Successful M&A Integration with help of Identity Governance

Mergers and Acquisitions (M&A) are pivotal events that can revolutionize businesses, unlocking growth, diversification, and competitiveness. Yet, to harness the full potential of these deals, successful integration between the two organizations critical applications, system, and data is paramount. Identity Governance, often overlooked as a key step in M&A, emerges as a critical piece in this process. CredenceIA team have helped organizations merge their IT systems and provide rapid business process integration services to its customers post M&A, and we go into the details of how harnessing Identity Governance can be the catalyst for M&A integration success.

According to reports (here and here), the total volume of global M&A deals had topped USD 5 Trillion in 2021 representing estimated over 63,000 deals according to a report. 

M&A is driven by various factors, including strategic goals, growth opportunities, cost savings, market access, access to distribution, access to capital, market dynamics, competitive pressures, regulatory environment, shareholder value, management vision, value creation, talent expansion, and market consolidation. To realize these objectives, among various other factors, effective integration of IT systems and utilization of identity governance tools and processes combined with meticulous planning and rapid execution of technology integration with identity lifecycle processes are essential.

Common Risks post M&A

Complexities of mergers and acquisitions (M&A) is a formidable task, and the challenges don't end once the deal is closed. Post-merger integration brings its own set of risks and pitfalls that can derail even the most carefully planned transactions. If overlooked, these risks can result in disastrous consequences for the intended outcomes and could result in failure.

Risk of relaxed controls: With business objectives taking driver seat, the expectations to allow rapid access to various applications and systems to the users of the acquired (or merged) company will be paramount. To avoid delays, user access policies could be relaxed, however, It is important to understand the risks that organizations could be exposed to via granting blanket access. An identity governance solution can help extend the user lifecycle policies and technology enablement to the users of new organization.

Exposure of privileged access: One significant risk in the integration of newly onboarded users during mergers and acquisitions lies in the unregulated granting of privilege access. In scenarios where the parent organization doesn't adhere to the principles of least privilege or the more advanced concept of zero standing privilege, we've observed a troubling trend. Some organizations provide domain-level access, rather than more granular member server access, to all administrators from both merging entities. What's more concerning is the exposure of admin accounts to the internet, often without proper segregation of primary and admin accounts. These practices pose substantial security risks for the organizations involved, potentially leading to data breaches and critical vulnerabilities. It's imperative for organizations to prioritize controlled access and adopt robust identity governance practices to mitigate these risks effectively.

Operational Risk: Operationally, the parent company will have an influx of a batch of users from the acquired company and staff adjustment that would lead to orphan accounts and accounts that will need change of manager and/or privilege adjustments. The helpdesk would be inundated with calls/emails for questions related to access.

Stakeholder Communication: Inadequate communication with stakeholders, including employees, customers, suppliers, and investors, can lead to uncertainty, mistrust, and resistance to change, hindering the success of the merger integration process. Lack of organization change management (OCM) processes and integration outreach could result in the acquired companies talent to feel neglected and unable to navigate through the prevailing processes.

Integration Challenges: Challenges in integrating systems, processes, and operations post-merger can result in disruptions to business continuity, delays in achieving synergies, and increased costs. This leads to customer disruption, financial loss and talent retention issues. Changes in product offerings, service levels, or customer relationships post-merger can result in customer dissatisfaction, loss of market share, and revenue erosion.

How Identity Governance can help Expedite Realizing M&A Objectives?

Organizations are driven by IT systems, and access, authorization and governance of the critical system of both organizations require a robust planning and execution. Identity Governance (IGA) and its effectiveness in rapid integration in M&A scenarios is often overlooked. IGA can play a pivotal role in expediting the realization of M&A (mergers and acquisitions) objectives by ensuring seamless integration of systems, identities, access controls, and security policies across the combined entity.

