The RIM manager's role in supporting major business changes: during major organizational changes--mergers, acquisitions, divestitures, and closings--quality recordkeeping should never be an organizational afterthought.

The economic necessity of being shrewdly competitive in today's global markets drives many organizations to expand, contract, grow, or reduce entire product lines or organizational divisions very rapidly. As markets change and financial realities redirect corporate strategies, businesses often consider combining forces for increased market domination or to streamline and focus products and services.

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Mergers between organizations may occur, requiring some internal downsizing of staff and activities. Acquisitions of one corporate entity by another can occur to increase intellectual capital, available product lines, or market presence, while simultaneously increasing executive responsibilities for the management of financial, human, and physical resources. Divestitures or closings might occur when certain products or services are no longer viable in the marketplace.

These organizational changes may be years in planning or take place rapidly--within a few weeks or months. Often, considerations regarding data, information, and records are left to quickly formed working groups or addressed as an afterthought when business activities begin to decline in volume or criticality. Many organizations have later regretted not creating thorough documentation on business process changes or have not realized the expected financial reward of a merger or acquisition because their records are inadequate to respond to business, legal, or regulatory questions that arose.

This is an unfortunate reality unless executives require that quality recordkeeping and records management processes be incorporated into any activities resulting in global changes in corporate business strategies and operations.

Business Change Demands Quality RIM

As organizations change strategies and overall activities, individual business units within those organizations also change--existing departments are eliminated, new departments are created, and the responsibilities of the remaining elements of the organizational structure are vastly changed.

Mergers create a combined company with the need to integrate information management practices overall. However, specific information management practices may vary between locations or business units, and a cooperative consensus will need to be reached regarding how to best manage information long-term. In acquisitions, the acquiring organization may drive and determine the eventual outcome of information management practices. However, a transition period and transition plans will still be needed.

In cases when organizations split or closings occur, responsibility for financial data preservation, intellectual property protection, and information technology systems maintenance must be determined. During divestitures, some records may be transferred to the buyer of the business units that are sold, requiring decisions on mutual responsibilities following the cessation of some business processes. Complete closure of an organization or business will not necessarily eradicate continuing responsibilities for records maintenance and retention by all parties, if litigation or regulatory compliance issues remain.

Failure to address these issues can lead to difficulties for executives and attorneys if decisions must be justified or defended later. There is no single solution to meeting such challenges, which makes advance planning all the more critical.

Demanding a Place at the Table

Commonly, chief executive officers, company presidents, and internal strategic planning staff initiate merger, acquisition, divestiture, and closing (MADC)-related activities. Often, marketing executives, attorneys, and financial personnel are added to due diligence teams that may be formed as the deliberations become more complex and the likelihood of organizational change becomes more apparent.

Unfortunately, internal RIM program personnel are not always included in these initiatives until later when, for example, it becomes clear that a volume of important records needs to be placed in a commonly accessible repository to ensure future access. Therefore, it is critical for records managers to take the initiative in asserting both the need to manage the life cycle of all information and the corresponding need for them to participate in any teams chartered with leading organizational change.

In a forward to The Art of M & A Due Diligence by Alexandra Reed Lajoux and Charles M. Elson, PriceWaterhouseCoopers partner Philip J. Clements noted that as much as 80 percent of merger/acquisition transactions did not achieve their intended financial value for eventual company shareholders. As Lajoux and Elson wrote in The Art of M&A Due Diligence: "While there is no single reason for the high failure rate, many transactions are unsuccessful because the acquirer cut corners on due diligence--downsizing or delegating important due diligence work."

Due diligence activities are very dependent on information, documents, and records. Such processes must have professional-level expertise if organizations are to be well-informed during decision-making processes.

The added value from documenting the information assets of organizations considered for merger or acquisition must be presented in a clear business case that outlines both the benefits of professionally managing records and the risks of not doing so. RIM activities are most effective when they are started early in a merger/acquisition lifecycle project. After team activities begin, it can be difficult to regain lost time in assessing both team and business unit information assets and making recommendations for their proper management.

Contributing to MADC Activities

Supporting merger and acquisitions teams is a major opportunity for records managers.

Records managers are familiar with the need to educate records creators regarding the principle that data, documents, and records in all forms belong to the organizational body supporting creation of that information. This principle must be presented clearly to any due diligence or merger/acquisition teams that might form. This can be a source of frustration for team members if the need to document team activities is perceived as time-consuming and of low immediate value.

Typically, RIM professionals might also provide records checklists, as well as manage records in an easily accessible repository for team members. They may perform records inventories onsite at new locations, establish retention periods for newly identified records series, and design a document management system for managing both physical and electronic records. It is common for due diligence teams to fail to assess and inventory archival materials owned by other companies or in other locations that still must be preserved. Records management personnel excel at these kinds of activities.

The project team may also have a perception that it, the work group, or business unit "owns" the records. But the need to share information--both now and later (with personnel not currently on any working group)--must be a primary part of the charter of any project team, and this can be reinforced by the RIM professional.

The records professional also must clearly distinguish for team members the difference between the records created for due diligence team activities and the records created or owned by the organizations that are involved in these processes. Only a small subset of the overall information assets of a corporation will be needed for due diligence processes by the team. Copies and/or originals of corporate records may come into the possession of the team and need to be preserved as team documentation, but they should be transitioned to the purview of a records management department as the project closes.

Finally, the RIM manager needs to begin making plans for managing the corporate records of the respective organizations after the merger activity. (See "Strategies for Merging Recordkeeping Systems" in this issue of The Information Management Journal.)

RIM Program Activity Challenges

Once it becomes clear that a merger/acquisition activity will occur, all information resources and information management programs in related organizations must be described and identified. Such an inventory should include the existence of any information management programs, the program scope, the degree of completion of retention schedules, and any recordkeeping-related policies, procedures, or business practices.

When few formal programs exist, the creation of new RIM programs may become the responsibility of any current records management staff, with a corresponding increase in their daily workloads. Such changes in responsibilities and volume of activities may mean existing RIM programs need additional support from management with respect to staff, resources, and funding.