Mergers and acquisitions are undoubtedly one of the biggest decisions – and changes – a business can make. And the challenge is merging everything from processes to the differing company cultures thatcan cause friction if not addressed head on.
While culture and processes are obvious changes to combine, it becomes increasingly clear that the success of a deal hinges how well two organisations integrate their technology estates.
In the UK market, where digital transformation and AI adoption are accelerating across every sector, that challenge is becoming more complex and more consequential. The technology merger – often treated as a secondary task – has become one of the most critical determinants of whether an M&A deal achieves its intended value. And as AI becomes woven into software, cloud platforms and business processes, the difficulty of merging two estates is growing at pace.
Today, a back-office merger no longer involves simply consolidating licences, infrastructure and contracts. It now encompasses integrating AI-enabled applications, ensuring the safe and compliant use of generative AI tool. Without doing this well, organisations risk creating new security vulnerabilities and missing out on the efficiencies that M&A activity is designed to unlock.
The hidden weight of AI in modern M&A
Every company entering an M&A transaction already carries a significant AI footprint, even if they don’t always recognise it, because most enterprise software now includes AI-driven features. On top of this, employees independently adopt AI tools to speed up tasks or create content.
Even before a merger, inefficiency is common in AI due to the ‘new’ nature of it. And when two companies combine, the level of duplication and complexity can double overnight.
Every small area of overspend or inefficiency becomes amplified across the combined organisation. An unused AI add-on attached to a licence agreement may appear trivial in isolation, but across hundreds or thousands of seats, it becomes a material cost. Shadow AI usage can also become significantly more difficult to monitor and control when two different cultures and technology environments are brought together.
In deals where cost synergies are a priority, these inefficiencies risk eroding expected savings. And in cases where organisations want to protect employees and avoid excessive headcount reductions, eliminating waste from technology and AI portfolios becomes even more important.
The rising cost of mystery—especially with AI
The financial and operational risk created by unclear technology estates has long been a challenge in M&A. But with AI embedded across software, cloud platforms and data pipelines, that risk is now even greater.
Research from PwC shows that 65% of enterprises are audited within a year of completing an M&A transaction, and penalties can exceed 20% of the acquired software spend. Auditors often note that “mystery creates margin”—and few business events generate more mystery than the collision of two complex IT environments.
AI heightens this exposure in several ways:
For highly regulated sectors – financial services, energy, healthcare – the level of scrutiny is even more intense. Regulatory frameworks for AI are evolving rapidly, and a merger can expose governance gaps that may not have been visible before. Ensuring the combined infrastructure meets both regulatory and auditor expectations from day one is no longer a nice-to-have, but a requirement.
Why clarity—not consolidation—is the true driver of synergy
When organisations talk about post-merger integration, they often focus on consolidation: rationalising tools, removing overlaps, and streamlining contracts. While these steps are important, they should not be the first priority.
The real challenge is visibility.
Organisations need a clear and unified understanding of:
UK businesses that treat AI as part of the due diligence process, rather than a post-merger clean-up task, are better placed to capture value and avoid costly surprises.
With full visibility, organisations can make informed decisions about which systems to keep, which to retire, and where to renegotiate vendor agreements. This strengthens the organisation’s position with suppliers who are often keen to secure loyalty from a larger, merged entity.
In the age of AI, eliminating mystery defines success
As AI becomes a foundational component of every technology stack, the complexity of merging two organisations’ digital environments will only grow. What doesn’t change is the principle: organisations that root out mystery and create clarity will outperform those that rely on assumptions or incomplete information.
In a competitive UK market, where deals are closely scrutinised for efficiency and value creation, the ability to understand and integrate AI-enabled technology estates is increasingly a differentiator. Those who get it right lay the foundation for innovation, agility and long-term value.
In M&A, nothing creates more mystery than overlapping contracts, duplicated AI tools and unmanaged data flows. And nothing signals success more clearly than the organisations that eliminate that mystery first.
