The Challenges of Due Diligence

Posted on Posted in Database, IT, Legal, Marketing

Whether you are buying or selling there is always a need to be diligent where Information Systems are concerned. Our team has had lots of experience in this area, being on both sides of the table. Being the company that is being purchased can be a worrying time when you don’t understand what your future will be. Due Diligence is one area where getting your wires crossed can be expensive and have far reaching consequences. If you are selling a business you may benefit from a Pre-Sale Review. In a Pre-Sale Review we assess, on behalf of the potential seller, a business’s Information Systems to evaluate whether they are likely to represent an obstacle in the sale process. We will make recommendations as to how cost-effective improvements can be made so that the information systems are presented in their best light.

If you are considering buying a business or investing in a business you may benefit from a Pre Investment Review. In such reviews we assess, on behalf of the investor, a

Due Diligence is important
Due Diligence is important

business’s Information Systems in order to evaluate the overall ‘health’ of the systems and highlight any implications for the future. The information from the review may provide you with valuable bargaining material for your negotiations with the seller but, in any case, you will have a clear understanding of what exactly you are buying into [this case study illustrates the benefits to be gained by this approach].If you have already invested in a company, and are not sure about the integrity of the information systems you have acquired, you may benefit from a Post Investment Review. Somebody else system your will inherit is only as strong as its weakest link.

Naturally such reviews are case specific, focusing on different aspects depending on the buyers and sellers particular circumstances of the case. We are looking for the weak links so we consider a combination of practical and legal aspects to obtain a balanced picture.

Our reviews typically encompass some or all of the following:

  • an assessment of the ‘health’ of the various systems suppliers, their position in the marketplace, track record, etc (including financial due diligence enquiries if needed)
  • an assessment of the currency, suitability and applicability of the systems used to support the business as it stands now and their ability to support future business plans (if available)
  • the relevance and suitability of the technical underpinnings of the system (server and desktop hardware, operating system, database, communications systems)
  • the availability of suitable support for all aspects of the system, both internally and externally
  • the ability of the systems to integrate / co-exist with other information systems
  • an assessment of any critical dependencies which exist including potential solutions and/or work-arounds which we can identify
  • an assessment as to the position of the systems in their life cycle and an indication of the likely life of the systems, identifying any significant constraints to the life of the system and potential costs
  • an assessment of the contractual position, right to use, right to assign, contractual time bombs, etc
  • a review of the potential future running costs of the system including identifying potential major investments which can be foreseen and areas where cost could be reduce

The information gathered can be useful for negotiations either way, reducing the risks and costs associated with Information Systems

Our proven credentials in IT strategy, system acquisition and contract negotiations mean we are ideally placed to undertake due diligence reviews.

 
Written by James Page

For a Independant Due Diligence Report in the North West Click Here.

Related Topics: Acquisition and Mergers, Migrating, Merger and Decommission Merger Companies IT, Domain Trust, Multiple email domains, Microsoft Exchange Email Merging,

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