Leveraging the principles in mergers, acquisitions, and divestitures: despite the upheaval that comes with merger, acquisition, and divestiture activities, they provide great opportunities for organizations to assess and improve their information gov ernance practices.

Author:Gable, Julie
Position:THE PRINCIPLES: GENERALLY ACCEPTED RECORDKEEPING PRINCIPLES

Industries as diverse as hospitals, pharmaceuticals, airlines, law firms, utilities, and non-profits have all experienced high levels of merger and acquisition activity in recent years. According to the Institute of Mergers, Acquisitions and Alliances, a non-profit think tank that researches the subject, there were more than 130,000 such transactions from 2000 to 2010.

At best, mergers and acquisitions are the melding of two cultures to produce a single, stronger entity. At worst, they are politically fueled wars about which processes and systems will dominate once the dust settles. Records and information management (RIM) programs are often caught in the fray because information assets play a pivotal role in mergers and acquisitions. Most often, the acquirer or the larger firm in the merger assumes its information governance program is superior, when that may or may not be true.

In merger and acquisition scenarios, the Generally Accepted Recordkeeping Principles[R] (the Principles) and the Information Governance Maturity Model (IGMM) provide standards-based, objective ways to coolly assess where the strengths and weaknesses of each party's RIM program lie, removing the competitive "Our program is better than your program" atmosphere and focusing instead on the opportunity to combine the programs with an eye to overall improvement.

Conversely, changes in regulatory climate and new technologies in industries such as energy and communications have made it profitable to spin off or divest certain subsidiaries into stand-alone companies. Newly divested companies may find themselves with gaping holes in information policy and practices that were once supplied by the parent company. How to plug the gaps becomes an important priority for the new company.

For divested companies, the Principles and the IGMM can be used to identify what needs to be done to shore up and supplement RIM programs that lack the features and focus of their more established parent company's programs.

The case studies of fictional companies below illustrate how the Principles can be used in acquisition and divestiture settings.

Case Study 1: Arix Acquires Nemestan

Arix, established in 2001, is a pharmaceutical company that has grown chiefly through acquisition. Each acquired company produced a specific product at one or more locations globally.

Previous Acquisition Practices

Upon acquisition, records were left in place at the acquired company. Paper records may have been stored at one or more offsite storage facilities, and electronic records occupied the expected mix of document management systems, specialized quality systems, file shares, and storage devices.

Many of the previously acquired companies had some components of RIM, but there was never any formal study of which company had which elements. Each company did its own thing with regard to regulatory compliance, retention schedules, policies, procedures, and tools such as records management software. So far, regulatory audits have gone smoothly, and Arix has never had a serious lawsuit.

Corporate RIM Established

About a year ago, Arix established a formal RIM department at the corporate level. The new RIM function is working on global policies and retention schedules that can be disseminated to all locations. It is hoped that these will serve as a uniform framework that can be adapted for managing records locally. The RIM department is also developing policies to protect records that are considered private, confidential, or privileged, as well as standardized metadata for all records.

Arix is also evaluating records management software as part of an effort to unify...

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