Many tech companies haven’t fully prepared for an acquisition. When the time comes, are you ready? Grant Thornton LLP shares the six best due diligence practices.

1. Tech M&A
Preparing your tech
business for sale
grantthornton.com/duediligence

2. CONGRATULATIONS!
You have an offer
You've attracted a possible buyer:
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But what's next?

3. The due diligence process
The acquirer will now look closely
at your company:
• Financials
• Operations
• Systems
• Performance
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4. 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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5. Preparation is key
Find 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.
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Want to get the big picture?
Read the full article>

6. #1: Financial due diligence
How robust are your financials?
Key areas to consider:
• Working capital trends
• Receivables
• Active clients
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• Sources of value
• Financial systems
• Accounting methods/policies
TIP: Base your analysis on billings data to show the
tie to financials; properly account for credit memos.

7. #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
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How complete and current are your
tax records?
TIP: Prepare detailed records over a range of years.

8. #3: IT due diligence
Are your IT infrastructure and systems a potential
integration obstacle — or even a business risk?
Key areas to consider:
• Network architecture
• Use of cloud services
• Information flows
• Capacity
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TIP: Proactively flag any platforms, functions or
strategies that may pose challenges. Read more>

9. #4:Operational due diligence
Can your company deliver the expected
market value post-acquisition?
Key areas to consider:
• Software/intellectual property
• Confidentiality policies
• Key employees
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• Documentation
• Software release calendar
• Mix of direct sales/resellers
TIP: Be prepared to share details on product development,
launches and coding.

10. #5: HR due diligence
Will 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
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TIP: Identify and communicate with key employees.

11. #6: Cultural due diligence
Are values and culture a good fit?
Key areas to consider:
• Communication
• Transparency
• Inclusion
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Download the presentation>
TIP: Identify the key cultural attributes of the acquirer and
seller to highlight commonalities and resolve differences.

12. Be proactive
Every 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.
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13. Marc Chiang
Partner
Transaction Advisory Services
Grant Thornton LLP
415.318.2206
marc.chiang@us.gt.com
Steven Perkins
Managing Director
Technology Industry Practice
Grant Thornton LLP
703.637.2830
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.