M&A Information Technology Best Practices

Chapter 5

IT Due Diligence Leading Practices

Mark AndrewsDavid Sternberg

Executing an M&A IT due diligence assessment is the same as performing a typical IT assessment, right? No. In fact, there are a number of challenges that are faced during the M&A cycle that an IT department would not normally experience during a typical IT assessment project. A due diligence project usually operates at an accelerated pace with a fixed deadline and with limited information at the team's disposal. In these circumstances, a well-defined process is a must in order to allow the team to handle curveballs as they are thrown.

Another consideration is how much firepower management needs to throw at the process. The decision could take away from the IT department's ability to keep the lights on. However, reduced IT involvement in the pre-deal process can be extremely costly in the long term. Potential buyers that overlook, or minimize, IT due diligence during a proposed transaction often pay a high price later on through unexpected conversion costs, consolidation methods, or environment improvements. Of course, no one wants to overspend on IT due diligence (or anything else for that matter), especially when the IT environment will be quickly replaced or changed.

The focus of this chapter is to help an IT department understand and address the processes, and nuances, involved in an IT due diligence assessment and arrive at an applicable balance of effort, cost, and speed. Discussion topics include: