Arrange know-how to do your due diligence

Arrange know-how to do your due diligence

Time flies if you’re having enjoyable. It additionally flies when you will have an LP Fuel column submission deadline.

It looks like simply yesterday I submitted “All the time be prepared on the market,” the place I tried to elucidate how know-how may be used to run a enterprise prefer it’s at all times on the market even when it’s by no means on the market.

This 12 months’s column focuses on a extra instant query: What know-how questions must you fear about in case you are shopping for or promoting a enterprise?

It seems that patrons and sellers must be nervous about the identical questions – and infrequently for a similar causes:

⦁ Expertise roadmap: Figuring out the place the info is – whether or not it’s within the cloud, in your server, on an worker’s laptop, or a chunk of paper or serviette in a file drawer – is essential for each vendor and purchaser. It’s additionally essential to understand how entry to it’s managed, whether or not and the way it’s secured or backed up, and the way it’s shared amongst purposes if it’s digital. If you happen to’re a vendor, it’s possible you’ll need to know the solutions to those questions earlier than the customer asks.

⦁ Software program purposes: If you happen to’re promoting what you are promoting, you want a listing of all the purposes you employ in what you are promoting and, like your information, the place they’re (e.g., cloud, server, laptop computer, one other machine), what you employ them for and the way, if in any respect, they’re related to 1 one other. The customer will use your listing to determine how simple it is going to be to place the companies collectively and give you a sport plan on what is going to occur to the purposes and when.

⦁ Expertise, individuals and course of: Software program purposes and information are good, however the who, what, when, the place and why of utilizing the appliance and the info are elementary. Documented processes are greatest, so in case you are a vendor and don’t have one, you may need to get began earlier than the customer asks for it. And in case you are questioning why they could ask, it’s as a result of they want to determine how they’re going to combine what you are promoting into theirs, even when they plan to maintain your identify on the door and proceed what you are promoting as a stand-alone operation.

⦁ Financials and operations: {Hardware} and software program licenses have expiration or renewal dates. Your small business’s computer systems, telephones, tablets and screens all have helpful lives and have to be changed sooner or later, ideally earlier than they all of the sudden cease working. In case you are shopping for a enterprise and all the vendor’s gadgets have to be changed in a 12 months or are past their helpful lives, it’s worthwhile to put that price in your mannequin. Expertise additionally is usually a supply of super synergies. Consumers could possibly change software program licenses with their enterprise software licenses or, higher but, extract the info and put it into their purposes. Consumers who intend to combine the vendor’s enterprise totally into theirs will have the ability to sundown web sites and all the related prices. The synergies might be vital if the vendor has third-party IT help bills that may be terminated and absorbed into the customer’s IT help system.

⦁ Safety and compliance: This may be probably the most technical diligence matter. It includes bodily safety, community safety, information safety, know-how insurance policies and procedures and even regulatory compliance. In case you are about to purchase or promote a enterprise, and also you don’t perceive any of those phrases, it’s worthwhile to learn up on them and rent someone that can assist you with this a part of the method.

Arrange know-how to do your due diligence

Christopher Caywood

In case you are a purchaser, you need to ensure the know-how a part of your acquisition course of is fastidiously mapped out in your integration plans.

In case you are a vendor, you share that purpose as a result of figuring out, documenting and reaching synergies in a clean closing and post-closing course of will allow your purchaser to share a few of these synergies within the kind of a better a number of and buy worth.

Lastly, and most significantly, unsuccessful transactions finally have extra than simply monetary penalties to the events. Legacies, reputations, prospects and staff are at stake too.


Christopher Caywood is a co-owner of Caywood Propane Fuel Inc. Contact him at [email protected].