The Role of IT in Buy & Build Projects

by admincf | May 2, 2025 | Insight, Newsroom

Fairy tale hour with system jam

The hare sprints — but the hedgehog is already at the finish line. The hare is not only completely out of breath but also beside himself with anger. “I don't mind,” says the hedgehog, “I'm already here.” So the whole game is repeated seventy-three times. But on the seventy-fourth attempt, the hare doesn’t make it to the finish line.

We know the story — it may sound like a fairy tale, but it’s still true, at least according to the Brothers Grimm. There are only a few buy & build cases in which 74 add-ons are actually integrated. But what if IT isn’t the hare this time, but instead takes on the role of the hedgehog?

IT in Buy & Build: The Underestimated Bottleneck

In most cases, IT is not involved from the outset when the target company is turned upside down during the due diligence process — even though IT plays a significant role in value creation, especially in the financial services sector.

How often is IT excluded from management presentations because they ask critical questions? Because they inquire about the budget for IT integration? Because their bulletproof migration plans might delay the entire deal?

Then comes Day One — and there is no plan for IT integration, no budget for the necessary data migration, and no additional capacity to handle the required effort. “That can wait. It's not that urgent.”

A few months later, disillusionment sets in. The acquisition goals have not been achieved. The anticipated cross-selling has failed to materialize. Access to products and customer data remains cumbersome and time-consuming.

Why is that? When interfaces are poorly defined — or not defined at all — the data doesn’t match along the process. Information must be entered twice, three times — or seventy-four times. This becomes a breeding ground for shadow IT.

This isn't just inefficient due to excessive duplication and reduced quality. It also leads to ineffectiveness, missed opportunities for innovation, and delayed product launches. In short: a loss of added value. Welcome to the fairy tale forest of lost integration opportunities.

What IT Could Do If You Let It

Let’s start with a classic no-brainer: data harmonization can begin before closing. No data needs to be exchanged — which is usually prohibited by regulation anyway — but it is possible to align on formats and requirements for the data sets and prepare existing information accordingly.

Starting early not only means being ready sooner, but also results in less duplication of work later on. From the moment of alignment, new data can be entered “correctly” from the start. This immediately frees up capacity for activities that create real value — for example, additional cross-selling activities.

The voice of IT is often critical. That’s true. And the word “unfortunately” is deliberately omitted here. IT is responsible for digitally supporting and automating complex processes — as quickly, smoothly, and error-free as possible.

To achieve this, IT must inevitably pay attention to detail. IT needs a special eye for exceptional situations — even if they rarely occur. But sooner or later they will, usually without warning.

This critical mindset should not be demonized. IT — in the role of advocate diaboli — identifies stumbling blocks. And if you let them, they will develop solutions to remove those obstacles in good time.

An IT department constantly in firefighter mode is busy fixing problems that have arisen and cleaning up afterwards. What’s often missing then is the time to calmly develop viable solutions to complex challenges.

Creative hacks can’t be forced — and certainly not rushed. Sometimes it’s enough to give IT an extra week and the freedom to devise a thoughtful, sustainable solution. In the end, this usually saves both time and money.

If employees are already electronically connected on Day One, this significantly enhances collaboration. Anyone can find and contact anyone — across locations and company boundaries — thanks to email and video conferencing.

The prerequisite, however, is that contact details are easy to find. If you have to hunt for email addresses in the target company, you might not get invited to the meeting at all.

Mutual access to intranets also supports cultural integration. It offers insights into the “others”, allows differences to be perceived and shared values to be discovered.

IT can build bridges between old and new. Much is possible — if you involve them early and give them the necessary freedom they need. So far, this applies to any integration.

Buy & Build Needs Built-to-Buy

Buy & Build can only reach its full potential on a sustainable platform. This requires a powerful organization with efficient, stable processes — which, in turn, depend on a solid IT foundation: a modular, scalable IT application landscape.

This calls for preparation — and, above all, the early integration of IT into the strategic planning of the Buy & Build strategy. If IT is not built-to-buy, this foundation on which everything else depends is missing. Even the most creative platform architect cannot build a resilient structure in this case — only a fragile conglomerate that will eventually collapse.

