The Challenge
In an interesting turn of events, the client placed more value on the business assets (the customers and vendor network) than the technology that ran the business. As a result, the scope of this due diligence was maintenance focused – what are the costs to maintain the technology, transition the customers, then decommission the technology over a 12-18 month period?
How We Solved It
The target company used an outdated operating-system as well as an external software development team. The target’s small internal team knew very little about the inner-workings of the technology. It was also learned that the external development team’s agreement included a revenue share that complicated a potential acquisition and created serious financial risk:
- Finding talent familiar with the dated technology would be difficult and expensive
- The old operating system was nearing end-of-life forcing an immediate migration to the cloud.
- Security issues from the old OS required additional cybersecurity assessments as part of the OS migration
- Re-negotiation of the external development team’s contract was mandatory.
Solution
The client was willing to take a number of risks because the business value of the acquisition outweighed the technology limitations. However, a risk mitigation plan was put into place that included:
- Renegotiate the external development team’s contract
- Migrate from the outdated OS to AWS
- Following the OS migration, lock-down security, and run “as is” for 12 months until the transition is ready
The Results
For each risk, a mitigation plan was put in place. Understanding the risks, the client made the decision to acquire the business and technical assets of the target. The OS migration was successful.