1. Streamlined User Access Management:

In the wake of an M&A, disparate user access systems, permissions, and directories can become a significant challenge. Identity Governance unifies these systems, allowing for efficient access management. It ensures that users have the right permissions, reducing the risk of unauthorized access and data breaches.

2. Simplified Compliance and Risk Management:

M&A integration brings new complexities to regulatory compliance. Identity Governance provides a centralized platform to manage compliance and risk across the merged entities. It enforces policies, monitors user activities, and generates compliance reports, reducing exposure to legal and financial risks.

3. Enhanced Operational Efficiency:

Identity Governance optimizes processes, reducing manual administrative tasks associated with user onboarding and offboarding. It automates provisioning, de-provisioning, and role assignments, making integration faster and more efficient.

4. Data Security and Privacy:

Maintaining data security and privacy is critical during M&A integration. Identity Governance helps ensure that sensitive data is protected by managing who can access it and under what circumstances. It enhances data security controls, bolstering the protection of customer and employee information.

5. Consistent User Experience:

Identity Governance delivers a consistent user experience post-M&A. Employees experience minimal disruption, and customers encounter a seamless transition. This consistency not only fosters trust but also enables the newly integrated entity to operate smoothly.         

6. Scalability and Future-Proofing:

Identity Governance solutions are scalable, accommodating the evolving needs of your integrated organization. They can adapt as your business grows or undergoes further M&A activities, providing a sustainable approach to long-term success.

7.      Robust User Self Service:

IGA solutions allow user self service. The User self service capability include a new user to be able to setup their profile, perform self-service password reset that gets synched with all other key downstream systems. Equally important of IGA solution’s capability is to allow user to request access to on boarded resources (e.g. application, entitlements, groups) including multi-level approvals. All these capabilities alleviate administrative overhead, avoid mistakes and reduce risk of unintended access in the new unified entity and help the new employees navigate with ease.

Additionally,

Efficient post-M&A operations rely on technology integration, self-service capabilities, and comprehensive business process documentation. While these elements are crucial for user lifecycle management and operational efficiency, many organizations overlook proper documentation, upkeep, and access control of critical processes and system designs, putting themselves at risk. Talent attrition post-M&A can exacerbate these risks, leading to operational gaps and compliance issues. Auditors require evidence of effective internal controls, highlighting the importance of detailed process documentation, RACI charts, and regular updates to ensure accountability and compliance. Combining detailed documentation with Organizational Change Management (OCM) facilitates robust preventative controls, preventing errors, detecting changes, and mitigating unauthorized access. Adopting a phased approach to documentation as part of a business resiliency plan ensures comprehensive coverage and readiness for future challenges and improve chances of effective and successful M&A outcomes.

Post M&A Day 1 Access to the New Users

A well-documented and established User Lifecycle Management (ULM) process, when effectively applied, can be a backbone in realizing M&A objectives. In the post-M&A scenario, the swift and well-organized provisioning of access to essential applications and assets for users from the acquired company can significantly impact the overall success of the merger. At CredenceIA, our experts have devised rapid onboarding strategies that seamlessly facilitate integration, merger processes, and the eventual transition away from the acquired company's HR and user authoritative systems.

Furthermore, it is equally crucial to determine which applications will no longer be in use and prioritize those that are integral to the HR and authoritative data sources. Rapid application onboarding is key to realize intended M&A objectives quicker. This strategic approach not only streamlines the transition but also ensures the security and performance of vital systems during M&A activities.

Conclusion for Successful M&A Integration with help of Identity Governance:

M&A integration can be a challenging endeavor, but with the right tools and strategies, effective planning and execution can lead to immense business growth. Identity Governance plays a pivotal role in simplifying access management, ensuring compliance, enhancing operational efficiency, fortifying data security, provide accountability and maintaining a consistent user experience. In today's dynamic business environment, Successful M&A Integration with help of Identity Governance is the key to unlocking success in M&A integration, and in achieving desired objectives that brings lasting benefits to your organization. 

Contact us to find out how CredenceIA can help you!