If the goal goes beyond “more of the same”, scalable processes alone are no longer sufficient. That’s why it’s critical to consider modularity from the very beginning. How can AI agents take over core processes if the underlying data isn’t consistent? For example, if boreholes are measured in centimetres in one company and in inches in another?

IT that is deeply embedded in business processes and has a strong understanding of the business, can unlock additional synergies — not just to boost efficiency, but also to enable growth and innovation.

A built-to-buy IT department knows its application landscape inside out — and also has control over modifications and extensions. If the hedgehog hadn’t known the map, how could it have reached the finish line before the hare?

The Hedgehog Is Not a Know-It-All. He Just Started Earlier

IT is not slow — it is thorough. Who wants an invoice showing the wrong VAT rate or a customer receiving the wrong delivery just because both recipients happen to be named Meyer?

One possible solution for the role of IT in Buy & Build projects lies — quite fabulously — in Buxtehude. The fairy tale “Dat Wettlopen twischen den Hasen un den Swinegel up de lütje Heide bi Buxtehude” (Brothers Grimm, 1843) offers the idea: How can the hedgehog always be at the finish line?

Quite simply: it is in both places at the same time. One part of IT ensures the stable operation of existing systems (“run the platform”), while another part actively develops the platform and is involved in M&A transactions from the very beginning (“build & integrate the platform”).

Regular exchanges between these two teams are essential. Only then can they learn from one another and continuously improve the platform. “...and they both went home happy with each other: and if they didn’t die...”

In Buy & Build Projekten entscheidet nicht die Geschwindigkeit des ersten Zukaufs – sondern die Konsistenz des vierten. Wer bis dahin keine belastbare Plattform aufgebaut hat, rennt zwar mit hoher Geschwindigkeit – aber eben im Kreis. Und bricht irgendwann erschöpft zusammen.

And IT?
They were already there —
if you ask them in time.

Artificial Intelligence in Post Merger Integration

by admincf | Mar 30, 2025 | Insight, Newsroom

Post Merger Integration on the beach

pmiGPT: Good morning, Peter, how can I support you today?
Taking into account the milestones of our latest target and considering your email communication on the closing conditions, the closing should take place in the next few days.
Shall we have a look at the plan for Day One?

Peter: Please provide me with the complete schedule for Day One. Consider our usual procedure and also look at the latest discussions with the target's works council.

pmiGPT: I'll get straight to work, boss.
…

Peter: Oh, I almost forgot – I’ll also need the scripts for the speeches, the presentations and my moderation cards with the key points.

pmiGPT: Of course, as soon as I have the schedule ready, I'll get right on it.
…

As Peter sips his cappuccino, he thinks about the fact that his avatar could actually handle the job on Day One – allowing him to extend his workation by another three days...

Science fiction or soon to be reality?

Back to reality. For now, these are still just dreams.

Although artificial intelligence is already used in one in five M&A transactions (BAIN, M&A Insights, March 2025), its large-scale application primarily focuses on the transaction process — specifically, the phase before signing. After signing or closing, AI usage remains limited today.

Setting aside the fact that an avatar on Day One might help Peter optimize his personal work-life balance, it certainly doesn’t contribute to building goodwill with new employees.

Artificial intelligence is already significantly reducing manual effort in many areas. Generative AI unlocks entirely new possibilities and will become even more influential in the months and years ahead.

The scenario from the introduction is still futuristic. How long that remains the case largely depends on creativity and the willingness to experiment. Technology must be embraced to drive progress — and the first step is to start experimenting.

To make that process a little easier, I’ll share some use cases and ideas here. I won’t bother with the obvious no-brainers, like having written communication proofread or generating custom images to support messaging.

Supplier Screening Support

Wherever there is data — preferably large amounts of it — artificial intelligence can be leveraged effectively, delivering significant efficiency gains. This is why it has been widely adopted, particularly during the transaction phase, with a strong focus on due diligence.

We can feed the AI with all supplier contracts and have it identify “critical” passages. This not only saves us the time we would otherwise spend reading but also allows us to focus immediately on the AI-prioritized “red flags.” For example, we can mitigate risks through the change-of-control clause. After all, no one wants to hear from their suppliers: “It was nice having you as a customer — until yesterday.”

