Recently, Waterstons’ Mergers and Acquisitions team were tasked with undertaking a technology and systems due diligence process, providing detailed information to support an acquisition. The deal, involving the purchase of a longstanding manufacturer of crisps and snacks by another snack maker, was a key strategic acquisition, with the target’s IT state considered alongside financial and legal due diligence from the outset. Waterstons’ IT due diligence exercise helped the buyer gain information on risks and confidence in the future state of IT before proceeding with the deal.
Our client’s business strategy included expansion via acquisition in order to quickly grow their business and widen their product and customer portfolio in the UK and Europe. The target was a well-established UK brand with a history dating back over 70 years. A thorough, albeit rapid, IT due diligence exercise was required; while this should always be the case in a deal, sometimes it is forgotten (please see our recent short articles on this theme). As usual in a pre-exclusivity situation, this had to be conducted with absolute integrity and confidentiality; any leaks would mean an immediate end to the potential acquisition.
By its nature, due diligence work must be delivered quickly, confidentially, objectively and thoroughly. This can be challenging due to there being a limited amount of information and data to work with, and, in addition, these projects need a fast turnaround to start up. It’s essential to have the capability to swiftly assemble a team which can cover all relevant areas, and to be able to draw on additional expertise to tackle specific areas of concern arising during the exercise.
Waterstons’ “IT due diligence in-a-box” exercise is a well-established, robust process which investigates up to 40 technology and systems areas (depending on the business and information available), and which is undertaken in partnership by us and the selling party. The process is supported by our values of transparency, integrity, and honesty, and is performed independently and objectively. This provides buyers with a supplier and product agnostic view of their target’s current IT state and clarity around risks posed to the deal’s value or chances of success. Through this process any challenges which may impact upon a successful post-deal integration can be identified, giving a balanced view of the target’s IT maturity.
An initial question and answer process was followed by discussions between Waterstons, the buyer and the seller to work through each area investigated and drill down into specific items of concern or interest. Our focus for these discussions was any items that could potentially result in business risk or require significant investment in the post-acquisition NewCo.
Waterstons’ due diligence project was completed alongside financial, legal and commercial investigations over a four-week period. We delivered critical information required by the buyer to make a balanced and objective bid, considering IT risks and challenges alongside the more common due diligence outputs.
Whilst often an afterthought, in this case the structured approach of Waterstons’ IT due diligence process provided the buyer with clarity over any material issues which would increase risk or cost; the two most critical factors in negotiations.
Furthermore, our ability to rapidly deploy experts from our core teams, covering a wide range of skills from enterprise architecture design, to software development, to project and programme management gave the client comfort in the knowledge that all aspects of systems, technology, and future-state planning could be taken into account; every due diligence exercise is different, but each one shares one vital element – Waterstons’ approach to working with their client as ‘one trusted partner’.
We appreciated your team's support in the process of the acquisition. We look forward to the opportunity of extending our relationship in the wider business.