IT Due Diligence

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    Wei Zhong Ong

    Given today’s increasingly digitalized world and the rise of cybersecurity importance and threats, I think it is necessary for M&A advisors to conduct a detailed due diligence on the target’s IT systems and backend infrastructure as well. This will also help to facilitate any potential integration of the existing IT systems with the new inherited one. What do you think?


    Clark Murphy

    Absolutely Wei! It’s the most overlooked and the most important after the company is officially required. You need to make sure all IT systems are in place or you run the potential exposure risk. If the 2 companies are still running on there systems there would be no cost synergy savings and could cause more problems down the line.



    IT due diligence is even more crucial now that the Covid pandemic has brought about greater use and reliance of IT systems. Failure to integrate the IT systems or issues inherent in the target’s IT systems can not only be a deal breaker in terms of potential synergies and integration, but also bring about regulatory penalties especially when personal data is involved given that data protection penalties have come into force across many regions.



    Any deficiency or weakness in IT related areas will show-up in your CDD or FDD.



    CDD and FDD really have a different focus. It is true that some of the most critical systems to operations will likely be in focus during CDD, and things like exposure of customer information should become apparent. The company’s IT infrastructure deserves its own look to ensure vulnerabilities are understood, including user access, to determine not only breaches that might already have taken place, but also immediate post-acquisition actions that may be needed to sure up the IT environment, even before full integration is undertaken.

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