The buzzword today is “digital transformation.” Technology is transforming virtually every aspect of the business world, from the back office, to the way in which companies handle customer interactions. Companies are relying upon data so heavily that every business may be considered a “technology company” in some respect. As a result, technology is seeing increased scrutiny during mergers and acquisitions. This scrutiny goes beyond a technical inventory. The process is called technical due diligence. It is a purposeful technical assessment of the companies in question, with an eye on getting the most out of the combined entity. Technical due diligence gives you insight into whether you can reasonably expect to see a positive synergistic effect—or whether you may encounter a high-tech minefield as the companies merge.
What to consider in M&A technical due diligence
In a merger, one goal is to assess whether the companies’ technologies may integrate in a way that creates synergy and other business-related benefits. At a high level, you need to know which systems and capabilities are critical to realizing those benefits. Some key areas for consideration include:
- Customer-facing websites;
- Enterprise software systems;
- CRM; and
- Information security.
For all of these areas, you must answer the following questions:
- Are they scalable?
- Are they reliable?
- Are they flexible?
- Can they be integrated?
Another technical due diligence consideration: Data management
When you have those answers, you’ll need to assess the issue of data management. To achieve a smooth merger, you’ll want to have a single view of your customers. But when two companies merge, the best-case scenario is that you’ll have (only) two different views of the customer—and most often, there are more. Many deals are motivated by a desire to increase market share. How you bring each company’s customers together to expand your customer base—while ensuring your customers can still enact transactions shortly after the deal’s closing—is crucial to your success following an M&A.
What a reliable systems integrator sees
Because many transaction benefits rely heavily on IT systems and infrastructure, partnering with an experienced technology architecture and integration firm early in the M&A lifecycle is critical. Logic20/20 can ensure solid enterprise data management, which will give your post-M&A firm(s) accurate data and reports. Our experience performing post-merger large-scale systems integration for Fortune 500 clients will help you realize the synergies—and value—of a merger. Our experience is an advantage that allows us to produce efficient and cost-effective strategies to effectively merge multiple IT systems. The faster you can execute your overall technical plan, the faster your company will realize business value from the transaction.
All companies can benefit from a comprehensive evaluation and review of their data, cloud, application architecture, network and infrastructure, security, people and IT service management processes. You’ll learn about any risks involved and you’ll receive recommendations; you can secure integration or remediation cost estimates; and you can establish a timeline for addressing findings. You’ll also gain insight into how your new entity will operate after the M&A transaction is complete. In all, technical due diligence early in the process saves time and money in the long run.
Logic20/20 can help you to mitigate risk while providing a clearer picture of how you can maximize success in the future. Technical due diligence, when it’s conducted by the right partner, increases your chances of seeing a smooth transition period, culminating in mutual success and satisfaction. Contact us today to begin refining your strategy.
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Executive Team member Jill Reber is a nationally recognized expert on data privacy — particularly GDPR, CCPA, and other data protection laws — and has spoken on the topic at conferences sponsored by American Banker, International In-House Counsel Journal, and other national and international organizations.