IT Capital Partners: Good morning, Matthias. It’s a pleasure to have you with us today. As the Central Europe Head of PMI at BCG, you’ve overseen numerous post-merger integrations. We’re particularly interested in your experiences with IT-Service companies. Could you start by sharing your general approach to post-merger integration in this sector? 

Dr. Matthias Krühler: For sure, thank you for having me. In the IT-Service sector, post-merger integration (PMI) is quite challenging due to the rapidly evolving technology and human capital as the central resource. This is why our approach is always tailored to account for these two aspects. We try our best to capture on the one hand the technological compatibility of acquirer and target while nurturing the innovative cultures that often define these companies. 

IT Capital Partners: What are some specific challenges you’ve faced in PMIs involving IT-Service companies? 

Dr. Matthias Krühler: We particularly see two challenges in line with the two sector specificalities above. One major challenge is again technical: During integration, aligning different technology platforms and systems can be quite challenging. IT-Service companies often have proprietary solutions and processes, and harmonizing these post-merger is complex. The other challenge is to retain key talent. Mergers can create uncertainty, and in an industry where talent is the biggest asset and it is easy to switch between employers, managing morale and culture is crucial. 

IT Capital Partners: How do you address these technological compatibility issues? 

Dr. Matthias Krühler: We conduct a thorough baselining exercise to understand the technological landscape of both entities. This involves assessing software architectures, development practices, and even customer integration points. The goal is to develop a clear roadmap for integration that minimizes disruption to ongoing operations and customer services while using the post-merger momentum to create something new and potentially more efficient.

IT Capital Partners: And what about the human aspect, particularly in maintaining company culture? 

Dr. Matthias Krühler: This is where a tailored and tangible change and culture approach is needed. We focus on defining a common integration vision early on that can be communicated throughout the organization to provide guidance and certainty, prioritize the definition of a shared target culture where leaders walk the talk and use a multi-stakeholder approach to make key employees be a direct part of the process. For instance, we often establish joint integration teams to foster a sense of unity and shared purpose already during the early integration process. 

IT Capital Partners: Have you noticed any trends in PMIs within the IT-Service industry? 

Dr. Matthias Krühler: In currently challenging economic circumstances and with tighter corporate pockets, there’s a growing emphasis on digital integration and leveraging synergies in innovation. Companies are looking to merge not just to expand their service offerings but also to pool their technological capabilities. This means PMI strategies are increasingly focused on fostering environments that encourage collaborative innovation. 

IT Capital Partners: In your experience, what makes a PMI successful in the IT-Service sector? Dr.

Matthias Krühler: Successful PMI in this sector hinges on achieving a balance between integration and autonomy. While operational efficiencies are necessary, it’s equally important to maintain the entrepreneurial spirit that often drives innovation in IT-Service companies. Additionally, a successful PMI strategy must be forward-looking, considering not just the immediate integration but also the long-term strategic positioning of the merged entity. 

IT Capital Partners: Any final thoughts or advice for companies considering mergers in this space? 

Dr. Matthias Krühler: Start early! Companies often wait for a longer time after signing or even until closing to start preparing for the integration journey ahead. It’s not just about combining two businesses; it’s about creating a new entity that can thrive in an incredibly competitive and fast-paced industry and that has a clear strategic vision. Careful planning, respect for cultural differences, and a focus on future innovation are key and take time to develop – ideally already long before closing. 

IT Capital Partners: Thank you, Matthias, for sharing your valuable insights with us today. 

Dr. Matthias Krühler: My pleasure. Thank you for the opportunity to discuss this critical aspect of business strategy in the IT-Service sector.