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Whether you are buying or selling there is always a need to be diligent where Information Systems are concerned. This is one area where getting your wires crossed can be expensive and have far-reaching consequences. Our proven credentials in IT strategy, system acquisition, and contract negotiations mean we are ideally placed to undertake due diligence reviews.

Is this relevant to me?

If you are selling a business you may benefit from a Pre-Sale Review. In a Pre-Sale Review, we assess, on behalf of the potential seller, a business’s Information Systems to evaluate whether they are likely to represent an obstacle in the sale process. We will make recommendations as to how cost-effective improvements can be made so that the information systems are presented in their best light.

If you are considering buying a business or investing in a business you may benefit from a Pre Investment Review. In such reviews, we assess, on behalf of the investor, a business’s Information Systems in order to evaluate the overall ‘health’ of the systems and highlight any implications for the future. The information from the review may provide you with valuable bargaining material for your negotiations with the seller but, in any case, you will have a clear understanding of what exactly you are buying into.

If you have already invested in a company, and are not sure about the integrity of the information systems you have acquired, you may benefit from a Post Investment Review.

What is involved with these reviews?

Naturally, such reviews are case specific, focussing on different aspects depending on the particular circumstances of the case. We are looking for weak links so we consider a combination of practical and legal aspects to obtain a balanced picture.

Our reviews typically encompass some or all of the following:

 

  • An assessment of the ‘health’ of the various systems suppliers, their position in the marketplace, track record, etc (including financial due diligence inquiries if needed)
  • An assessment of the currency, suitability, and applicability of the systems used to support the business as it stands now and their ability to support future business plans (if available)
  • The relevance and suitability of the technical underpinnings of the system (server and desktop hardware, operating system, database, communications systems)
  • The availability of suitable support for all aspects of the system, both internally and externally
  • The ability of the systems to integrate/co-exist with other information systems
  • An assessment of any critical dependencies which exist including potential solutions and/or work-arounds that we can identify
  • An assessment as to the position of the systems in their life cycle and an indication of the likely life of the systems, identifying any significant constraints to the life of the system and potential costs
  • An assessment of the contractual position, right to use, right to assign, contractual time bombs, etc
  • A review of the potential future running costs of the system including identifying potential major investments which can be foreseen and areas where cost could be reduced

Benefits

Detailed due diligence can reduce the risks and costs associated with Information Systems and may provide you with valuable bargaining material enabling better budgeting.

Contract negotiation

Selecting the ‘right’ system is only one part of the story. All too many companies sign the suppliers’ standard agreements only to find that there is something of a gap between what the salesman has promised and what can actually be delivered.

Negotiating good commercial agreements isn’t just about legal niceties. Ideally, the contract should capture, within a sound legal foundation, the entire essence of the project including sensible commercial terms and, most importantly, the practical aspects of how the contract will work.

Given the length of time taken to select a new system, the time and effort which will be expended with implementation, and the likely impact upon the business should things not go to plan, then negotiating a balanced contract is an important step in system acquisition.