IT Due Diligence

Quantifying risk and identifying growth opportunities

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Identifying and assessing factors affecting capital allocation and growth potential is critical during the diligence process. For private equity and corporate acquirers, risks associated with IT can consume significant post-close investment or impair long-term revenue gains.

At RSM, our IT due diligence professionals  have both the operational and technical skills, combined with real-world business experience, to quantify remediation needs, identify investment opportunities and target revenue or margin growth areas.

By delving into a target company’s business operations, our multidisciplinary team is able to assess strengths and weaknesses related to how technology supports, could enable or is underutilized within operations. Our team reviews strategy, operations, applications, infrastructure, personnel and spend, and provides an informed analysis and recommendations related to post-close value capture, cost containment and risk reduction.

For technology companies or companies that make use of highly-customized applications, our team examines the product management, application architecture, infrastructure, development processes and operations, and technology team to identify deficiencies or strengths, while recommending remediation options or commercial software alternatives. For market-facing technology, the team can also assist in differentiation analysis to help identify the commercial opportunity and relative cost to replicate, helping buyers understand the company’s defensibility.

As a company prepares to sell, our team performs a sell-side diligence, which identifies areas to remediate in advance of buy-side diligences, helping to maximize value at sale. Our team can also perform executive coaching, assisting the IT leadership in preparing for challenging conversations and better enabling them to interact with bidders and diligence vendors with knowledgeable fact-based responses, reducing accidental value erosion.

Our IT due diligence services include:

Buy-side IT diligence. This is a holistic, deep dive assessment done by an onsite team of RSM professionals. It looks at the strategy of the IT function and its alignment with the business and business applications. It discovers whether key processes are supported and effective. It looks into the condition of the infrastructure; capabilities and sufficiency of leadership, staff and vendors; and sufficiency of budget. The report includes considerations during acquisition, during the hold period, and for the eventual sale.

Limited-scope IT diligence. This is a customized assessment that targets a limited portion of the items covered in a full buy-side diligence. A limited scope review is often performed as an exploratory measure before an official letter of intent (LOI) is signed or when deal-size or IT complexity does not warrant a more robust analysis. The report includes considerations during acquisition, and may provide recommendations for areas warranting deeper exploration post-LOI execution.

Sell-side review. This is a buy-side-like diligence performed on the company, which then turns into a workshop to review risks and prioritize near-term investments. Sellers are also provided a buy-side request list, so they can begin preparing core materials to improve and accelerate the buy-side processes. Coaching of the IT leadership may occur at this point.