Tech M&A: Preparing Your Tech Business for Sale

Tech M&APreparing your tech business for sale

grantthornton.com/duediligence

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CONGRATULATIONS!You have an offerYou've attracted a possible buyer:

But what's next?

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The due diligence process

The acquirer will now look closely

at your company:

• Financials• Operations• Systems• Performance

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Issues can lower the price

Multiple issues can suggest more systemic problems, leading to a drastically lower price or, in extreme cases, deal cancellation.

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Preparation is keyFind out what you need to know now — it's time to take action.

Next up, the 6 critical areas of focus in preparing for acquirer due diligence.

Want to get the big picture? Read the full article>

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#1: Financial due diligence

How robust are your financials?

Key areas to consider:• Working capital trends

• Receivables

• Active clients

• Sources of value

• Financial systems

• Accounting methods/policies

TIP: Base your analysis on billings data to show thetie to financials; properly account for credit memos.

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#2: Tax due diligence

Key areas to consider: U.S. and foreign income taxes

State and local taxes/Sales tax

Unclaimed R&D tax credits

Accumulated NOLs for federal income tax

Corporate structure and change-in-control agreements

How complete and current are yourtax records?

TIP: Prepare detailed records over a range of years.

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#3: IT due diligenceAre your IT infrastructure and systems a potentialintegration obstacle — or even a business risk?

Key areas to consider:• Network architecture

• Use of cloud services

• Information flows

• CapacityTIP: Proactively flag any platforms, functions or strategies that may pose challenges. Read more>

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#4: Operational due diligence

Can your company deliver the expectedmarket value post-acquisition?

Key areas to consider:• Software/intellectual property

• Confidentiality policies

• Key employees

• Documentation

• Software release calendar

• Mix of direct sales/resellers

TIP: Be prepared to share details on product development, launches and coding.

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#5: HR due diligenceWill the buyer be able to retain key employees and their client relationships and institutional knowledge?

Key areas to consider:• Effective communication

• Proactive outreach

• Recruiting

• Compensation packages

TIP: Identify and communicate with key employees.

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#6: Cultural due diligenceAre values and culture a good fit?

Key areas to consider:• Communication

• Transparency

• Inclusion

Download the presentation>

TIP: Identify the key cultural attributes of the acquirer and seller to highlight commonalities and resolve differences.

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Be proactiveEvery facet of your company’s operations – the underlying financials as well as individual functions, systems and performance – will be under the magnifying glass. Start preparing now.

Marc ChiangPartnerTransaction Advisory ServicesGrant Thornton LLP415.318.2206marc.chiang@us.gt.com

Steven PerkinsManaging DirectorTechnology Industry PracticeGrant Thornton LLP703.637.2830 steven.perkins@us.gt.com

InformationContacts

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Ready to start your own pre-deal due diligence review? Contact Steve or Marc today.