Eric Frère (1), FOM, Essen as Doctoral Thesis Director "Impact analysis for the subject of information technology in mergers and acquisitions" by Mr. This thesis contributes to the sparse theoretical literature on the subject of IT DD in M&A.
DIRECTORY OF CONTENTS
- DIRECTORY OF ABBREVIATIONS ________________________________ XIV I DIRECTORY OF FIGURES ________________________________________ XVI
- Significance of the Thesis ______________________________________ 2 1.2 Research Gap for the Concept of IT Due Diligence ________________ 3
- Delimitation of Digitalization _________________________________ 25 .1 Definition Internet of Things _________________________________ 27
- IT Due Diligence from Process Perspective ______________________ 87 4.2 IT Due Diligence from of Technological Scope of Consideration __ 90
- Application Interview Guideline for IT Due Diligence __________ 135 .1 Briefing Initial Situation for the Expert Interviews ______________ 135
- I CODING AND ANALYTICAL PROCESS ______________________ XLVI II CODE MATRIX FOR QUALITATIVE CONTENT ANALYSIS __ XLVII
- DIRECTORY OF ABBREVIATIONS AG Aktiengesellschaft
- DIRECTORY OF TABLES
89 Table 5: Analysis IT DD from a perspective of technical scope of consideration 91 Table 6: Interrelations of IT DD with other Partial DD Tests.
1 INTRODUCTION
- SIGNIFICANCE OF THE THESIS
- RESEARCH GAP FOR THE CONCEPT OF IT DUE DILIGENCE The current state of research (see chapter 4) uses five assessment
- Introduction 4 organization. Interrelations from IT DD to other partial DD audit fields are
- RESEARCH OBJECTIVES AND QUESTIONS
- How is a IT DD organized and scoped in order, to support M&A success in transaction and integration regarding the information
- What are the challenges for the buyer to identify IT related risk for an acquisition and integration success of the desired IT related
- How needs a IT DD be improved on order to support mergers and acquisition effectively due to its role to other DD audit fields and
- Introduction 6 RQ 4: What is the contribution of the Principal-Agent Theory, Transaction
- LIMITATIONS OF THE STUDY
- THEORETICAL FOUNDATION
- Introduction 8 In this regard, the game theory deals with strategic behavior between
- RESEARCH METHODOLOGY
- Introduction 10 The details for the coding and analytical process of the expert interviews are
This thesis is an initial research to design an IT DD framework in M&A with the basis of previously defined economic theories. In the analyzed literature, no publication was observed that used an exploratory research approach on the topic of the IT DD concept.
2 FOUNDATION OF MAIN CONCEPTS
DELIMITATION OF MERGERS AND ACQUISITIONS
Mergers and Acquisitions Process
The situation regarding an M&A process is the same as in the definition of the terms merger. The term merger and acquisition process is also not uniformly defined, differentiated and used in the literature.
Foundation of Main Concepts 14 Strategic planning, planning the acquisition and finding, valuation and pricing,
Next, DePamphilis sees the execution of the DD in parallel with the negotiation process, which includes process steps, letter of intent, valuation, deal structuring and financial structure. Basic Concepts 16 Jansen defines the M&A process in three ideal typical phases: Before the merger.
Foundation of Main Concepts 16 Jansen defines a M&A process into three ideal typical phases: Pre-merger
Summary Mergers and Acquisitions
The definition of the term and the process of mergers and acquisitions in the literature is not uniform. Nevertheless, this thesis uses a combination of the Reed/Lajoux/Nesvold and Sherman/Hart acquisition definitions.
DELIMITATION OF DUE DILIGENCE
The conclusion is that the majority of authors see the DD process as an important success factor for price negotiations from the buyer's perspective. Some authors recognized the importance and complexity of the concept of IT DD, but information on the design of ITDD was sparse.
Foundation of Main Concepts 18 target companies, the selection of false markets, and a failure to assess market
Definition of Due Diligence
According to the Securities Act (SA), the principle of the exemption from the protective perspective applies, which not only affects the buyer and seller of companies, but also the accountants, advisers and all experts involved. Basis of main concepts 20 Reed/Lajoux/Nesvold defines DD as follows: 'The basic function of DD, in.
The term DD is understood as a methodical analysis of information and regarding an acquisition object. Spedding is more general in defining DD "Traditionally, DD has involved a discovery process relevant to important business transactions as well as operational activities." (Spedding 2009:3).
Due Diligence Objectives and Contribution
DD provides data on overall M&A processes to determine value created or destroyed by providing risk as well as opportunities (Gole/Hilger 2009:24). This thesis follows the definition of DD for designing the IT DD concept according to Gole and Hilger (Gole/Hilger 2009:24), that DD determines the value created or destroyed by giving the risk as well as the opportunities given to the overall M&A process.
DELIMITATION OF DIGITALIZATION
The digitization has many faces, therefore in the following paragraphs define the development and most important terms of the digitization. The spread of the Internet in the early 1990s was another essential step in the development of digitization.
Foundation of Main Concepts 26 efficiency and automation was also a priority and a further foundation of the
Definition Internet of Things
The result is the so-called "smart" objects, equipped with digital logic, sensor technology and the possibility of networking, form an internet of things in which the computer disappears as an independent device and rises to the objects of the physical world (Gellersen/ Schmidt/ Beigl 2000; ITU 2005; Matter Between the collection of data about a physical object and its image in the system, ubiquitous information technologies appear as mediators between the real and the digital world.
Foundation of Main Concepts 28 The digital component on the physical object allows, for example, the
Definition Industry 4.0
The basis of the main concepts 28 The digital component on the physical object enables e.g. Increasingly complex scenarios lead to strong networking of production-level systems.
Summary
This thesis follows the definition and understanding that cyber-physical systems are the technical solution between the physical and the digital world. Foundation of Main Concepts 30 DD, because the changes of the convergence of the physical and digital world will.
3 THE SELECTED THEORETICAL BASIS FOR IT DUE DILIGENCE 3.1 INFORMATION ECONOMY
Information Activities and Design
The information economy raises the information gap (the asymmetric information distribution) between economic subjects as a central phenomenon of market relations and tries to explain and shape it endogenously, because tensions arise mainly through the behavior of the parties involved (von Lingen 1994: 448 ). To overcome these asymmetries and in line with knowledge of the information economy, information activities must be initiated on both sides of the market (Fischer 1993: 448; Adler 1996: 45).
The concept of IT DD in this, follow this criterion to overcome the asymmetric information distribution. Regarding the concept of IT DD, it can be summarized that signaling and screening activities can be understood as a bundle of interdependent actions within an IT DD.
The Selected theoretical basis for IT Due Diligence 36
HISTORY AND DEVELOPMENT OF NEW INSTITUTIONAL ECONOMICS
Due to the shortcomings of the neoclassical theory, the New Institutional Economics (NIE) was developed. The definition of information in the theory of information economics is included and considered in the context of NIE.
The Selected theoretical basis for IT Due Diligence 38 individualistic theory. As such theory, it explains the drive for individual
Delimitation of New Institutional Economics
In the following sections, the position of NIEs within economic theory, their meaning and perspective on pre-contractual relations is outlined. An IT DD within the M&A framework is such a pre-contractual situation, and therefore it seems reasonable to consider this area of economic theory.
Delimitation regarding Neoclassical Theory
The Selected theoretical basis for IT Due Diligence 40 for this thesis to improve the completeness of contracts with regards to the
Classification of New Institutional Economics
The scope of this theoretical approach has not only been adapted in the classical field of economics. Furthermore, the NIE (Richter 1994) discusses and treats issues in the field of law, politics, history and much more.
The Selected theoretical basis for IT Due Diligence 42 the neglect of institutions, that constitute the framework for economic activities in
Assumptions of New Institutional Economics
Some assumptions of the NIE have already been mentioned in previous paragraphs in context where they were necessary for understanding. In addition to individual rationality, the assumption of an opportunistic relationship is a basic assumption of the NOT the economic actors.
The Selected theoretical basis for IT Due Diligence 46 including guarantee or enforcement instruments like the law, to control
PRINCIPAL AGENT THEORY
- Assumptions of Principal Agent Theory
The decisive factor for the agency theory for Göbel is the assumption that there is an asymmetric distribution of information between the principal and the agent: "The agent has an informational advantage in relation to the principal. He can improve his abilities, his knowledge, his intentions and motives better than the principal can.
The Selected theoretical basis for IT Due Diligence 48 The concept of information is a key element in PAT regarding the concept
Hidden Information
Alparslan (2006:20) and Weierhäuser (as cited in Saam 2002:55) applied the characteristics of hidden information to essential characteristics of goods or services. The Selected theoretical basis for IT Due Diligence 50 Arrow (1985:38) defines the problem of hidden information as follows:.
The Selected theoretical basis for IT Due Diligence 50 Arrow (1985:38) defines the problem of hidden information as follows
Hidden Characteristics
The agent will try to make the best possible impression on the principal before the contract is concluded. This thesis contributes to findings related to the design of the concept of IT DD to identify hidden features of IT before contracting.
Hidden Action
The agent may conceal defects and/or weaknesses of the subject of acquisition before the conclusion of the contract in order to reduce the risk of a possible favorable conclusion of the contract from the point of view of his seller. Selected theoretical bases for IT Due Diligence 52 situation when the agent has more information after the contract is concluded.
The Selected theoretical basis for IT Due Diligence 52 the situation where the agent has after contract closing more information
Hidden Intention
Ex-ante and ex-post Solutions for Agency Problems
IT DD is understood and defined as an activity to reduce the asymmetric distribution of information in M&A. Selected theoretical bases for IT Due Diligence 54 After the conclusion of the contract, problems of asymmetric information.
The Selected theoretical basis for IT Due Diligence 54 After contract closing, the problems of asymmetric information
It is therefore in the interest of the agent to document exactly what he is doing and communicate this to the principal. The principal knows that he cannot eliminate the ex post asymmetric information distribution by providing incentives for the agent.
The Selected theoretical basis for IT Due Diligence 56 There are in principle two possibilities to design contracts to solve this
An agent may have a strong interest in satisfying the principal in order to maintain and expand his reputation. Selected theoretical bases for IT Due Diligence 58 new services are provided by the agent in accordance with the client's expectations.
The Selected theoretical basis for IT Due Diligence 58 new services are delivered by the agent according principals expectation. This
Although the principal is aware that he is exposed to a certain behavioral risk of the intermediary and essentially gives him the above. The principal assumes that the agent will not take advantage of him because of the trust shown in advance.
The Selected theoretical basis for IT Due Diligence 60 attractive contract partner form a principals perspective, because this can also
TRANSACTION COST THEORY
- Development and Delimitation of Transaction Cost Theory
- Definition Transaction Cost
As negotiation costs, the costs for the acquisition contract in the context of M&A are also a simple example. The Selected Theoretical Basis for IT Due Diligence 62 In the following, the general Picots definition should be followed, where.
Some authors assume that the effort/time resulting from an individual's investment cannot be recorded as a transaction cost (Hammes/Poser 1992:888). The problem is more often in the distinction between production costs or procurement costs and transaction costs (Grote Michaelis.
Human as Influence Factor on Transaction Cost
When conducting transactions, there are two basic human behaviors to consider: On the one hand, the bounded rationality of human behavior and the possibility of opportunistic behavior (Hildebrandt 1990:153f.; . Williamson 1991a:16). Simon sees this in the limited information gathering and information system information processing capacity of the human brain and in the presence of limited language abilities.
The Selected theoretical basis for IT Due Diligence 66 All individual humans therefore try to maximize their individual benefit
Environmental Factors as Influence Factor on Transaction Cost Williamsons understanding of the term "environmental factors" is the
The Selected theoretical basis for IT Due Diligence 68 preferences, the political or regulatory framework as well as possible natural
Organizational Failures
The interaction of "human factors" with "environmental factors" hinders transactions and causes transaction costs. The influence of information' is mainly the result of opportunism and uncertainty, while the limited rationality of man plays an important indirect role (Williamson 1975:31).
Transactional Influence Factors on Transaction Cost
For the basic incidence of transaction costs, the previously mentioned elements of the "organizational failure framework" are important. It is not clear in this context, from which factors the transaction costs in the execution of a transaction are determined.
With increasing complexity and the duration of the transaction, the necessary search for information and thus the transaction costs also increase (Windsperger 1996: 34). A higher degree of incompatibility of the transaction partners' objectives will result in greater uncertainty between the transaction partners.
The Selected theoretical basis for IT Due Diligence 74 All forms of uncertainty can therefore be traced back to difficulties in the
Coordination Forms
One of the reasons is that the consideration of such a contract is not completely clear before the conclusion of the contract, the identity of the transaction partner is in fact very important and extensive personal interaction is necessary, for e.g. On the other hand, neoclassical contract law relates to long-term contracts, which are entered into under uncertainty (Williamson 1985:70f.) Consideration of all future environmental conditions is far too expensive or not possible at all.
The Selected theoretical basis for IT Due Diligence 76 Hedging measures plays a major role, as partner-specific investments have
Extensive knowledge is also not a typical character of a purchase, because usually expert knowledge is also in the object of the transaction and is usually transferred to the buyer after the contract is closed. After considering all three types of contract, the neoclassical type of contract best fits the nature of a purchase and is the meaning of a contract in this thesis.
Definition of Property Rights
Richter and Furubotn define three types of property rights in this regard (Richter/Furubotn 1999:82ff.). Depending on the authors, there may be some differences regarding the meaning of the meaning of property right, but generally it can be summarized that the common understanding in the literature is that PRT understands the rights to act and dispose of a resource or commodity as a group of individuals. rights associated with a resource (Bea/Göbel 2010:137; Ebers/Gotsch Göbel 2002:66; Picot/Reichwald/Wigand 1996:39).
Summary and Criticism
In summary, we can say that the amount of transaction costs to establish, enforce and transfer property rights to a resource determines the net use that can be achieved by disposing of the resource. The emergence of high transaction costs and high negative externalities can therefore be understood as a sign of the need for new institutional solutions (Eber/Gotsch 2006:250ff.; Göbel 2002:70; Picot/Reichwald/Wigand 1996:40).
The Selected theoretical basis for IT Due Diligence 82 With the consideration of external effects and the consideration of
THEORY OF INCOMPLETE CONTRACTS
Contractual aspects of economic relations are usually within the framework of classical contract theory. This seems unrealistic, as far less complicated contracts are drawn up in practice than classical contract theory predicts.
Impact of specificities on incomplete contracts
He has more value in this employment relationship than outside, where he can no longer use his expertise. The higher the level of specificity from the TCT perspective, the higher the transaction costs.
Purpose of Incomplete Contracts
The institutions first regulate which of the transaction partners has existing goods/services under control. How property rights are established and enforced from a contractual point of view depends on the way in which the transactions can be organized.
4 LITERATURE REVIEW WITHIN INFORMATION TECHNOLOGY DUE DILIGENCE
IT DUE DILIGENCE FROM PROCESS PERSPECTIVE
Information Technology Due Diligence Literature Review 88 The recommended technology scope of consideration is evaluated in.
Literature Review within Information Technology Due Diligence 88 The recommended technological scope of consideration is evaluated in
According to Table 4, the majority of publications have an idea or concept for an IT DD framework. Literature review within Information Technology Due Diligence 90 4.2 IT DUE DILIGENCE FROM THE TECHNOLOGICAL SCOPE OF.
CONSIDERATION
The results of the assessment according to Table 5, the technological scope of studies clarify, showing that there is room for improvement from a scientific perspective for the foundation of the technological scope within IT DD.
Dirk Stein 93
Literature Review within Information Technology Due Diligence 94
IT DUE DILIGENCE RESEARCH APPROACHES
The application of expert interviews to the IT DD concept could not be observed in the available literature. Table 7 below provides an overview of the assessment from a scientific perspective for IT DD publications.
Literature Review within Information Technology Due Diligence 96
CONCLUSION OF CURRENT STATE OF RESEARCH
It can be concluded that there are research gaps in the reviewed literature on the topic of IT DD. The role of information technology also applies to enabling digitization itself (Châlons/Dufft 2016:27f).
98 Literature Review within Information Technology Due Diligence
DEFINITION OF RESEARCH OBJECTIVES AND QUESTIONS Based on the literature review and identified research gaps this thesis
Providing a brief conceptual explanation of the Information Economy, New Institutional Economics and the theory of
100 Literature Review within Information Technology Due Diligence
SRQ 3_1: What is the role of the IT DD in relation to the other partial IT DD tests, especially with regard to possible overlapping study topics, and are there points of contact between them. SRQ 3_3: How will the role in relation to other DD audit fields and the importance of IT DD change due to the impact of digitalization in the future, to support M&A success effectively.
102 Literature Review within Information Technology Due Diligence
5 RESEARCH APPROACH FOR THE ANALYSIS WITHHIN IT- TRANSACTIONS
RESEARCH APPROACH CONSIDERATIONS
Research Approach for the Analysis withhin IT-Transactions 104
Research Approach - Quantitative and Qualitative Research While in the 18th and 19th century studies the distinction between
The ideal of the human sciences is the understanding of the entire human historical individuation from the context and generality of all soul life (Dilthey 1968:265). The polarity of the approaches reveals differences for the entire research process (see figure below), although they tend to reflect the views of the two paradigms (Lamnek 1993:220).
