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.
%0 Journal Article
%1 ls_leimeister
%A Yetton, Philip
%A Henningsson, Stefan
%A Böhm, Markus
%A Leimeister, Jan Marco
%A Krcmar, Helmut
%D 2022
%J European Journal of Information Systems (EJIS)
%K Carve-out IT_alignment IT_stranded_assets M&A Multi-Business_organisations divestment integration itegpub pub_jml theory_building
%N 6
%P 926-988
%R 10.1080/0960085X.2022.2085201
%T How IT carve-out project complexity influences divestor performance in M&As
%U https://pubs.wi-kassel.de/wp-content/uploads/2022/07/JML_881.pdf
%V 32
%X 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.
@article{ls_leimeister,
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.},
added-at = {2022-06-21T17:07:03.000+0200},
author = {Yetton, Philip and Henningsson, Stefan and Böhm, Markus and Leimeister, Jan Marco and Krcmar, Helmut},
biburl = {https://www.bibsonomy.org/bibtex/2bd6f68bf2cc2ed36e3fccf28e5f4443d/ls_leimeister},
doi = {10.1080/0960085X.2022.2085201},
interhash = {6479f3cae1bd3e6006a90aa7f62df5fa},
intrahash = {bd6f68bf2cc2ed36e3fccf28e5f4443d},
issn = {0960-085X},
journal = {European Journal of Information Systems (EJIS)},
keywords = {Carve-out IT_alignment IT_stranded_assets M&A Multi-Business_organisations divestment integration itegpub pub_jml theory_building},
language = {english},
number = 6,
pages = {926-988},
timestamp = {2023-11-17T12:51:52.000+0100},
title = {How IT carve-out project complexity influences divestor performance in M&As},
url = {https://pubs.wi-kassel.de/wp-content/uploads/2022/07/JML_881.pdf},
volume = 32,
year = 2022
}