Software Investment Banking

5 M&A Strategies for Boosting Pre-Sale Technology Value

During the M&A process, seemingly inconsequential technological issues can have major impacts on a business’s ultimate valuation. So how can you improve technological value and speed due diligence? Follow these five strategies.

Organize the Garage
A clean garage can improve real estate value. So too with the M&A process. Every company has technology it no longer needs, or that is even harmful. Get rid of old laptops, printers, phones, boxes, cords, servers, and other devices you no longer use. Don’t hold on to something just because you paid a lot, or think you might fix it “someday.” Chaos is not your friend. Useless objects today will be even more useless tomorrow. Don’t hold onto them.

Inventory Your Technical Assets
You need to know what you have, where it is, and what it’s worth. You should already have an inventory, but if you don’t, or if it’s out of date, now’s the time to fix that. It can be a simple document or spreadsheet, or a complex illustrated manual. What matters most is that it is usable.

Your list should also note the purpose of the asset, particularly if it is not self-explanatory. This expedites due diligence, and can help with valuation.

A Picture is Worth a Thousand Words
Build a few drawings of the technical layout and architecture of the business. They don’t have to be beautiful. They just have to be useful. They should illustrate technical dependencies and relationships, and other relevant high level details. Note that the drawings should be consistent with other documents in terms of naming scheme. This turns the drawings into a useful reference point for the information you convey in other documents.

Review Your Policies
Your technological policies and procedures communicate key information about your operations. They should be well-written, organized, and accessible. This increases compliance and conveys professionalism by showing you take these issues seriously. Your policies should include password and security issues, backup policies, software procedures, and similar strategies. This is particularly important if your business is involved in financial or credit transactions.

As you move toward due diligence, review your policies again. Update any that seem out of date. Document and begin drafting any missing procedures.

Finally, organize your policies. Give them an appropriate title, and organize them into sections if appropriate. Then put them someplace accessible that your staff can easily find. Google Drive is often a good option for this aim.

Address Roles and Responsibilities
Your staff is one of your most valuable assets. Your HR department needs a list of your staff and their titles. Know, however, that this list may do little to communicate roles and systems expertise. The acquirer needs to know who can offer what technical assistance.

The tech team needs its own responsibilities and roles list that communicates each team member’s duties. The list should include the names of systems used in other technical documents. This ensures deeper understanding by the acquirer, and can minimize confusion during the transition.

About Solganick & Co.
Solganick & Co. is an independent investment bank and mergers and acquisitions (M&A) advisory firm that provides specialized expertise in the Software, IT Services, Healthcare IT, and Digital Media sectors. Solganick & Co. offers strategic and financial advisory and relationships within the industry, a deep knowledge within these sectors, and a premium team of experienced investment banking professionals. Our team assists companies and owners in completing mergers, sales, divestitures, spin-offs and acquisitions that are strategically and/or financially beneficial to your firm’s business model and transaction goals.

For more information or to discuss an M&A transaction, please contact us at [email protected]

Posted in Guides.