Most people are familiar with the need for companies to perform Acquisition Due Diligence in the areas of Accounting, Finance, Operations and even HR. What many people fail to understand is the ever increasing role of IT in the companies they acquire and the need to include IT due diligence in their assessment. First let’s start off by defining it due diligence and its components.
What is Acquisition IT due diligence?
Acquisition IT due diligence assesses:
- A target acquisition’s current state of technology
- Issues related to maintaining its current technology
- Financial implications of a technology plan
- Opportunities for leveraging existing technologies
- Initiatives necessary to accomplish a successful merger
- Business risks
The IT Due Diligence process usually requires four to six weeks, depending on the complexity of their environment and business. For example, if the acquisition target company relies heavily on custom, proprietary software code, the unique code may need to interface smoothly with more-standard code used by the acquiring company, a challenge that can carry significant financial costs and risks.
So, how do you understand the cost and risk involved with IT investments and possible regulatory or software compliance issues? Perform Acquisition IT due diligence.