Private Equity and M&A IT Due Diligence – An Expert Guide from 15+ Global Deals

TL;DR

With over 15 successful global Private Equity and M&A deals under my belt, this guide distils the critical steps in IT due diligence from uncovering hidden risks to planning seamless integrations. You’ll learn how to assess technology assets, protect deal value, and align IT with the investment thesis.

richardkeenlysidecio.com - Private Equity & M&A

Private Equity and M&A IT Due Diligence: An Expert Guide

In today’s high-stakes investment environment, Private Equity IT Due Diligence and M&A IT Due Diligence can make or break a deal. Technology is no longer a back-office enabler it is often central to value creation, operational efficiency, and post-deal growth.

Having advised on over fifteen global Private Equity and M&A transactions across sectors, including retail, manufacturing, finance, utilities, and logistics, I’ve seen firsthand how robust IT due diligence safeguards investments and accelerates returns.

Why IT Due Diligence Matters in Private Equity and M&A

The stakes are high:

• Operational risk: Poor IT infrastructure can cripple business continuity.

• Hidden liabilities: Legacy systems and technical debt can drain capital post-deal.

• Integration failure: Misaligned systems delay synergies and erode value.

For Private Equity firms, IT due diligence must not only assess current capability but also measure future scalability and strategic alignment with the investment thesis.

The PE & M&A IT Due Diligence Framework

I apply a five-phase model, refined over multiple cross-border transactions:

1. Pre-Diligence Scoping

Define the IT scope early: ERP, CRM, cloud, cybersecurity, data governance, and sector-specific applications. Agree on deal drivers with the investment team — cost synergy, market expansion, or digital transformation.

2. Technology Landscape Assessment

Evaluate core systems, infrastructure, integrations, and vendor dependencies. Identify:

• Legacy platforms are due for replacement

• Licensing exposures

• Single points of failure

For example, during a £600m global manufacturing group acquisition, early discovery of unsupported ERP modules saved months of post-merger remediation.

3. Cybersecurity and Compliance Review

Cyber resilience is now a top investor priority. Assess:

• Penetration testing results

• GDPR and data privacy compliance

• SOC and incident response maturity

In one multi-national deal, bolstering security posture pre-close avoided a seven-figure post-acquisition compliance fine.

4. Integration and Carve-Out Planning

A carve-out deal is as much about separation as integration. Key steps:

• Define interim service agreements (TSAs)

• Map critical data migrations

• Align ERP and WMS roadmaps

I’ve led carve-outs where clean separation in 90 days was achieved without disrupting supply chain operations.

5. Value Creation Roadmap

Post-deal, IT must fuel growth. Typical levers:

• ERP consolidation

• AI-driven process automation

• Cloud migration to reduce technical debt

• Data analytics to unlock new revenue

Case Insight: Avoiding the £2M Technical Debt Trap

In one cross-border PE acquisition, my team identified hidden technical debt in outdated server infrastructure. By migrating to Azure before integration, we avoided £2M in immediate replacement costs and delivered a global standardised IT platform.

Common Pitfalls in M&A IT Due Diligence

• Underestimating integration complexity

• Ignoring cybersecurity maturity gaps

• Failing to quantify technical debt

• Overlooking vendor contract risks

Best Practices for Investors

1. Engage IT due diligence early – technology risks emerge quickly.

2. Map IT to the investment thesis – every tech decision should serve deal objectives.

3. Focus on the first 100 days – integration momentum is key.

4. Retain flexible separation planning – be prepared for vendor pushback.

FAQs

Q: What’s the difference between commercial and IT due diligence?

A: Commercial due diligence focuses on market, customer, and revenue aspects. IT due diligence dives into technology infrastructure, cybersecurity, and system readiness.

Q: How long does IT due diligence take?

A: Typically 3–6 weeks, depending on deal complexity and data access.

Q: Can you combine IT due diligence and integration planning?

A: Absolutely — it’s more efficient and ensures findings directly inform integration strategy.

Closing Thoughts

In the world of Private Equity and M&A, IT due diligence is no longer optional, it’s a strategic imperative. Done right, it not only mitigates risk but also accelerates value creation and competitive advantage.

Having worked across 15+ global deals, I’ve seen the transformative impact of a well-executed IT due diligence process. It can turn a good deal into a great one and save millions in hidden costs.

Richard Keenlyside is a Global CIO, PE&MA Advisor, Endava TAC and a former IT Director for J Sainsbury’s PLC.

Call me on +44(0) 1642 040 268 or email richard@rjk.info.

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