One of the first emails I sent on the Tech Diligence list is titled Do I need a plumber where I provided the snarky response of YES!

Acquisitions, for any business beyond the size of the local pub, can be very complex. At its core you have:

  • Sales
  • Marketing (maybe combined with Sales)
  • R&D
  • Accounting
  • Payroll
  • HR

Each one either being combined or split off into subgroups. Their own tooling, processes, teams. You get the idea.

If you are small enough, there is some overlap in the tooling such as in Sales/Marketing (think Toast or Square handling the ordering, sales, and the marketing of the newsletters and loyalty programs). If you are big enough, then there are some software packages that take over large parts of the business such as ERP (for budgeting, project management, and billing).

When you are acquiring a company, it isn’t so much the tools you are purchasing (unless it is the special sauce for the company or their product), but the underlying data whether it is the customers or intellectual property. Unfortunately, there is the additional overhead of the maintenance and support of the tooling whether it be licenses or upgrades.

The challenge is how much of this can you anticipate prior to making an offer so that it is budgeted in, or after the deal is announced so you can get the project plans together for a course of action.

The checklist is one way to do this. However, are you using one specific to what you’re looking for, or are you using one you found online?

Tomorrow, lets work on building one out using a top-down approach.

cab