IT has become a growing concern for Private Equity investors:

- Poorly designed software products can destroy the reputation of a tech company;

- Obsolete IT systems and infrastructure can threaten the competitiveness of a company, disrupt operations and induce undue costs during mergers or acquisitions processes;

- Projects, especially ERP implementations, if not adequately scoped or managed, can hinder profitability for several years;

AXESSIO helps Private Equity investors detect, evaluate and mitigate technology related risks.

 

Of the total “Due Diligences” performed by AXESSIO over the past five years, within 46% of cases, the primary reason for conducting an IT due-diligence was directly the nature of the activity (IT Centric Business): online databases, ecommerce sites, software publishers or financial services; for those deals, quality and best-of-breed technology are top critical for assuring the competitive advantage and to run the business on a daily basis.

In the 54% other cases, the IT due diligence was justified by other reasons:

In 24% of the audits performed by AXESSIO, IT due-diligence was required to validate IT investments in young, fast growing companies where, often times, founders developed IT systems by themselves, not always with a strong IT background.

When a company reaches a level of maturity where the recruitment of a Chief Information Officer (CIO) and IT investments are inevitable, the transition is often uneasy and investments often underestimated.

For the same reason, more and more due-diligences are required to review the choices and the investments (generally substantial) attached to the implementation of the ERP systems

Finally, the last two cases are related to deals that include build-up or spin-off strategies, with some impacts on IT systems.

Estimate the IT criticality of your deal