Similar approaches work in any area with numerous contracts or large volumes of data. In sales, this applies to customer contracts; in HR, to remuneration agreements, and much more. Of course, data protection and GDPR compliance are ensured, provided that key principles are followed when selecting the AI model, the place of hosting, and configuring various AI settings.

Reorganization – Ready on Day One

Now, let’s take a step into the future. Following the acquisition, the accounting departments — I like this traditional term; it fits well into our modern discussion — of both companies are set to merge. This isn’t just about consolidating a location and a management level; it’s also about modernization — introducing agile processes and increasing efficiency.

There are countless articles on this topic online, along with best practices from large, mid-sized, and small consulting firms. So why not feed all these organizational charts and concepts into our pmiGPT? We can also include the current organizational structures of both accounting departments, along with growth plans for the coming years. And, of course, we won’t forget to incorporate other relevant framework conditions.

Then, pmiGPT will generate suggestions for the structure of the new accounting department — including a detailed description and an analysis of the respective advantages and disadvantages. In a single step, it will optimize management spans and, who knows, maybe even consider the team members’ star signs — for particularly energetic collaboration.

When employees arrive at the office on Day One, they’ll find themselves standing in front of a large table displaying the new seating arrangements — almost like a wedding reception.

Phew! Maybe that’s a bit too much automation and top-down decision-making. But some of these approaches significantly boost efficiency and are no longer just a futuristic vision.

Avatars for accounting standards

After our journey into the future, let’s return to what’s already possible today. On Day One, Target employees face a lot of new information — from parking and canteen use to booking meeting rooms and understanding the buyer’s accounting standards.

Of course, all of this could be documented in a traditional how-to guide. But that approach feels outdated. For years, learning content has been delivered through videos featuring someone reciting the information. AI can already do this much more effectively.

Let’s have an avatar deliver the training. With AI-driven learning, it can even use pedagogical techniques to make the content more engaging and easier to absorb. Digitalization offers countless possibilities — documents and videos can be searched or tailored to specific target groups.

But this is just the beginning. If something small — or even significant — changes, the avatar can update the content with a single click. In the past, this would have required reshooting and editing an entire video.

Here, AI not only enhances efficiency and effectiveness but also improves quality at the same time. The best part? This isn’t a vision of the future — it’s already a reality. And who knows, involving people from both organizations in the avatar creation process might even become a key step toward cultural integration.

Making cultural differences visible

Cultural integration — the key term for our next use case. At the core of cultural integration — and here, “integration” does not mean assimilation — is the mutual recognition of differences. The famous elephant in the room needs to be brought into the spotlight.

In the past, this required extensive processes. First, surveys; then, data analysis; and finally, workshops with mixed teams from both organizations. The outcome was a visualization of cultural differences.

A complex process that not only takes time but can also only begin after Day One. And with all the urgent tasks that need to be tackled after Day One, cultural integration often takes a back seat.

Culture is particularly evident in communication — on websites, in job postings, in external and internal content (aka posts), and even in emails. So why not feed this data into an AI and let it analyze the cultural differences? This technology has been available for some time and is already being used in other areas.

This provides a starting point for discussions within teams and among managers — meaning cultural integration is already underway. All without requiring extensive time from employees and, most importantly, without delay.

Culture Clash Meter

Once we have analyzed cultural differences with AI and then refined them through input from those involved, the first step is successfully completed.

Going forward, it’s especially important to recognize when discussions in meetings or conversations shift into the cultural realm — often at the expense of constructive dialogue.

In larger meetings, moderators are often brought in to oversee discussions. With their experience and a targeted briefing, they ensure conversations stay on track and intervene when cultural differences lead to unproductive exchanges.

Today, bots are already recording numerous meetings. If AI can analyze cultural differences, it will eventually be able to detect them in real time — or at least with minimal delay.

Now, we let AI calculate an indicator. The more frequently cultural misunderstandings or culturally driven discussions arise, the higher the value climbs — and it decreases as these instances become less frequent. This creates the Culture Clash Meter, a tool that can be used in every meeting, video call, phone conversation, or face-to-face discussion.

