The CIO Priorities That Make or Break Consumer Goods M&A
The marriage of two consumer goods organizations can be a fraught proposition. Like any partnership, it requires communication, collaboration and an understanding of what both parties bring to the table.
The consumer industry market is “primed for a significant increase in deal activity and valuations in 2025,’’ according to investment banking firm Capstone Partners, noting that 2024 saw consumer M&A markets volume up 8.6% year-over-year.
“There is pent-up demand for organic growth, and CGs are doing deals to survive,’’ Mike Ross, a partner and U.S. consumer market deals leader at PwC, tells CGT.
Experts say CIOs and other IT leaders must be included in the discussions to help ensure a smooth transition; what CIOs bring to the table is the pragmatic question of the value-add of an acquired CG company.
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“Today, especially in consumer goods where companies are under tremendous pressure, these decisions have to anchor back to a value creation plan: What is the reason we’re doing the deal?” and how IT can help make the transition smooth, Ross says.
A CIO’s ability “to integrate complex IT systems, ensure cybersecurity and drive technological innovation makes them crucial to the overall success of mergers and acquisitions,’’ notes the National CIO Review. Their responsibilities in the due diligence phase involve assessing the IT infrastructure of the company being acquired, its cybersecurity posture, data integrity and overall technology capabilities.
Varying views on standardization
It’s not just during M&As where IT needs to have a well thought-out strategy. When Kellanova was spun off from Kellogg’s as an independent organization in 2023, for example, “having the right building blocks in place was really critical,’’ Lesley Salmon, senior vice president and CDIO, said during a 2024 podcast.
“We created two of everything from one of everything,” Salmon said, explaining that everything IT-focused needed to be duplicated—infrastructure, cyber landscapes, apps, data platforms and teams. She credits a strong cloud strategy as “key to achieving that magic.”
While companies have traditionally focused on standardizing ERP systems to drive efficiency and margin improvement, the private equity playbook has evolved in recent years, says Randal Kenworthy, head of consumer and industrial products at West Monroe Partners.
Now many firms recognize that “there are alternative technology strategies that can deliver those same outcomes—improved financial visibility and operational efficiency—without the costly and often painful process of ERP standardization,” he says.
West Monroe advises clients to explore options like middleware software, tool consolidation and AI-enabled data strategies, Kenworthy says. “These approaches can unlock value quickly while allowing the organization to maintain legacy ERP systems, reducing disruption and accelerating integration.”
What gets integrated; what goes?
The biggest obstacle for IT, arguably, is the integration of systems, which can be a tedious process. Integrating disparate systems in consumer goods organizations is challenging due to system complexity, security concerns, operational disruptions and a talent gap, says Thorsten Bernecker, a principal at Deloitte Consulting.
“Consumer goods organizations often undertake this integration following a merger to enhance operational efficiency, ensure data consistency, improve customer experience, align strategically and support future growth,” he says.
Bernecker advises clients to understand what capabilities are built to last and which systems need an upgrade to meet the demands of the next phase of technology. “In today’s tech environment, having a modernized architecture is a must—even if it requires putting additional time and resources toward innovation now,’’ he stresses. “What’s working today may not be in a few years.”
Further, depending on how monolithic the systems are, it requires defining the path forward on each capability, Bernecker says. “The ones that differentiate and move forward need to be mapped to code artifacts and then decomposed and modernized to the target state architecture.”
CIOs must also identify potential risks and integration challenges early to ensure a smooth transition. The key here is planning and having a well-defined technology integration strategy plan—one that’s comprehensive and aligned with the overall business strategy.
Collaboration and team harmony were at play when Mondelez International acquired Clif Bar in 2022. IT teams from both companies worked together to integrate systems, including ERP, CRM, supply chain and IT infrastructure. With cybersecurity top of mind, IT also implemented robust security measures to protect sensitive data in both companies’ systems during the integration process.
The old way of thinking was that IT just integrated systems after a merger, says Ross. Now there is a much more nuanced assessment of, “If I’m going to combine ERPs, what specific reason am I doing that for?” he says.
Sometimes, during M&A discussions, there’s a connection back to IT and examining whether the company overspent on integration in the past without getting the value from a system, Ross says.
