IT Due Diligence in M&A

Question

Dear All ,

I am starting in a big 4 and I want to understand what all needs to be done in IT Due diligence in a M&A .

I understand that we need to analyse on Infrastructure , application and other details but I want to understand how is that done .

Foe eg I don't have much knowledge on cybersecurity so how will I be able to assess if the organization infra is secure or not .

Also I want to understand on what details is this expected . If there arev any references that I can go through will be extremely grateful.

Answer 1

Hi there,

I'm not an IT expert, but I am wondering if it is required that you're an IT expert while starting in a big 4 company? Wether you are required to be one or not I believe that it is by far more important to analyze the context of this m&a transaction. In my opinion the following questions should be answered first:

1. How important is the IT in the company to be merged/acquired?
--> E.g. if we're talking about a bank, a tech or software dev company or similiar, it will be a top prio issue. If we're talking about a consultancy company, I wouldn't pay too much attention to the topic ;-)

2. Will it be required to merge the IT systems in the future? If yes, at which effort and cost (incl. timeline) will it be doable?
The question might be similar to the question: What is the purpose of the M&A transaction or will the IT infrastructure remain in the future?

3. Further some high level questions for the management:
- Is the IT infrastructure state of the art?
- Is the IT properly serving the business purpose?
- What about the backlog? Is everything properly running?

4. Last but not least, if all strategic / high level IT aspects of company which is to be acquired are answered I would anyhow hire somebody to run a proper IT diligence (next to legal, financial and business dd)...

I understand you would like to jump instantly into all technical details, but if you haven't answerd the strategic IT questions before, you might fail to give a good answer...

Hope it helps and I'm sure someone will also give you enough details of how to run a proper IT DD ;-)

Best - Jasper

Answer 2

Hello!

Congrats on starting the job!

I don´t think this Q&A is going to be very useful anymore -at least not as much as your own team and company resources-. I say so because we don´t know the details of the merge, which is the helpful thing and nuance here.

My first projects in consulting were also M&A! They are a lot of work, but you will learn a lot for sure.

Rely on you team and company, they are the ones that will set the direction at the beggining.

Hope it helps!

Cheers,

Clara

Answer 3

Hi there,

First, you need to get a lot better at asking the right questions!

"what all needs to be done" is a terrible way to get the advice you need...this is far far too broad of a question!

Rather, I implore you to do the following:

Think about what you don't know
1. By looking online (google), reading through the company website, asking your bosses etc.
Think about what you need to know
Figure out how to learn it
1. By looking online, asking pointed questions, and talking to peers/colleagues

EDIT: Google is your friend. As is Mckinsey Insights, BCG Insights, and the IT/DD/M&A pages of the big 4 at which you're applying

Answer 4

Agree with Clara. Definitely not the right forum for such a niche question. For these questions you would bring in a specialist, even in a real DD done by a strategy consultant firm.