One of the most exciting parts of what we do at Leap Managed IT is when we get the opportunity to help founders navigate the technology side of selling their business. Each year, we provide IT consulting to numerous organizations as they prepare for ownership changes, whether it’s transitioning within the family, merging with industry peers, or partnering with private equity firms. Regardless of the path chosen, ensuring that IT systems are in proper order is critical to a successful sale that maximizes the valuation and makes for a smooth transaction.
While accountants, attorneys, and operations teams play evident roles in the sales process, engaging IT teams is equally crucial. Prior to starting the sales journey, it’s critical to implement appropriate IT and cybersecurity best practices. Neglecting these standards can not only affect the final valuation but also lead to frustrating delays in closing. Acquiring companies are very vigilant in performing intense IT discovery leading up to the final minutes. The M&A industry has been burned too many times with inadvertently inheriting expensive IT related liabilities and have significantly raised the bar for the standards that must be put in place prior to close. Don’t let a benign firewall port flag uncovered 5 minutes before closing derail months of intensive work. You can avoid unneeded frustrations with a little effort at the beginning of your journey.
Here are our top IT tips for founders preparing to sell their business:
- Connect with appropriate IT resources early in the process – This can be your managed IT provider or CIO if you have in-house staff. If you don’t feel comfortable discussing a potential sale just relay that as a best practice you would like to implement the NIST Cybersecurity Framework or similar standard for your organization.
- Use the NIST Cybersecurity Framework as your playbook – These standards are broadly known and accepted in the cybersecurity industry. The best part is they are designed for both IT and non-IT professionals to follow. Technical jargon is at a minimum.
- Invest in internal and external network scans and remediate any issues – The acquiring firm will perform these activities so why not get ahead of it.
- Focus on your people – Make sure you have appropriate IT policies in place for your team. (Here is a list to get you started.) Make sure you train your staff on the policies and enact monthly phish testing along with quarterly cybersecurity training. Over 60% of cybersecurity related issues can be traced back to an end user. This is no secret to the M&A world and they will undoubtedly check what training and guidelines you have in place for your staff.
If you are in a position to consider a successful exit, congratulations to you on your years of hardwork! We are here to help. If you have any questions about how to make sure your organization’s IT systems are set-up for a successful transaction, please reach out to us.
