How IT Assessments Can Reduce M&A Risks

President at Spot Migration, a Chicago-based managed IT support and strategy company that ensures peace of mind for leaders in operations

The purchase of a company is one of the most important decisions an organization will make, and there are many risks to consider. These can be reduced by incorporating technology assessments into M&A due diligence investigations. In addition to reviewing a potential target company's financial statements and business plans, organizations should conduct IT assessments, which address systems vital to the success of an organization: networks, hardware, security, software, documentation, processes, productivity enablements and overall strategic road map. This helps organizations identify cyber risks and brings out areas of opportunity for the acquiring organization to increase the value of the company.

Here are three areas a company should make sure to assess in this process.

Network Infrastructure

The first area organizations should assess is the company's network infrastructure. A network infrastructure assessment is typically performed by a technology consultant and should include an evaluation of the network’s design, security and supporting systems. It is important that this information about the target company be considered because it can help organizations understand the business processes that need to be evaluated for future opportunities or threats.

During a network infrastructure assessment, organizations should make sure they are aware of any problems with the internet connection. Something as simple as a second internet line can be a game changer for businesses that utilize online programs and applications. Business continuity is important, especially during a complete transfer of a company's infrastructure and systems.

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Organizations should also assess internet services such as WiFi and ISP. WiFi availability can be a major benefit for employees who typically use mobile devices to stay connected. In contrast, if there are problems with this service, employees may have trouble staying connected. Issues with the ISP or on-premise servers can cause problems for employees as well. Without active servers, employees cannot access files that are hosted, nor are they able to send emails or access social media platforms. This is just one example of a technology system that can have an impact on the company's overall evaluation.

Finally, it is important that organizations assess the underlying network structure of the target company. This will help them determine what resources should be migrated or left behind during an acquisition.

Cybersecurity And Data Protection

Another important factor organizations should consider when assessing a target company for acquisition is security and data protection. This is especially important when personal information (PI) and intellectual property (IP) are involved. PI and IP must be protected during the due diligence process to ensure there are no breaches.

The organization can conduct a vulnerability assessment in order to understand security issues, but it must make sure that systems and applications associated with the assessment are not compromised. If any vulnerabilities exist, these should be identified and remediated to ensure that the system is secure for use during the company's M&A due diligence.

There are many ways to protect data during an M&A deal. One way is to have a data protection policy in place, which should include procedures for handling and protecting personal information. It should also identify who is responsible for implementing and enforcing the policy. Another way to protect data is through the use of encryption, which protects data by transforming it into an unreadable format, making it difficult for unauthorized individuals to access the data.

Organizations should also implement a data breach response plan. This will ensure the organization is prepared to handle any breaches that may occur. This includes minimizing the impact of the breach, identifying compromised information and taking steps to prevent future breaches.

All of these are important steps to ensure the M&A deal doesn't blow up because of a cyberattack.

Technology-Enabled Productivity

It's hard to know what you're getting into when buying a company, and the technology they use can be one of the most important factors to understand when it comes to productivity.

When assessing productivity enablements that use technology during an M&A deal, it's important to take into account whether their IT infrastructure is set up for success. This includes backups, what tools they use and how up-to-date their systems are. All of these can make the difference between working seamlessly and being bogged down by continuous technology issues. Many people find workarounds when technology doesn't work the way they want it to, but that breaks the processes that are put in place and creates time waste.

Depending on why the company is being acquired, you will also want to gain a better understanding of what resources should be migrated or left behind after the acquisition to enable a smooth merging of technologies.

Finally, looking at technology contracts is an integral role in helping companies better understand third-party suppliers, customers and partners. Knowing what resources can be cut, added or adjusted, and what providers and vendors can be consolidated is a valuable tool for post-acquisition.

Conclusion

The assessment of a target company’s IT infrastructure can help organizations understand their current state as well as challenges and opportunities. The more information they have about this area before making an acquisition, the better off they will be. By conducting a thorough assessment, organizations will be better prepared to handle the challenges and take advantage of opportunities associated with IT infrastructure when it comes time to close an M&A deal.

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