M&A Activities in 2021: Study Shows Strong Involvement of Enterprise Architects
Bonn, Germany and Boston, MA – February 4, 2021 – In most companies, enterprise architects (EAs) have claimed their place at the table when it comes to mergers & acquisitions (M&A). This is one of many findings in the LeanIX M&A Survey 2021 published today. 80% of the EAs who participated in the survey are involved in at least one phase of the M&A process – primarily during post-merger integration. As M&A activity is set to rise in 2021, global IT company LeanIX analyzed the status quo of international companies. The final report covers many specific EA use cases relevant to M&A processes. Among others, a key finding is that EAs, if actively involved, can increase the overall success of any M&A effort.
Download the comprehensive report at: https://www.leanix.net/en/download/the-role-of-enterprise-architects-in-mergers-acquisitions
Two recent deals underline the upward trend expected for M&A in 2021: (1) Salesforce's purchase of the messaging platform Slack for approximately $28 billion, and (2) SAP's acquisition of the business process management software company Signavio. An increase in M&A activity goes hand in hand with heightened requirements, both for the evaluation and implementation of M&A projects.
But how can EAs support the M&A process – and how are they doing so already? Following an online survey that lasted from December 2020 to January 2021, a total of 128 EA experts from large international companies within the LeanIX customer portfolio shared insights into the current corporate reality of various industries.
Three-quarters of companies saw at least one M&A process in 2020
In 2020, M&As, as well as carve-outs of business units, played an important role for the companies surveyed. 74% reported having at least one such project on their agenda.
M&A processes commonly paired with EA expertise
Regardless of whether M&A projects made it to corporate agendas in the last 12 months, the vast majority of surveyed EA experts (80%) stated that they are involved in M&A processes in some form or another. This includes at varying stages of the M&A process: (1) identification of possible candidates for acquisition or (2) business units for carve-out, (3) due diligence checks, (4) post-merger integration, (5) or the implementation of carve-outs.
The extent to which EAs are involved in M&A activities varies greatly. More than a third of enterprise architects report being involved in only a single stage of the whole M&A project; another quarter participate in two stages. Only 20% of architects are consulted by their companies in three or more stages in the M&A process. And a staggering 20% of respondents do not participate in any M&A activity whatsoever.
EA involvement highest for post-merger integration
At almost 90%, most EAs are involved in M&A activities to support post-merger integration efforts. Less than half of EAs provide support during due diligence or to implement carve-outs. EAs are also not often consulted for identifying possible candidates for M&A projects or carve-outs.
Most relevant EA use cases for M&A
With regard to the M&A process, surveyed EAs were asked to evaluate specific EA use cases and assess where their contributions are most important. All EA use cases were considered of value for M&A projects with approval rates of more than 70% per use case.
- IT transparency (*94%): Nearly all EAs surveyed value establishing transparent IT landscapes. Without such transparency, companies lack the very basis to make sound architectural decisions, especially when harmonizing IT landscapes.
- Application rationalization (*88%): Eliminating redundant applications and services contributes directly to cost savings. It is crucial, however, to understand and consider the interdependencies of business capabilities and their underlying applications with efficiency to ensure business continuity, among other things.
- Developing a target IT landscape (*84%) and charting application roadmaps (*82%): Establishing a framework for both the future architecture as well as for all individual applications is regarded as an important part of any post-merger integration effort.
- Creating a common business capability map (*80%): Surveyed EA experts indicate a strong appreciation for business capability maps. Business capability maps provide management with a better basis for decision-making by giving them a holistic overview of all relations and links within the IT landscape.
- Various scenarios and plans for post-merger integration (*70%): Even though this use case ranks last in this survey, some respondents explicitly pointed out the necessity of such simulations in the future.
*Approval rate of the respective use cases during the M&A process in the company.
Increase in M&A deals has implications for EAs
The vast majority of EAs are already involved in the post-merger integration phase within their companies. Given the expected increase in M&A activities, LeanIX CEO André Christ is convinced that EAs will assume even more responsibility in the future: “The market is progressing, and companies are under increasing pressure to have data-driven and reliable information at hand in the run-up to transactions. Possessing comprehensive data about IT landscapes set to be harmonized is a necessity for preventing prolonged, costly discussions between organizations. With modern EA tools, EAs can support the entirety of an M&A process and guarantee success.”
The LeanIX platform promotes continuous transformation and enables internal IT and DevOps teams to establish superior governance while efficiently organizing, planning, and managing IT landscapes. LeanIX follows a collaborative and data-driven approach, focuses on speed and control in cloud environments and enables companies to make sound and fast decisions based on comprehensive data.
The LeanIX Team in Bonn
Over 380 leading international brands such as Volkswagen, Adidas, DHL, Merck or Vodafone trust in LeanIX – including half of the German DAX companies. More than 40 certified partners such as Deloitte, Cognizant and PwC rely on the dynamically growing IT company co-founded in 2012 by LeanIX CEO André Christ. With EA Connect Days, LeanIX has been regularly organizing one of the world's most important industry events in the field of Enterprise Architecture since 2014. The company is headquartered in Bonn, Germany with additional offices in Boston, Massachusetts; Munich, Germany; Utrecht, Netherlands; and Hyderabad, India. It has more than 300 employees worldwide.