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.
Original language | English |
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Journal | European Journal of Information Systems |
Volume | 32 |
Issue number | 6 |
Pages (from-to) | 962-988 |
Number of pages | 27 |
ISSN | 0960-085X |
DOIs | |
Publication status | Published - Dec 2023 |
Bibliographical note
Published online: 14 Jul 2022.Keywords
- Crave-out
- integration
- IT alignment
- Divestment
- IT stranded assets
- M&A
- Multi-business organisations
- Theory building