I had a blast on Tom Bronson’s Maximize Business Value podcast this week. Tom’s podcast provides business owners information to maximize their business value and join the 17% of successful business owners who actually exit their business. You don’t want to be among the losing 83%!
Our conversation revolved around the value of a company’s technology in a transaction, or worse, the reduction an acquirer will give them on their sales price after performing technology due diligence. The discussion included among other things how I approach due diligence from an acquirer’s perspective.
Unfortunately, many business owners don’t think technology will have any affect on their valuation. Nothing could be further from the truth!
Just like getting your books in order, you should also get your technology platform in order, and it pays to review it in advance rather than waiting for a buyer to uncover your technology challenges. There can be more than 9 areas with 45+ topics/processes I review during due diligence, but depends on the size of the company. Here are a few of them:
Understanding the post-transaction business strategy to make appropriate recommendations.
Culture of the company being acquired and how that might affect the post-transaction strategy.
Evaluating the existing IT staff and other resources.
The impact of “Technical Debt.”
Last but not least…the cybersecurity posture of the company being acquired.
As a seller, you need to understand what a buyer will consider in technology due diligence. There may be a negative impact on your selling price. I strongly recommend an assessment so you can make informed decisions and maximize the profit from your hard work long before you exit your business.
This is just a summary of our discussion. Watch or listen to the podcast to hear specific examples, detailed stories and the rest of the conversation around technology due diligence. I am sure you will find it helpful in advance of your exit!
ABOUT THE AUTHOR
Kent Barner founded CIO Suite to be the Strategic Advisor to C-Level Executives and Business Owners WHEN Technology Matters. As a CIO for 25+ years, he has been the internal advisor to C-Level Executives of high growth entrepreneurial organizations. Most recently, at Behringer’s peak, he delivered CIO services to 15 organizations concurrently. Kent looks to bring this same service to mid-market companies and companies in the M&A space.