[Martin Tse]

I was wondering what was the consensus on use of in-house IT to perform DD or use a 3rd party to perform an IT DD. I was wondering as from my experience IT was a ‘afterthought’ and now we have IT person on the M&A Team that does this.

[Meg Ver]

Earlier in our organization, the task for performing DD was outsourced to third party. Since they are outsiders, they had to consult with business function leaders to perform their job which was counter productive as these leaders couldn’t give them much of their time because of their busy schedules as they had their day job to support the business operations which resulted in half baked due diligence being performed by this third party and we saw all the issues that should have been addressed during DD coming up in PMI.
After that we have stopped using third party consultant and dd is performed by IT M&A team.

[Martin Tse]

Thanks for your view on this topic, much appreciated! I can see where a 3rd party IT DD can become more of an hindrance then being productive.

[Kevin]

I have personally experienced both scenarios (in house IT and 3rd party) to conduct diligence. While working in industry we did not have a formal M&A practice however we purchased a couple of food manufacturing facilities and we conducted our own diligence, I will say it definitely did not have the same rigor as what I use now working in the consulting space specializing in advising our clients with the M&A process. Later I did work with a life sciences company that did have an internal M&A team that would conduct diligence however it still was not as sophisticated as what we do in consulting, this is likely due to the volume that we produce versus how many the life science company would do per year. I say all of this to illustrate that internal IT diligence efforts can still be good but when you need a deeper level of understanding, it may be a good idea to work with a 3rd party who specializes in this space.

[Pamala Paschal-Sturhan]

Hi Team:

Would it not be best to work with external experts but to also have internal team members that understand what is being done and help coordinate with the external entity? It seems like with just about anything, completely internal or completely external would be limiting as external experts have the resources needed to allocate time and effort to the DD review yet they would lack a good understanding of the company’s business culture, etc.

~Pamala

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