Buyer Due Diligence

(Information Technology)

Acquirers are very careful about conducting a DD while taking over another company. However, the sellers also need to carefully conduct the DD of the prospective buyer to evaluate the strategic alignment of the potential buyer.

Legaligence was associated with a software product company as a strategic consultant to evaluate and compare prospective buyers. The following are some of the key strategic fit issues that Legaligence looked at and evaluated as a part of this DD:

• Financial analysis.
• Key personnel in the acquiring company and their backgrounds.
• Market reputation of the acquirer.
• Analysis of product and technological synergies and strategic fitment of the seller’s products in the acquirer’s portfolio.
• Analysis of operational and financial synergies.
• Identification of the best prospective buyer from two perspectives – Long strategic existence in the acquiring company and highest valuation (price).

The software product company was sold to an American software conglomerate at a high price within 1 year of Legaligence submitting the DD analysis and recommendations.