, and therefore, when the deliverables are submitted, the business is already is in agreement.

Working with C-suite business executives, I created a standard list of questions that mirror the SWOT categories (Strengths, Weaknesses, Opportunities and Threats).

What advice would you give to other CIOs interested in learning these skills?

Certainly, they can join a company that’s highly acquisitive. Another option is to join a management consulting firm. I was with Deloitte and then a boutique firm for several years. This taught me how to gather information, solve problems, interact with executives, and it laid the foundation for being able to recognize strengths and opportunities for improvement at other companies.

But the real journey, in my opinion, is not tied to M&A or consulting. It is broader than that. It is about taking a step back from the job, no matter what job you have, and looking at the work from a higher level, determining what can be learned from it, and how that learning can be applied. What might surface is that this reflection can be used to benefit your employer, shareholders, customers, self, friends, colleagues and family.