IT Due Diligence
Highlighting the impact of technology on deal value
IT is increasingly a critical factor for deal success, enabling companies to deliver successfully on their integration and separation agendas.
Due to the confidential nature of M&A transactions and emphasis on strategic rationale, IT departments are often consulted too late in the M&A process to assess the actual cost and effort of the downstream integration (or separation).
This can affect adversely the subsequent expected financial outcome of the transaction, as technology costs, timescales for implementation and complexities of integration (or separation) are not sufficiently considered or calculated in the early deal phase.
What we do
At Deloitte, we offer a full range of pre-deal IT due diligence and assist services as well as post-deal solutions tailored to the individual client’s circumstances, to ensure that IT is a successful enabler throughout the lifecycle of a transaction.
We work with corporate and private equity clients on both the buy and sell side of transactions, and related IPOs. We have a dedicated IT Due Diligence team in Switzerland that can draw on assistance from our financial, tax, operational, commercial, risk and cyber diligence colleagues to offer a comprehensive view of a transaction.
Many organisations underestimate the importance of IT in the due diligence phase, leading to a partial understanding on challenges, risks and potential investments that may be required during the separation or integration execution. Our Technology Due Diligence services support you maximize the success of your deals by:
- Providing an objective assessment of the technology landscape, IT strategy and projects, contract relationships, key issues and comprehensive costs
- Advice on IT governance during and after the transition
- Preparing for required Day 1 IT changes
- Identification and provision of the resources required to deliver transaction and post-transaction tasks
- Estimating realistic transition costs and synergy benefits
- Identify any gaps in the IT services that should to be covered by a Transitional Service Agreement to ensure business continuity post-closing
Technology Due Diligence can create value by establishing the following key areas of focus:
- Major risks and operational constraints
- Prospects for improving revenue and margin growth by utilising IT as a capability and to reduce costs
- Opportunities to give a better customer experience
- The investment that has been made and what is required further
- Existing supplier and internal dependencies
- The critical path for integration
- The ability of the IT organisation integration (processes, infrastructure and teams) to support the business objectives following the transaction
- Technology Due Diligence red flag report to assess the target’s current state and any associated risks
- Product IT due diligence services to evaluate the capabilities of IT products against claimed benefits, competitors’ offerings and market development potential
- Assessment and quantification of IT synergies, and the development of a technology-enabled business case that can stand up to private and public scrutiny as required
- IT Blueprint to design and develop the end-state IT organisation, assess, run and change costs, dependency and risks of IT
- IT vendor assist for sell-side mandate and development of Transitional Service Agreements from scoping to operationalisation
- Benefits Assessment to identify risks, barriers and enablers – including consideration of dependency on IT and stand-alone IT separation and integration.