In an ideal world, tech leaders want tech harmonization—a simple stack, rather than a proliferation of ERP and CRM systems, he says. “The priority is spending integration dollars and effort on specific things that are driving [both] into data insights, the cross-selling, and the supply chain integration, and using that as your rubric for making decisions” on the future of those systems.
Integration challenges
But deciding which systems get integrated and which don’t may not always be cut and dried. It’s crucial to start the process by assessing the makeup of both technology environments, Bernecker says. “Start with the bigger picture questions and move to the more technical as you familiarize yourself with the other organization’s tech stack.”
For example, are both systems operating within cloud environments, on-premise or a mix of both? “Based on the current landscape of each organization’s tech stack, you’ll start to understand where efficiencies can be made and where new investments or talent can be deployed,’’ Bernecker says.
When integrating two separate tech stacks into one, it’s important to view them through a modernization lens, he says.
“When looking at what each organization is bringing to the table, take note of what’s working now and what will continue to work long term. If capabilities are working well now, but you know will not hold up in the next few years as new tools and technology become much more embedded into business operations, it’s time to assess how to move forward.”
Whether it’s supplementing an existing tool or system from the other organization involved in the merger, or investing in a new solution, it’s a good idea to make these decisions sooner rather than later, Bernecker says.
Data and apps are other big considerations, and IT needs to ensure it is making harmonization decisions aligned with the company strategy. CIOs should not be afraid to say, for example, “The company we acquired has 500 apps and we’ve got 500 apps and there’s only some overlap,” Ross says. “Maybe we’re not going to harmonize all of those … and we may live with an expanded portfolio for a while and in two years, we’ll open it up.”
Cybersecurity considerations
West Monroe’s Kenworthy expands on that, saying that when mulling what to include from an acquired company’s tech stack, decisions become clearer when looking at its cybersecurity posture. “Portfolio rationalization is a careful balancing act between driving efficiency and managing the organization’s tolerance for technical debt. In some areas, trade-offs can be made—but cybersecurity is no longer one of them.”
There’s growing awareness, especially in private equity, that cybersecurity must be a non-negotiable priority, he adds. “Announcing an acquisition often puts a target on the acquiring company, and too many firms have learned the hard way that underinvesting in cyber can lead to significant pain and cost post-close.”
Weighing technical debt versus a firm’s modernization status is an important consideration, echoes Ross. “That influences your decision tree. If I’m further down the modernization route, some of these [system integration] decisions become easier.”
Cybersecurity diligence is basically table stakes at this point for any company, he notes. When evaluating potential consolidation targets, CIOs should rely on experts—internal and/or external—to help them understand where the risk is from a cybersecurity, privacy and compliance perspective.
The key is figuring out what they need to be worried about on day one post-acquisition in a zero-trust mindset, Ross stresses.
AI’s role in accelerating the integration process
Of course, AI can play a significant role in tech considerations during a merger. Data and AI tools can create efficiencies in the integration process through advanced analysis and learning, Bernecker says. This will help IT leaders and teams understand the full inventory of both tech stacks.
“Together, they can showcase duplicate tools/software and provide context into how each technology system is working,’’ he says. “During the M&A process, teams may be working against accelerated timelines. AI and data can allow teams to digest information quickly, helping them make informed decisions faster.”
AI offers significant value-add in its ability to accelerate data consolidation, mapping, cleansing and de-duplication early in the integration process.
“AI and data insights have changed the decision-making calculation,’’ Kenworthy says. “Increasingly, we’re seeing that key business objectives—such as improved financial reporting and operational efficiency—can be achieved through targeted data and AI strategies.”
These tools also reduce reliance on large-scale system overhauls by enabling faster visibility into performance and more agile integration pathways, he adds. The key is using AI not just as a tool, but as a strategic enabler for faster, more intelligent merger integration.
How IT can shine
Capital discipline should be a guiding force for CG leaders, says Ross. “This is an industry that’s under a lot of pressure. Increasingly, tech leaders need to have that business view … when we’re making our capital allocation priorities.”
He acknowledged that while CIOs may not naturally focus on this, their elevated role means they should pause during M&A to ask why they’re doing this and how can they help. That mindset, paired with a repeatable framework, increases the chances of long-term success.