Integration Path Optimization

Last but not least — even if the scenario from the intro isn’t reality yet, we can still hand over the plans of all individual workstreams, functions, or teams to AI for analysis. By supplementing these with relevant topic details and overarching milestones, we create a more comprehensive picture.

This enables AI to identify dependencies that we previously mapped out manually. The insights provide teams with valuable input for discussions and collaboration — an essential step in growing together and ensuring the success of post merger integration.

The road ahead

How far are we from AI not only creating the post merger integration plan but also detailing every step — what needs to be done, when, and by whom? And how long until it takes over these tasks entirely, just like the avatar delivering the Day One speech?

Generating such a plan might take hours, maybe even days — but what is that compared to 100 days of integration or even three years to finalize every detail?

Today, we are still far from this scenario. However, AI already offers numerous opportunities to enhance post merger integration. The maturity levels of these use cases vary, and the full potential of AI in this field is far from being realized.

Parallel Integration - Success in Mergeritis

by admincf | Feb 27, 2025 | Insight, Newsroom

Waiting until the day after tomorrow

“We're not starting the integration yet. There are more add-ons in the pipeline, and we'll know more in two months.” This — or something similar — is what many CEOs pursuing a buy-&-build strategy are currently saying.

Although some add-ons have already been acquired, further takeovers are still pending. If you begin integration now, how will you handle the next acquisitions? The first integration isn’t even complete, and the next closing is already imminent.

One option is to integrate the new acquisition alongside the ongoing process. Another is to put the company on hold for now. But if you start too early, you won’t be able to incorporate insights from future acquisitions into the process.

“So it makes no sense to start now.” Right? In the end, you just keep waiting — until the day after tomorrow.

It is not uncommon

Buy-&-build strategies have become an integral part of many private equity investments. No wonder — the low-hanging fruits are particularly rock bottom here. However, this no longer refers to the classic multiple arbitrage that once seemed almost automatic: larger company, higher multiple.

It was a self-reinforcing effect, almost like a perpetual motion machine or a sleight of hand. Today, that alone is no longer enough. To increase the multiple now, real integration is required — leveraging synergies within the growing organization. Without a targeted allocation of resources, the desired effect won’t be achieved. Yet, despite the additional effort, the investment is worthwhile.

This raises a crucial question: When should integration start? And when new companies are continuously being added, how can they be incorporated into an ongoing integration process?

But buy-&-build strategies aren’t the only path to multiple acquisitions. Traditional growth strategies today also rely on both organic and inorganic expansion — such as add-ons, where suitable companies are acquired. And often, these involve more than just one or two.

Even companies that aren’t actively pursuing expansion face this challenge. Demographic trends are creating numerous succession opportunities that are hard to ignore. Failing to seize them means risking that a competitor will — gaining a decisive advantage in the process.

And suddenly, you've acquired several companies in a short period — and once again face the same question: When does integration begin?

Do you have to choose? Plague or cholera?

The situation is clear: the first integration is already underway, and another target is being added. There are two basic options: either the new company is integrated directly into the ongoing process, or the initial integration is completed first while the new target remains on hold until it is incorporated in a second phase.

So far, so difficult. Parallel integration speeds up the process but risks compromising its stability.

Corporate culture, for example, can be a critical factor. Even with the first acquisition, there were significant differences from the buyer: We’re on a first-name basis versus We’re not. Now, a third player enters the mix — with a completely different culture. This new addition prioritizes clear responsibilities and hierarchies, regardless of how people address each other.

In the original integration, cultural differences were still manageable — they existed along a single dimension. But with the addition of another company, complexity increases: Who represents which culture? And in which direction should the entire organization evolve?

Choosing stability by postponing the second integration means also losing valuable opportunities.

Take IT, for example. As part of the integration, the entire application landscape is under review. A key decision looms: selecting a Manufacturing Execution System (MES) to replace the existing production planning system. Neither the buyer’s solution nor the first target’s system is ideal, but a choice must be made for integration to move forward. The decision falls in favor of the buyer’s system.

However, the second target successfully implemented an integrated MES just a year ago. They have valuable operational experience, identified optimizations, and documented everything thoroughly — after all, they’re the ones with clear structures and hierarchies.

