IT Due Diligence

In mergers and acquisitions of financial organizations, information technology plays a key role at the stage of transaction preparation, deal execution, and subsequent integration. Strategic and operational management decisions are usually made based on data from automated systems, so the organization and efficiency of information technology (IT) of a bank or company (hereinafter referred to as the organization) significantly affects both the deal value and the subsequent merger of the organizations.

We offer our professional assistance in solving the following tasks, which will minimize IT and business risks.

At the deal preparation stage:

• Review of IT processes, architecture, and systems. Assessment of their maturity level and alignment with the deal’s objectives;
• Identification and assessment of key IT risks associated with the preparation and execution of the deal (including pre-sale preparation);
• Assessment of the potential impact of the deal on the IT budget and the amount of IT expenses in the short term.

At the deal execution (integration) stage:

• Assessment of the IT control environment, identification of problems and risks related to the preparation of information on the basis of which management decisions are made. Preparation of recommendations for the implementation of control mechanisms in IT systems;
• Assessment of compliance with regulatory requirements. Development of control mechanisms in IT systems to ensure the completeness, correctness, and accuracy of mandatory regulatory reporting and compliance with regulatory requirements;
• Assessment of the effectiveness of major IT projects taking into account the current financial instability, ensuring a return on funds already invested in IT projects, and preserving the competitive advantages created;
• IT cost optimization. Recommendations for adjusting contracts with suppliers and integrators of IT solutions, optimizing payments to improve current liquidity and ensure a return on investments already made in the future;
• IT development and management. Adjusting the organization’s IT strategy, minimizing risks associated with the use of IT technologies, building an optimal model for organizing IT services, processes, and resources (for example, based on COBIT, ITIL, ITSM standards, etc.).
• Increasing the availability and continuity of business processes, critical IT systems, and resources. Ensuring the ability to continue operations in emergency situations, as well as minimizing the risks of failures and the negative consequences of interruptions.

Insufficient attention to IT issues during mergers and acquisitions can lead to a situation where IT risks that significantly affect the deal are underestimated, and the deal value may be overstated (or understated, in the case of pre-sale preparation), while the costs and timelines of work related to subsequent integration and business transformation may be underestimated.