I had a blast on Tom Bronson’s Maximize Business Value podcast this week. Tom’s podcast provides business owners information to maximize their business value and join the 17% of successful business owners who actually exit their business. You don’t want to be among the losing 83%!
Our conversation revolved around the value of a company’s technology in a transaction, or worse, the reduction an acquirer will give them on their sales price after performing technology due diligence. The discussion included among other things how I approach due diligence from an acquirer’s perspective.
Unfortunately, many business owners don’t think technology will have any affect on their valuation. Nothing could be further from the truth!
Just like getting your books in order, you should also get your technology platform in order, and it pays to review it in advance rather than waiting for a buyer to uncover your technology challenges. There can be more than 9 areas with 45+ topics/processes I review during due diligence, but it depends on the size of the company. Here are a few of them:
1. Understanding the post-transaction business strategy to make appropriate recommendations.
2. Culture of the company being acquired and how that might affect the post-transaction strategy.
3. Evaluating the existing IT staff and other resources.
4. The impact of “Technical Debt.”
5. Last but not least…the cybersecurity posture of the company being acquired.
As a seller, you need to understand what a buyer will consider in technology due diligence. There may be a negative impact on your selling price. I strongly recommend an assessment so you can make informed decisions and maximize the profit from your hard work long before you exit your business.
This is just a summary of our discussion. Watch or listen to the podcast to hear specific examples, detailed stories, and the rest of the conversation around technology due diligence. I am sure you will find it helpful in advance of your exit!
Tom Bronson is the founder and President of Mastery Partners, a company that helps business owners maximize business value, design exit strategies, and transition their business on their terms. Mastery utilizes proven techniques and strategies that dramatically improve business value that was developed during Tom’s career 100 business transactions as either a business buyer or seller. As a business owner himself, he has been in your situation a hundred times, and he knows what it takes to craft the right strategy. Bronson is passionate about helping business owners and has the experience to do it. Want to chat more or think Tom can help you? Reach out at tom@masterypartners.com or check out his book,Maximize Business Value, Begin with The Exit in Mind (2020).
