An IT insider’s view on a global cross border M&A
Systems Integration

An IT insider’s view on a global cross border M&A

“Working globally will always bring in different cultures,” says Jon Forster, a consultant global programme director and senior IT adviser, who has been working with Fitness First’s IT team following its global sale. “This has involved dealing with a vast range of different viewpoints, ideas and ways of working. It drives and influences the way the planning has to be undertaken to successfully migrate from the existing infrastructure to how the new owner wants to operate, whether that’s on-premise, SaaS or a combination.”

It’s a challenge, Forster says, is typical of all such deals. In October last year, Dave Whelan, the former JJB Sports owner, bought Fitness First UK in a deal worth an estimated £70 million ($93 million). In Asia, the gym chain merged with Celebrity Fitness creating new brand Evolution Wellness, which now operates 152 outlets, including 46 in Indonesia and 35 in Thailand. In technology terms this is not straightforward.

Speaking from Singapore, Forster is still ensconced although admits the project is nearing an end. So what has been the most difficult aspect of the sale from an IT perspective?

“The sale of Fitness First has been across the globe - UK, Middle East, Australia and six countries across Asia,” says Forster. “It has not been one agreement but a different agreement and a different solution to multiple new owners of each global region. In summary, what has been difficult is each end solution has been different. Each transition has had to migrate from a common base to a different set of solutions. The team has had to work across various end states and keep not just a single focus but a multi focus where each end state is as important as the rest.”

The break-up of the existing IT infrastructure had to be done in a structured, buyer-led manner says Forster, which needed the right internal and third-party resources to be in place. He says that managing a transitional process across multiple countries and ensuring all of them running concurrently is not something you can wholly fully plan for. It takes experience working with multiple Transitional Service Agreements (TSAs) and working in conjunction with the buyer, in-house resources and what the owner wants to deliver to get to a common agreement.

“Successfully managing multiple concurrent TSAs means ensuring any one agreement can be delivered without impacting any other agreement,” he says. So what’s a TSA and why is it important?

“It is the mutually agreed process to migrate from the current IT landscape to the new landscape over an agreed period of time,” says Forster. “It is the fundamental building block in the sale of a business. As technology becomes more integral in a business then the TSA becomes increasingly important and ensuring the TSA is correct and deliverable is paramount in a successful sale process.”

The TSA has to clearly state how and when services will be migrated, what knowledge transfer has to be delivered and how the business services can continue to be delivered during the period, so the end customer is not impacted. This has to encompass continuing the existing services and migrating across to new services.

“These new services may be subsequently delivered using different technologies, different architecture and different support models,” adds Forster. “My experience in negotiating and agreeing how the services need to be in place at the end of the TSA period means working with seller, buyer and different IT and legal teams. This has included working with the global CTO to ensure we have the correct agreements in place that can be successfully delivered across multiple TSA and one TSA does not impact on going delivery of global services.”

 

Virtualisation

What the experience has done is given Forster an insight into how different companies run their IT infrastructures across the globe. Although we can get caught up in the idea of hyper converged infrastructures and virtualisation, it’s not for everyone. So does the lack of hyper convergence surprise Forster?

“Has it surprised me? No. This has shown me that hyper convergence has both an opportunity but a real challenge. The two aspects are intertwined,” he says. “The challenge, and opportunity, is from two aspects. Firstly, explaining to those who want to stay on premise that there is a better way of doing it and secondly that the buyer who wants to move to a total cloud-based approach that it may not be the best solution. The challenge is understanding what hyper convergence can deliver. Hyper convergence has to show it is more efficient to run your own cloud then use a public option and you can successfully deliver a hybrid solution in a short timescale.”

Why does he think so many countries have not gone down this route? Knowledge? Legacy? Cost?

“I believe it a combination of knowledge and roadmap that is driven by a short delivery timetable,” he says. “A transition has to deliver in a short timescale and any technology has to support and deliver in this timescale. Hyper convergence technologies have to clearly demonstrate they can be established quickly and can be a building block to a hybrid architecture and not just become legacy.”

It's a good point. We spend so much time talking about the pain of legacy that we don’t really consider if we are just creating more legacy. Could this change? Is dealing with various legacy systems the nature of the beast or can you envisage a future where there will be no legacy, just regularly upgraded systems and infrastructures?

“‘Just upgraded’ would be a good future,” says Forster. “This would require businesses using the same applications as they merge together. As a business moves to common SaaS this becomes more possible. This though is only possible if they are running a ‘vanilla’ build where you can merge a business. This means having global applications that are not be-spoked but where the business should change to meet the application. A business should differentiate through customer service and not be held back by using bespoke technology. A business that wants to grow and is looking forward has to understand differentiation is through using standard technology combined with good customer service. It is not about ‘tinkering’ and thinking it is better to keep changing technology.”

According to the Baker McKenzie Cross border M&A Index, the climate is positive, with more deals of higher value expected towards the end of this year. However, how merging businesses cope with increasingly complex integrations is a key factor in retaining business value. If we’ve learned anything from Forster’s experiences with Fitness First is that’s easier said than done, as after all there is never a one size fits all approach.

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Marc Ambasna-Jones

Marc Ambasna-Jones is a UK-based freelance writer and media consultant and has been writing about business and technology since 1989.

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