Technology is undervalued in M&A deals, per new survey

BVWireIssue #247-1
April 5, 2023

M&A valuations
mergers and acquisitions (M&A), information technology

While technology is key in many companies’ operations, it “remains one of the most undervalued aspects in M&A transactions,” finds a new survey from Chief Executive, conducted in partnership with Elliott Davis, the tax, assurance, and consulting firm. The acquisition of technology assets ranked at the bottom of the list of factors influencing M&A decisions, behind top-line growth, revenue or operational synergies, accessing new markets, and the acquisition of skills/talent. True, top-line growth should be a primary motivator for any M&A, “but technology is a factor that can also turn a seemingly good ‘revenue deal into a failed transaction.’” The firm’s white paper gives an example of a seemingly good deal gone bad due to a lack of IT due diligence. The paper also includes key questions and actions to consider early in the M&A process to strengthen the understanding of the technology being acquired. The Elliott Davis white paper, “Maximizing M&A Value: A Guide to Evaluating IT’s Underlying Risks and Assets,” is available for download if you click here
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