How IT carve-out project complexity influences divestor performance in M&As
Journal
European Journal of Information Systems (EJIS)
ISSN
0960-085X
Type
journal article
Date Issued
2022-07-14
Author(s)
Research Team
IWI6
Abstract
IT carve-out projects are complex and cost-intensive components of M&A transactions. Existing research sheds little light on the determinants of IT carve-out project complexity and/or its effects on divestor performance. Instead, research has focused on the post-acquisition IT integration project and acquirer performance. This paper presents the first divestor-centric model of IT transactions from the divestor to the acquirer when a Business Unit in a Multi-Business Organization (MBO) is carved out and integrated into another MBO. The model explains how divestor business and IT alignment pre-conditions contribute to increased IT carve-out project complexity. Such complexity increases IT carve-out project time to physical IT separation and creates IT stranded assets, which decrease post-divestment business, IT alignment and divestor performance. The current recommended strategy of adopting transitional service agreements (TSAs) to handle IT carve-out complexity is compared with two new proactive strategies derived from the model. TSA-based strategies restrict the divestor from both decommissioning IT stranded assets and reconfiguring its IT assets to support its new post-divestment business strategy. The two new strategies address IT carve-out complexity without incurring the negative effects from adopting TSAs
Language
English
Keywords
Carve-out
IT alignment
IT stranded_assets
M&A
Multi-Business organisations
divestment
integration
theory building
HSG Classification
contribution to scientific community
Refereed
Yes
Volume
32
Number
6
Start page
962
End page
988
Pages
28
Subject(s)
Division(s)
Eprints ID
266818
File(s)![Thumbnail Image]()
Name
JML_881.pdf
Size
971.21 KB
Format
Adobe PDF
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