A checklist for IT due diligence and integration

14 April 2021 Consultancy.uk 2 min. read

With technology nowadays the backbone of many organisations and in some its entire business model, it has never been more important to conduct an IT due diligence during a transaction. Keith Thomas, M&A Lead at Coeus Consulting, provides a number of tips for the delivery of an IT due diligence. 

IT due diligence has always been an important part of pre-transaction analysis, sitting alongside wider due diligence work. However, in today’s landscape, with IT essential to company success, the role of IT due diligence is even more relevant. Add to this that IT integration is one of the critical success factors in any merger or acquisition.

The key challenge is to fully understand the existing IT environment in enough detail to accurately estimate benefits, costs, risks and timescales for integration and to identify priorities and quick wins to support acquisition, merger or divestment planning and communications. This needs to cover the entire IT landscape across people, applications, data, infrastructure, suppliers, contracts and governance.

Keith Thomas, M&A Lead, Coeus Consulting

A checklist for IT due diligence and integration:

  • Understand the business driver behind the acquisition, merger or divestment: where will the value to be driven from?
  • Get IT due diligence carried out early in the pre-deal assessment phase;
  • Make sure that commercial and IT due diligence are carried out in parallel and are as integrated as possible;
  • Ensure the due diligence focuses on the post-deal requirements of the business, not the pre-deal requirements;
  • Understand the existing IT environment(s) in enough detail to accurately estimate costs, benefits, risks and timescales for integration or splitting and to identify priorities and quick wins to support merger / divestment planning;
  • Identify the critical services: any elements that cannot or should not be integrated, and any services that cannot be split (and so may have to be duplicated) to make suitable plans for those. The changes around people, processes, applications, data, infrastructure, suppliers and contracts must all be considered together with the overarching governance that supports both the initial change as well as longer term aims;
  • Start Day 0, Day 1 and Day 100 planning early, communicate widely and ensure you have the right resources to execute;
  • Take an iterative approach. As the business requirements for IT develop gradually during the transaction process, the IT requirement assessment should refine alongside them.

An accurate and optimised IT due diligence process can enable the organisation to provide an accurate view of the business value that IT can bring the post-deal entity(ies) and avoid risks in funding and integration.