Having delivered more than a 100 IT & Tech DDs, remembering a single one amongst them is not that easy. This one IT DD in particular is significant and worth remembering, for the wider impact it created.
One of the PE PortCos acquiring an IT Services & Cyber Security company, asked to do a ⏱ 3 week IT DD red flag report only.
I have always felt that diligence exercise requires more of a personal tact, rather than just following a scope checklist. With the experience of conducting a number of IT & Tech DDs, you tend to ask key questions, following that up with related questions within the scope, thereby covering more in a short timeframe. For the target company, as this never looked intrusive at any time, they were willing to share much more information verbally, and also provided the documentation to cross-validate the information.
So while the client expected a 5 page 📄red flag IT DD report, we complemented our key red flag findings with a 📊 50 page IT inventory consisting of the usual scope of:
🖥 Systems
🏗 Infrastructure: detailed inventory of around 100+ physical & virtual servers, storage etc; Laptop inventory, software audit pulled through ServiceNow(500+ unique desktop software versions)
👥 IT org
🤝 Vendors
🔐 Cyber security
💰 IT capex / opex
and additionally:
🔗 IT integration & separation: consideration for systems, infrastructure & other IT
⚙ Technical services delivery team capabilities: for both IT Services & Cyber Security team and missing skill gaps
🎓 Key certifications: held by IT Services team & Cyber Security team, and how that is impacted by the acquisition
☁ Partner status: held with Microsoft, AWS, Google and other providers, and how that is impacted by the acquisition
The last two were of particular significance, as these are normally ignored during an acquisition. The company acquiring understands that these certifications and partner status come with the acquisition, only to realise later that the conditions to retain those are actually now not valid, hence affecting the overall deal and investment thesis.
🎯 The outcome:
While it was an additional effort on our side to produce a detailed report of this level, we could really see the inputs it provided to our client supporting them on their overall acquisition negotiations. Additionally, the inventory was so detailed that the client's post acquisition IT team started on the IT integration straightaway, rather than waiting for another post acquisition IT diligence.
The PE backing the PortCo in particular enquired about me, and were surprised that I was able to write such a detailed report in ⏱ 3 week's time. No wonder, the client gave us next 20 ITDD's , stressing that it needs to have the same level of detail in every ITDD, where possible.
While delivering IT & Tech DDs has become a second nature, this one in particular hence, is quite close and personal.
🌍 CIDEK Consulting supports UK, Europe, US & global PE, PortCos, Consulting & Recruitment firms (interim roles) in their:
📊 M&A programs
🔀 Carve-out projects
🔗 Integration programs
⚙ Transformation initiatives
We are open to work and available to discuss any of our client requirements.
A sample anonymised IT & Tech DD Report is available on request to check the insights and depth provided in our typical IT DD coverage.