IT Due Diligence

Tired of IT diligence reports that offer little beyond basic confirmatory checklists? For insights that deliver immediate value consider these 7 essential enhancements.

Are you growing weary of the same old IT diligence reports filled with standard confirmations and checklists, which seem to offer little beyond surface-level insights? If you’re looking for value-add approaches that deliver immediate pre-close value and seamlessly integrate into your Day 1/100 plans and long-term strategic post-close planning, consider these enhancements:

Detailed Process Flows: Gain a comprehensive understanding of the data and processes directly impacted by IT systems—or those that are not but should be. This insight is crucial for identifying potential efficiencies or areas of risk.

An Incremental Spend Summary: Expect a breakdown of one-time and recurring costs with precise details on how these figures were calculated, rather than vague estimates. This specificity is expected from a report authored by an IT expert, providing clarity on the financial implications of IT investments.

Accessible Narratives: The report should include narratives that make the findings clear to non-IT stakeholders, such as members of the deal team or C-level executives. This approach ensures that the impact of the findings on the organization is understood without the need for interpreting complex diagrams or navigating through bullet points that lack depth.

Beyond Basic Findings: It’s vital that the report provides additional context beyond just describing what was found. Understanding the ‘why’ behind the findings and the implications or ‘so what’ for the organization adds significant value, transforming raw data into actionable insights.

Interview the Actual Analyst: Often, the insights provided in a due diligence report are as valuable as the expertise of the person who compiles them. It’s worth inquiring about the background of the individual conducting the due diligence and writing the report, rather than just the reputation of the firm or its partners. Are they seasoned in the industry? Do they have experience as a technology executive who has practically applied the recommendations they’re making, rather than merely theorizing about them?

Security, Privacy, and Compliance Focus: While cybersecurity may often be mentioned in diligence reports primarily to satisfy Rep and Warranty (R&W) auditors, its importance extends far beyond. Ensure your diligence providers are not just advisors but actual cybersecurity operators who document and implement security, privacy, and compliance controls. Working closely with these experts to understand the security risks is crucial. Integrating their findings into your pre-Day 1 planning and post-close efforts is essential for enhancing the security posture of the portfolio company.

Roadmap: An actionable IT roadmap should be provided, aiding deal and value creation teams and the CEO in weaving these insights into post-close strategies.

Incorporating these elements can transform IT diligence from a routine procedural step into a strategic asset that informs decision-making and supports the successful integration and growth of your portfolio companies.

Our IT Support Services are 100% focused on Private Equity-Backed Companies.

Contact Compello Partners for a Complimentary IT Assessment