It seems in the past few years, volumes have been written about Private Equity exit strategies and activities. Bain talks about “the private equity exit traffic jam,” while others suggest the return of secondary buyouts, IPO’s and dividend recapitalization to satisfy impatient PE fund investors. We understand it is harder and takes longer to successfully exit a company now than ever before.
We don’t pretend to be industry analysts even though we are now the largest IT consulting and business process firm dealing exclusively in the Private Equity space. We’re just common sense business gals and guys who try to do the right thing by our 90+ Private Equity clients. But it seems to us, there is one simple way to make sure your Portfolio Company exit candidate is a highly desirable “market ready” candidate that will generate the highest return on investment for you and your shareholders: be the best operating entity it can be. And, as you know, a critical part of that equation is to make sure the company you are selling has the right technology in place, and there is clear documentation that it works efficiently and effectively.
A Sell-Side or Reverse IT Due Diligence allows a seller to assess the IT risks and potential surprises facing their company prior to sale. How do you benefit from performing a Reverse IT Due Diligence?
- Resolve issues proactively ‒ With an introspective look into IT functions, potential issues can be resolved before they deteriorate. As buyers are reviewing the accomplishments of a company, sellers can show that steps are being taken to resolve any outstanding issues.
- Increased seller credibility ‒ Being upfront with issues and minimizing surprises will enhance your credibility. The end result will be negotiations built on trust and an increased likelihood of a successful deal.
- Accelerate the process ‒ With a Reverse IT Due Diligence, there will be fewer hurdles to impede the close. In addition, the Buyer’s due diligence will be streamlined, leading to a simplified process.
In short, you need to perform a brutally pragmatic Reverse IT Due Diligence. At PIP we call it the “Seller’s ROI Insurance.” In today’s environment, clear value sells. The last thing you want is for the buyer to either walk away or suggest a deep discount in the selling price because “you surprised them.”
If you’d like to learn more about the “what” we do, and how we do it, just give us a call at 203-220-9556. We are happy to offer a no cost, no obligation consultation to our clients and their family of companies.