M&A Due Diligence

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Introducing, M&A IT Due Diligence

Due diligence is a comprehensive appraisal of a business undertaken by a prospective buyer, to establish its assets and liabilities to evaluate its commercial potential. M&A experts perform due diligence when they buy a business. Traditionally this due diligence has focused on the financial, managerial and business operations. The question for the modern M&A professional, "...is this enough?"

In the last 20 years, technology has become mission-critical for any business to maintain any level of profitability. Building a reliable technology strategy or technology platform from scratch is very difficult. Most management teams of mid-market firms have very little visibility or influence on their technology.

As a result, statistics show 50% of IT deployments fail. Because of this, buying a company for its successful digital strategy or reliable technical assets are leading reasons for acquiring another organization. I think the question buyers are asking is, "Why risk building it myself?"

In the same way, a company might be acquired for its customer base or product lines. Companies are also being acquired for their technical savvy and technical reliability. It follows then that investors need to raise their due diligence game by including IT Due Diligence. Enterprise organizations (multi-billion, multi-national companies) do a good job in this area. At the same time, very few mid-market buyers (and especially lower-mid-market buyers) invest in IT due diligence or even know what to look for when doing the due diligence.

Resources are available to help Investment bankers, private equity firms and others focused on buying or investing in mid-market businesses, and to develop their own IT Due Diligence strategy.

There are some simple things anyone can do to identify the most obvious IT Due Diligence red flags:

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Topics: IT Due Diligence Due Diligence Customer Aquisition