A key contributor to acquisition risk is overlooking IT infrastructure and security issues. This oversight often leads to unanticipated IT investment and possible regulatory or software compliance issues.
Paranet will help investors understand the true nature of the opportunity and what lies beneath.
If you look around at all the merger-and-acquisition activity going on today, you see a lot of deals taking place in the blind when it comes to technology. Not that people are being scammed, necessarily, but there’s a lot of IT window dressing being sold that’s not really functional in one way or another.
In short, too many M&As are getting this wrong, and for a whole range of reasons. Maybe they simply don’t know what questions to ask. Maybe they use an accounting firm to analyze the technology instead of someone who has experience getting under the IT hood to understand what’s really going on.
Maybe they try to do it themselves – just get in there and kick the tires in hopes of getting a good understanding. And then there are those who simply take what they hear at face value.
In all cases, M&As can end in a serious case of buyer’s remorse. Failure to account for legacy technology in calculating Total Cost of Ownership (TCO) often leads to unanticipated expenses and even possible compliance or regulatory issues.
To ensure that every engagement maximizes our clients’ investment and yields accurate results, Paranet examines all strata of the IT infrastructure including;
Paranet will map the target company’s IT strengths, weaknesses, and hidden deficiencies to acquisition priorities. The results provide a better understanding of the target companies IT organization. A roadmap for future investment requirements is included.
A comprehensive evaluation of threats, vulnerabilities and impacts.
By assigning value to data, Paranet is able to quantify risk. Additionally, we capture the compliance status of the IT organization for applicable regulatory requirements, such as HIPAA, SOC, SAS-70, and more...
IT Due Diligence requires additional understanding in specific areas. This primarily includes the capability, expandibility, and stability of the target company’s IT infrastructure. The personnel who perform IT Due Diligence must also know the operation and support costs of the IT department as well as the target company’s dependence on technology.
Each business acquisition is a unique process, which can make effective due diligence difficult to implement. A business may acquire another business for a variety of reasons, such as diversification or eliminating a competitor. It is therefore essential to understand the reasons for an acquisition when creating a due diligence plan. IT Due Diligence becomes critical when the reason for the acquisition is to obtain the target company’s technology. The IT of the target company may be assimilated into the acquiring company or the target company may be run as a separate subsidiary.
People who perform IT due diligence must know the assumptions that the acquiring company is making about the target company. These assumptions typically include growth projections and the client base. The acquiring company also needs to perform specific assessments for the target company. These include evaluations of the target company’s management and staff, identification of the key players, and individuals who are likely to leave when the company is acquired.