Sloan Limited Partners Corporate Mergers & Acquisitions

  Corporate Acquisitions – Technology Assessments
             For Client Discussion Purposes Only

OUR APPROACH at Sloan Limited Partners

For many companies, technology is a key component of the customer facing services that
they deliver. In addition, technology services can be a major component of a company’s
capital and expense budget as well as a key enabler for revenue generation. Therefore,
during the due diligence process that is undertaken when analyzing potential corporate
acquisitions, it is extremely important that a thorough assessment is performed of the
target company’s technology capabilities, assets, strategies and liabilities. Incorrectly
assessing the state of the acquisition target’s technology position can lead to unexpected
expenses such as: improper licensing of software, improvements to assure required
availability/reliability and personnel fees for long-term support of specialized applications
whose data and or functions cannot easily be ported to the acquiring company’s systems.
Properly assessing the acquisition target’s technology position can mean the difference
between fully leveraging an acquired business versus taking on expenses that create
inefficiencies in the entire operations or create an expense drain to improve the
technology service delivery.

SLP believes that every corporate due diligence process for acquisitions must include an
analysis component specific to Information Technology. This analysis should be
performed and led by seasoned technology management professionals who also have a
strong background in service delivery, finance and contract management. Regardless of
the type of business, the checklist for the technology due diligence process is designed to
create a type of “technology balance sheet” of the acquisition target. Examples of key
components of the assessment are:

Facilities – condition and commitments
Asset Identification, Value and Age (Hardware, software, etc.)
Software Licenses
Contracted Services
Applications – Business value, capabilities and support costs
Personnel
Service Delivery Performance
Security & SOX Compliance
etc.

Upon completion, the technology due diligence report should clearly identify the
advantages and risks associated with the acquisition target’s current technology position.
In addition, one of the supplemental goals of the assessment would be to identify
opportunities for potential cost saving initiatives after acquisition and a high level position
statement for integration of the two company’s technology organizations.

Although the due diligence process is focused on the acquisition target, understanding
how the newly acquired assets (software hardware, people, facilities, etc.) will be
managed/leveraged within the new company requires an understanding of the acquiring
company’s own technology balance sheet and strategy as well.

NEXT STEPS

Because acquisition strategies and processes can be different based on a number of
variables such as company size, industry, objectives and timelines, SLP recommends that
an informal discussion take place with the acquiring company (“client”) and members of
the SLP team to cover the following agenda topics.

Meeting Agenda Topics

High level discussion on acquisition time-lines and objectives

Understanding of the client’s plan for the due diligence process including team
composition and methodology

Overview of client’s current technology implementation and it’s role in the business

Identification of any technology objectives for targeted acquisitions

Discussion / review of client needs

Upon completion of this process, at the client’s request, SLP can prepare a proposal to
address the client’s unique business needs in this area.