Introduction
Mergers and acquisitions (M&A) usually carry the promise of growth, efficiency, and market integration. However, behind financial projections and integration plans is a technical challenge that can often define success or failure of the transition: network integration.
When two companies merge, their IT environments need to seamlessly converge. Conflicting systems, outdated equipment, and unforeseen vulnerabilities may delay the process or even expose the organization to significant security risks. For these reasons, network device discovery plays a vital role in the merger or acquisition during due diligence.
Knowing each device, endpoint, and connection on both networks enables making informed decisions about integration, security, and cost effectiveness. In other words, this outside-in information will verify as a sound operational acceptance of the merger or acquisition, as well as any prospective financial pledges.
The Importance of Network Discovery During M&A Due Diligence
In any M&A, technical due diligence goes beyond financial readouts. It is an evaluation of digital infrastructure enabling business operations. The acquiring company can inherit a lot more than it bargained for if they do not have full visibility into the network(s.) Using an asset or device discovery in this capacity means preventing the discovery of outdated hardware, wrongful configurations, or even unknown risks in network discovery.
A recent report from PwC states that approximately 60% of M&A engagements have unplanned IT challenges after an acquisition solely based on obscured asset visibility. Things always go wrong in a merger; IT not being prepared for something holding the organization back could cause unplanned downtime, extra costs, and even compliance as per Slurp’it.
Device discovery minimizes those unknowns by giving you:
➤ A visible inventory of all network-connected assets.
➤ Visibility of actual configurations, firmware, and vulnerabilities.
➤ Insight into device compatibility or conflicts of integration.
➤ Each of these knowns leads you to better business decision-making on the transition.
➤ Risks Involved with Not Conducting a Device Discovery
There are several risks included with not conducting a device discovery in an M&A:
1. Security Vulnerability
Outdated or unmonitored devices can be an entry point for attacks. According to IBM, “A legacy system or innocent misconfiguration can play a massive role in nearly 30% of breaches” will be identified without an asset or device discovery process.
2. Compliance
Every enterprise has regulatory demands based on type of industry (finance, health care, etc) for having controls put on personal (and sometimes sensitive data). Any unknown or unidentified devices could be holding onto or transmitting information which does not have a control – leading to non compliance and fines.
3. Integration Delays and Cost Overruns
If its integration due diligence and discovery should continue to be the responsibility of the acquiring IT team due diligence, but they don’t have a complete roadmap of both networks, then you can expect chaos. Overlapping IP ranges, incompatibility, and even redundancy are not discovered until late into the integration process leading to often subjectively driven decisions to stay compliant or unaware of the pending costs causing analysis paralysis as per Slurp’it.
4. Asset Valuation Accuracy
IT infrastructure can be a huge factor to placing a value on a company in network discovery. The acquiring company may miss the appropriate allocations just after acquisition if they miss an asset or investment needed for updating or replacing.
How Network Device Discovery Aids IT Due Diligence
A well-planned network discovery project is more than just action-oriented data; it is about understanding more than just a list of connections involved. This is how it aids in M&A:
1. Creating a Single Asset Inventory
The first thing that you must do is list every piece of equipment that is connected to the network, starting with traditional servers and switches and working through IoT sensors and virtual instances. Current-day network discovery tools execute this task by scanning IP ranges automatically, identifying devices and relevant metadata such as make, model, and operating system in network discovery.
Through the inventory, you can begin planning for the network and the integration efforts. It creates a baseline for both sides to have the same understanding of what is present and what will require attention as per Slurp’it.
2. Identifying Vulnerabilities and Configuration Gaps
In addition to identifying devices, discovery tools will also include health information for individual devices. They will highlight devices with unsupported firmware, poor password strength, unsupported operating systems, etc. When problems are identified through discovery work before systems are integrated, companies can prevent unauthorized exploitation of networks and be more ready for compliance initiatives.
3. Achieving an Efficient Network Integration
If there is credible data from discovery, IT teams will also be able to understand overlapping subnets, optimization with routing path, and implications of a migration that minimize downtime at an operational level. This reduces risks such as downtime and operational confusion during a large -scale integration.
4. Facilitate Post-Merger Extraction Value
Even post-merger, networks can continue to add value through discovery. Discovery allows to continue monitoring usage at a level that can also lead to planned capacity improvements, cost controls by identifying redundant equipment, and underutilized assets for decommission.
Best Practices For Network Discovery In M&A
1. Start Discovery Early Detection
Avoid delaying your network asset “discovery” process until after the acquisition. Using discovery indications, you can identify deal risks and mitigation efforts prior to getting to contracts.
2. Define Sccope and Include ID Ownership
Make clear which portion of the network (data centers, equipment space, etc.) each organization is responsible for reviewing through scanning. This protects each party through professional to organizational security.
3. Verify and Validate Information for Data Accuracy
Check the results of discovery against internal documentation, sanses, etc. to confirm results prior to or in conjunction with collaboration opportunities across the network. Data accuracy can delay decision making and lead to misunderstanding in the discovery process.
4. Incorporate Security and Compliance Checklists Scan
At minimum, add vulnerability scans and configuration checklists into the networks discovery checks. This will provision a level of risk items such as unsupported firmware, authentication issues, or domain/program compliance violations.
5. Utilize Discovery Data for Future Infrastructure Strategic Planning
Leverage relevant information from the data to inform planning, data/budget allocation, and modernization plans as per Slurp’it.
Case Example: Discovery in a Cross Border Acquisition Scenario
When a logistics firm based in Europe acquired their North American counterpart, the organizational IT team needed to understand how to combine long term, a global systems network with over 15,000 devices connected to it on board for each IT subnetwork.
Using an automated discovery solution for over 75% of the network, both organizations were able to produce a single inventory of assets in under 3 weeks. The early work with discovery highlighted more than 800 devices that were unsupported, and several overlapping IP subnets that would have caused significant issues in integration phases. With this information about the systems, the two companies were able to address network issues prior to the merger which subsequently reduced downtime in month post acquisition and saved the organization an estimated $1.2 million of costs to remediate after the merger.
Strategic Takeaway for Senior IT Leaders
For CIOs, CISOs and CTOs, network discovery is a technical requirement; it is a security blanket of sorts, just as crucial to your responsibilities. Realize that network discovery has a purpose beyond a “to-do” for due diligence, which is to use data-driven Network Asset Discovery to assess risk, identify opportunities for consolidation, and validate readiness to carry out the things you are integrating into your business.
With a view of the C-Suite through the lens of today’s M&A landscape, where digital asset values alone can be as impactful as financial values, more visibility gives more power. If an organization has validated discovery data, it will help to reposition the business to more assuredly make decisions about whether to pursue an integration plan based on real data instead of assumptions.
For every enterprise thinking about any sort of mergers or acquisitions, this is a best practice for the M&A integration process as you prepare for transitioning to the merging of these markets. To know more, contact us at Slurp’it!