ERP Strategies for M&A

ERP strategies in M&A are an imperative.

Mergers and Acquisitions and Private Equity deals cannot be successful without consideration and execution of an Enterprise Resource Planning(ERP) strategy. The acquiring or divesting of a company’s ERP system can be a very complex and one of the most important pieces of a merger or acquisition to ensure that it is done correctly. 

ERP Due Diligence is a critical step in the M&A process.

IT due diligence is a critical step that shouldn’t be overlooked in the diligence process. ERP systems are part of this assessment and can give the buyer a more accurate view of the risks and value of a target. Determining the true size and complexity of merging IT landscapes begin with an analysis of the core ERP systems as they are the backbone to most enterprises’ IT platforms. Correctly evaluating the target’s architecture of ERP environments is fundamental to optimizing the ERP strategy and the overall deal success. Not properly assessing the current target’s systems and the integration of the systems can lead to extensive unknown costs, delays in timing and scope creep, and substantial operational risks.

The ERP analysis in the due diligence process can determine at a minimum:

  • Maintain current ERP systems, migrate to the parent company’s system and whether upgrades of the target’s systems are needed to minimize costs to integrate, or if a new ERP system should be implemented for the combined companies
  • Integration challenges and estimated costs
  • Licensing costs and considerations
  • Quality and security considerations
  • Business process fit, challenges and improvement
  • If the current systems are a fit for the company’s requirements and projected growth
  • Resource capabilities
  • Determine the best strategy to handle the systems and avoid potential risks and costs
  • Identify value creation opportunities in simplifying processes and optimizing business operations

ERP Selection

ERP selection is an important and complex process and can be especially complex in M&A. It’s critical to ensure that the ERP system is a fit for the business’s current requirements but also the future growth needs of the business. 

Key Criteria for ERP Selection:

  • Functional Requirements Fit
  • Business Alignment & Business Process Analysis
  • Fit for Company’s Current Needs & Future Growth requirements
  • Customization Analysis & Requirements
  • Industry-Specific Functionality 
  • Systems Integration
  • Scalability 
  • Implementation & Maintenance Cost
  • Vendor Technology & Roadmap
  • Vendor Support
  • Systems Integrator and Availability of Resources

ERP Program & Project Management:

One of the major reasons businesses fail to implement ERP systems properly is because of poor leadership in project management. ERP projects are very complex and have high failure rates. 50-75% of ERP projects fail to meet their objectives. 61% take longer than expected for implementations. The specific experience and expertise of the resources doing the implementation and overseeing the implementation are key factors for failure. It’s critical to have the specific ERP package expertise, as well as business and industry expertise.

In M&A, it can be extremely beneficial to have a Program and Project Manager with M&A experience. Merging, acquiring, divesting companies can be very complex and having experienced oversight can greatly impact the success of the project.

About N2M:

N2M is an award-winning digital consultancy with over thirty years serving clients as trusted advisors. Differentiated by our agility and specialized expertise, we provide tailored to the unique needs of each of our clients. N2M’s team are ERP experts with over thirty years in ERP including: Oracle, NetSuite, Microsoft, SAP, Workday and Salesforce(CRM).

N2M is a  preferred partner to leading companies, private equity firms and portfolio companies world-wide. 

Reach out to N2M for prompt assistance for your expert assist with ERP need