Recognising the value of technology on exit

Posted on Mar 2017

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A company’s technology operations drive value to a greater extent than ever before and it should be assumed that potential buyers will pay close attention to this area before committing. By forward planning, management has the opportunity to optimise the value of its technology, or at least to mitigate any value drags and, by doing so, secure a greater control of the sale process. An exit readiness assessment, 12 months prior to sale and undertaken by someone that understands what a buyer will be looking for, will go a long way towards helping management achieve these objectives.

So what does an exit readiness assessment involve? In simple terms, it is an assessment that allows management to understand any technology or IT-related issues that may inhibit exit value or delay or complicate the exit process, but at a point in time that allows value-accretive or remedial action to be undertaken prior to sale.

Timeline of a typical exit readiness assessment:

  • 12 months prior to a potential sale Intuitus will assess your technology landscape via documentation reviews, on site interviews and technology inspections. We will then produce a commercially-focused report that highlights value drivers and other strengths, any value drags or risks, and what mitigating actions might be required in the months leading up to sale.
  • 6 months prior to sale we will meet with management to review progress and ensure that the plan is being adhered to. At this point we would discuss with management how best to respond to questions that buyers are likely to ask.
  • 3 months later we will carry out a final review, before providing management with a vendor due diligence report as part of the sale process. We would also be available to advise or support management during the period of buyer due diligence.

This extended timeframe shows a professional commitment to technology. While vendor due diligence undoubtedly has its place, by the time problems are uncovered it is often too late to put a plan in place to fix them, let alone actually fix them. An exit readiness assessment is a far more proactive approach and, importantly, ensures that management is on the front foot at all times.

The list of potential issues that may disrupt a sale is a long one, and includes intellectual property disputes, contractual disputes, scalability and capacity planning issues, product development problems and legacy development environments. Indeed, any issue that provides a lever for the potential buyer to reduce the purchase price needs to be considered.

Over the course of the 1,000+ transactions that Intuitus has advised, we’ve built an unrivalled knowledge and understanding of a buyer’s interests when it comes to technology across all industry sectors. This expertise is equally available to the vendor: our team of industry-hardened, Executive-level consultants recognise the value drivers within an organisation and we consistently deliver insightful, evidence-based and action-oriented reports that are designed to optimise value on exit.

Attempting to sell a business without carrying out an exit readiness assessment is similar to trying to sell a 4-year-old car without an MOT - if you can’t prove that any issues have been resolved it’s ultimately going to affect the sale value you achieve.

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