Mergers and acquisitions (M&A) are an important, strategic lever for business growth. They can help companies acquire new technology to stay competitive, diversify their products and services, expand their customer base, sell-off part of their business, and more. The success of the M&A depends on how quickly and efficiently you can integrate or de-integrate IT systems, data, and processing workflow.
Among our specialties at Finchloom are Microsoft tenant migrations. These are typically consolidations of one tenant into a “master” environment. Most merge relatively similar environments, though some involve translating Google Workspace into Office 365.
Learn more about consolidating Microsoft tenants:
- Tenant Consolidation for Mergers and Acquisitions
- Migrations from Google Workspace to Office 365
- Get Rid of Workspace, Migrate to Exchange
Velocity, efficiency, and strategy all play a role in M&A’s, but sometimes, companies grow too large and need to split their resources, which brings us within the realm of IT Carveouts (also known as Divestitures).
In this blog, we will walkthrough:
- What an IT carveout is
- How IT carveouts differ from migrations
- How to ensure high technology adoption velocity
- Reasons that companies tend to carveout a portion of their business
- How critical planning is to the entire operation
What is an IT Carveout?
An IT Carveout is the process of splitting IT resources, including Microsoft Tenants, into separate fully-functioning entities. Shared resources and collaboration tools such as Teams and SharePoint require unique oversight so that the resulting split leaves both entities whole.
Why Companies Choose an IT Carveout?
Companies choose to divest from a business unit for a variety of reasons, including:
- A parent company may spin-off a subsidiary with divergent business goals
- Two companies that previously merged now decide to exist as separate brands
- A section of business must be prepared for potential sale, or to stand on its own from a legal standpoint
Company B acquires also acquire a business unit from Company A, requiring a migration to a new Office 365 tenant, Google Workspace, or other. This situation is effectively a carveout from one company and a merger to the other utilizing a single migration.
For more examples, review:
Is an IT Carveout Just Tenant Consolidation in Reverse?
From a technical perspective, consolidations and IT carveouts are both migrations. In a merger and acquisition scenario, Company A purchases Company B, and merges all resources into a single environment. Both companies begin as two separate entities with zero connection to the other and end as a single organization with shared resources and spaces.
However, in an IT carveout, the resulting Company B may still reside under a parent umbrella or continue to share data and regularly work with Company A.
In this case, some data must be duplicated and/or shared, including Teams, SharePoint sites, shared mailboxes, groups, and other related collaboration tools.
The challenge for our IT Carveout team is to determine how to:
- Remove Company A’s proprietary data from Company B without impacting the daily operations of both companies
- Rebuild the connections so that they are still able to collaborate in their respective environments
The process of identifying shared resources and building new structures to hold them is the biggest technical difference between tenant consolidation and tenant carveout.
How Long Do IT Carveouts Take?
We have seen mergers, acquisitions, and IT carveouts that were quite simple and had a quick turnaround because there were not a lot of customizations in Office 365, and we have seen others that could potentially take months. It all depends on exactly how intricate the environment is, and what decisions are being made at a business level. What might seem like a simple split from a business perspective can turn into a major headache for the IT department.
Why IT Carveouts Require an External Partner
Any type of migration requires both time and resources. For many companies, time is of the essence. A potential buyer may be standing by, or the carveout may be the first part in an eagerly awaited multi-phase project.
Most companies also don’t want to split and retrain their IT resources or hire employees for the new business entity.
Companies should focus on their core functionality and outsource temporary projects like these to a team of experts that routinely performs similar projects. With a competent external partner at the helm, velocity of the carveout remains high throughout the project, and organizations don’t need to worry about losing internal staff or productivity for a one-off implementation.
Phases of an IT Carveout
The phases in an IT carveout are as follows:
- Discovery
- Assessment
- Pre-migration Planning
- Pre-migration Staging
- Migration Execution
- Post Migration Support
- Project Closeout
In our eBook on Tenant Consolidation, we break down the steps and why each is significant. If you would like to read our Tenant Consolidation eBook for Mergers and Acquisitions, please click here.
The Discovery and Planning phases are perhaps the most under-appreciated steps in the carveout process, and the ones that we want to focus on in this blog.
Discovery
In theory, if a company presented a complete set of carefully filtered data along with configurations needed in the destination tenant, with users, usernames and access levels for each account, Finchloom could perform a 1,000-user migration project very quickly.
In reality, identifying the needs of the organization and figuring out how data is tied together is a time-consuming, but critical part of the discovery process for IT carveouts. Most IT Administrators don’t consider building their IT environment in a way that enables an easy migration of part of the data. Additionally, many of our customers don’t even know where to start in identifying all the information needed to successfully perform an IT carveout.
Shared resources — Teams, SharePoint sites, etc. — come with ties to other aspects of the organization. So Finchloom meets with the different stakeholders within your company to learn how resources interact and share data so we don’t miss the details when we begin the planning phase.
Some resources can be moved in full before the migration starts. Some may require the duplication of shared data for the new tenant, but since IT carveouts may include migrating resources to a competitor, some intellectual property should not be released. Identifying what can be moved without jeopardizing either company is a critical part of our discovery process.
Planning
The planning phase determines the strategy, tools, and timelines for the IT Carveout so that there is no loss of company productivity during and after the cutover.
During this phase, we take what we learned in the discovery phase to make some tenant configuration decisions, including but not limited to:
- Retention policies
- Spam filtering
- Email naming conventions
- Security services
We do this to ensure that our clients have the licensing necessary for us to do our work, and to make sure that everything is in place before the project begins.
We will also establish connections between the resulting environment and the new tenant so that both Company A and Company B has a successful migration the first time around. Learn more:
Planning an IT Carveout can feel Slow
To eager customers, time spent planning can sometimes feel like delay. However, the time Finchloom invests in these decisions will pay off in the IT environment, business processes, and functionality for both entities at completion.
Our migration professionals will also work with your internal stakeholders and provide guidance so that tasks progress at a reasonable pace, because after the planning phase, the project velocity increases dramatically.
Contact Finchloom for IT Carveout Assistance
Ensuring your company’s productivity and access to its critical shared resources are the best reasons to hire a third-party migration service with a proven track record of success.
With 8 years of business migration experience and over 50 years of employee migration experience, Finchloom is well positioned to help companies of any size, and in any location successfully carveout an aspect of their business. We reduce migration delays and ensure that both company’s completed environments perform effectively, with appropriate shared spaces.
If you are interested in learning more about the migration phases, please check out our other blogs above, or download our tenant consolidation eBook at this link.
If you would like to learn more about carving out an aspect of your business, get in touch with us here.
Thank you for reading and stay tuned for our upcoming webinar on M&A Consolidations and Carveouts which can be found on our Announcements Page!