Had this expertise been incorporated early on, the system could have been further improved and developed into the best possible solution. But with a sequential approach, the buyer’s suboptimal system is chosen simply because time and money have already been invested in its migration. Making changes now seems unrealistic.

More stability — at the cost of speed and quality.

The choice between parallel integration — offering speed and flexibility at the expense of stability — and sequential integration is anything but trivial. And even after a decision is made, integration remains a balancing act.

Parallelize with a Playbook

A classic buy-&-build strategy simplifies decision-making. A solid platform company with stable, efficient processes serves as the foundation for consolidating a highly fragmented market by acquiring significantly smaller companies. The platform company’s target operating model is simply adopted as the standard.

With a well-defined playbook outlining each step of the integration, multiple targets can be integrated in parallel—without unnecessary risks. Processes can also start at different times. Such a playbook details the objectives and the required measures, structured by topic or function.

Careful preparation or documented experience from previous integrations helps establish realistic time frames, dependencies, priorities, and milestones. These milestones — which can also serve as internal communication tools or mark key events — might include a completed rebranding, the start of production, or the acquisition of new customers.

One of my favorite examples is Mister Car Wash, a U.S. chain of conveyor car washes. Mister — as the company affectionately calls itself — expands almost exclusively by acquiring individual locations or small chains. Each integration follows a standardized playbook, covering everything from site conversions to employee training in the company’s own academy.

Similar playbooks are common in hotel (re)openings. In addition to the playbook itself, specialized (re)opening teams often assist local staff during the initial phase. Their support spans both content — since they know the target vision and playbook inside out — and operational aspects, providing extra hands to tackle unexpected challenges.

A clearly structured roadmap creates space to accommodate the unique aspects of each acquisition. There are always valuable best practices that can be adopted across the group, which are then rolled out and incorporated into the playbook.

Because playbooks are not set in stone. They are regularly updated — not completely overhauled, but continuously refined with lessons from the latest integration processes.

Without a playbook - just listen

What about the other end of the M&A scale? When there’s neither a playbook nor extensive post merger integration experience? When the target picture for the new organization isn’t defined from the outset but instead develops throughout the process? Can another acquisition still be meaningfully involved in an ongoing integration?

Of course. After all, regular status or steering committee meetings provide a forum for discussing integration progress with key stakeholders. These meetings determine whether the future will follow the yellow or green variant. Representatives from the new acquisition should be involved early on — they, too, are relevant stakeholders.

Decisions already made regarding the target vision don’t need to be immediately applied to the new acquisition; that can happen in a second phase. However, their input can be incorporated early, offering two key advantages.

First, the new target feels included from the very beginning. Its expertise and experience contribute to the process rather than being overlooked. At the same time, it gains direct insight into the organization’s direction, ensuring transparency in the integration process.

Second, valuable insights from the new acquisition aren’t lost. Returning to the earlier example of selecting a Manufacturing Execution System (MES). Instead of being limited to two suboptimal options, the new target may introduce a superior solution — one that can be incorporated into the future IT landscape.

This approach may even unlock additional internal resources. Instead of relying on costly interim managers, underutilized talent from the new target can support the integration. This not only reduces costs but also creates direct points of contact, helping the organizations grow together more effectively.

There is always a Day One

Even if the real integration of a new acquisition is postponed, Day One still happens. It marks the day after closing when the buyer takes full control of the company. On this day, employees expect a warm welcome, an inspiring speech from the CEO, and clear guidance. (I shared my experiences and thoughts on this in my last article.)

Whether the new company is integrated immediately or later, this milestone cannot be overlooked or handled half-heartedly. It deserves the same careful preparation and serious execution as any other key moment in the integration process.

The solution? Almost doesn’t matter

As is often the case in life, there is no perfect solution — especially when evaluations must be made in advance. However, the two extreme cases outlined here provide guidance and reference points for your own very specific situation.

Many roads lead to Rome — and to a successfully integrated organization. More important than choosing the perfect approach is making a clear decision and following through consistently. After all, postponing integration until the day after tomorrow means losing valuable time.

As long as the new acquisition isn’t treated as second-class, employees are informed transparently and authentically, and they are involved as much as circumstances allow — everything will work out.

And if it is not yet good, then the integration is not yet over.