Specialism - Mergers & Acquisitions

The purchase and sale, merger and demerger of companies throws up many challenges across the business and particularly in IT. For most companies however this is an unusual event and existing staff can lack the practical experience to spot problems early and deal with them effectively. So what are the issues that businesses typically face?

The first is due diligence. Buyers need to undertake extensive enquiries to ensure that what they’re buying into is fit-for-purpose, doesn’t pose a business risk or hide a major outlay which will surface soon after the purchase is completed. We are all aware of the financial due diligence that accompanies M&A activity but the same is true for IT. Huge IT liabilities can lurk inside target companies including obsolescent systems, unlicensed software, onerous licence and support contracts. You need to know about these before you buy, not after.

Our due diligence service is designed to help buyers to be sure what they’re getting into. Often our enquiries reveal information which can be used to negotiate significant concessions as part of the acquisition process.

Another related issue is that of who owns licences, whether they can be assigned, and the inevitable negotiations with licensees to normalise the situation. In many cases software licence agreements do not allow for transfer to new owners and can give rise to large re-licensing fees. Here our contract negotiation service can be utilised to review the situation and negotiate effective deals with the suppliers.

After the deal has been completed there can be many practical issues to address including the de-merging of large and complex systems, the de-merging, cleaning, conversion and transfer of data and sometimes the creation of an entire IT organisation and infrastructure. This often has to take place in short timescales and effective project management, by someone who understands the issues, is key to success. We have managed numerous complex mergers and sales of complete and partial businesses; we know what to look for when managing the IT aspects of these transactions. Click here to see more details of our project management service.