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Mergers & Acquisitions

Technology Due Diligence

Whether you are thinking of buying your first business, or ready to scoop up a competitor, the purchase of an existing business can be a very stressful endeavor. More than ever before, mergers and acquisitions offer an increased level of risk. The acquirer needs to truly understand the capabilities of the company in implementing a successful acquisition or merger. A company that potentially made extreme cuts or growth over the past eighteen months may have fallen far behind from a technology standpoint. Technology Due Diligence will help acquirers to better realize value from the technological assets they acquire.

Technology Due Diligence: Mergers & Acquisitions

Technology Due Diligence: Mergers & Acquisitions

There are many technology criteria that speak directly to how easy or difficult it will be to integrate and optimize the technology of the company being acquired. If the technology infrastructure, architecture, and applications are incompatible, there will be serious – and expensive -problems with integration and optimization. The best way to gain this type of visibility is to take a “deep dive” into the organizations IT infrastructure, hardware and software applications. Questions that need to be asked about a company’s technology include:

– Is the hardware (i.e. computers, servers, etc) up to date?  When will the hardware become outdated and another investment needs to be made? If so, what are the costs associated in upgrading the hardware?

– What is the IT infrastructure? How does the network look? Are the applications hosted in the cloud or is the network owned? What does the contract look like and what risks are involved?

– What about the software applications? Are there annual licensing fees or does the company own the software? Does the company have custom software and if so, how is this managed? Do they own the IP/rights to the software?

– If the company grows quickly, will the technology infrastructure be able to handle the growth? Are there processes in place to maintain and advance the IT infrastructure?

– How long has the company neglected its technology infrastructure and gone without reinvesting in technology?

– Is the technology infrastructure sufficient to support the business going forward, or is it already beyond capacity?

– Are there any layers of technology “band-aids” that are in place?

– How is technology acquired? What sourcing deals are in place? How is technology organized? To whom do the technology leaders report?

Ayoka is an experienced technology company that can help to organize and assess these types of issues to understand the risks involved in the acquisition of a company. We provide a complete technology audit to guide managers of acquiring firms in evaluating the “IT health” of potential acquisition targets. This audit document will outline the “current state” as well as the “end state” of what will happen after the merger or acquisition, including the strengths, weaknesses, opportunities, and threats that the M&A opportunity presents. Minimize your risk and call us today!