Research Approach for the Analysis withhin IT-Transactions 106
The qualitative approach is based on a quality of its own, "which is lost by mixing with the quantitative research process rather than being used appropriately (Lamnek 1993:198). As an important distinguishing feature of the quantitative research direction that Hopf for qualitative research argues, that the approach to social reality is achieved through open procedures (Hopf 1993:14).
Research Approach for the Analysis withhin IT-Transactions 108
Principles of Qualitative Research
The common interpretation of the situation and the communication of this knowledge in the context of a communicative act, which is initiated by social enquiry, but which is similar to the everyday situation, which is again central to grasping the created reality in the respective situation (Lamnek 1993: 19). The level of the 'naturalisticity' principle achieved also contributes to the quality of the research results.
Research Approach for the Analysis withhin IT-Transactions 110
Justification of Research Approach
This also means that the importance of IT DD in the context of mergers and acquisitions will increasingly be a dominant critical factor in the success of the acquisition. A literature survey for the subject of IT DD showed that the available information from a scientific point of view is scanty.
Research Approach for the Analysis withhin IT-Transactions 112
EXPERT INTERVIEWS
The objective of the planned expert interviews on the topic of IT DD is to explore the knowledge of external IT DD experts. The expert interview is a suitable methodological instrument for the topic of the IT DD research field, as it is necessary to include external knowledge, which is difficult to include.
Research Approach for the Analysis withhin IT-Transactions 114
Interview Guide
The guideline is a kind of guideline that contains the essential questions on all important aspects. A central problem in the guided interviews lies in the difference of the cultural context between the two participants, for the world of life and the background knowledge of the interviewer.
Research Approach for the Analysis withhin IT-Transactions 116
Selection of and Access to Interview Partners
Since the selection of interviewees is crucial to the nature and quality of the interviews, this process must be carefully planned. It is therefore important to determine in advance who has specific knowledge for the process to be reconstructed.
Research Approach for the Analysis withhin IT-Transactions 118
Interview Execution and Data Collection
Personal suitability of respondents in face-to-face meetings and building trust with respondents prior to professional interviews are considered key success factors for achieving valuable insights and results for IT DD planning. Due to the complexity of information technology, respondents were asked to plan a maximum of 1 hour of interview time, which was easier to agree upon after a personal briefing.
Research Approach for the Analysis withhin IT-Transactions 120
Transcription of the expert interviews
QUALITATIVE CONTENT ANALYSIS OF EXPERT INTERVIEWS The qualitative content analysis describes an evaluation method of
Research Approach for the Analysis withhin IT-Transactions 122
Source Text of the expert interviews
Anonymized records of expert interviews are the source text for the qualitative content analysis method used. With their support, essential statements are extracted from the transcripts and used for subsequent analysis.
Extractions Results
The core statements extracted are presented as results of the extraction in tabular form, assigned to the respective categories and dimensions. This allows the extraction to be checked at any time with the source text, in the further course of the evaluation.
Analysis
The quality of the data should be improved by summarizing scattered and meaningful information and correcting any errors. Consequently, the scope of the extracted statements is again reduced and further structured according to the content further structured in more detail.
Research Approach for the Analysis withhin IT-Transactions 126
VERIFICATION, VALIDITY AND TRIANGULATION
Therefore, they are suitable to clarify and order hitherto unknown problems or new findings, which is the subject of the design of IT DD in this thesis. The Triangulation in this thesis has been applied to a limited extent and secured by the experts for the interviews with cross-checking of the available and extensive literature review and checking of the experts' knowledge and intentions.
Research Approach for the Analysis withhin IT-Transactions 128 The below figure illustrates the four basic types of triangulation
6 EXPERT INTERVIEWS FOR THE IMPACTS OF THE EXPERT REVIEW 6.1 EXPECTATIONS REGARDING THE RESULTS OF EXPERT INTERVIEWS.
6 EXPERT INTERVIEWS FOR IMPACTS OF IT DUE DILIGENCE 6.1 EXPECTATIONS TO RESULTS OF THE EXPERT INTERVIEWS
Expectation 2: Impact on Technological Scope
As well as expert experience with the cost of acquisition and IT acquisition integration can contribute to the scope of the relevant technology area which can also result in a recommendation for improved as well as completed contracts instead of more or less contracts incomplete.
Expectation 3: Impact of Digitalization
Expectation 4: Changing Role of IT Due Diligence
Expert Interviews for Impacts of IT Due diligence 132
Expectation 5: Clear view on most contributing economic theory The selected theories for the investigation of the topic of IT DD are building
In this regard, Principal Agent Theory (PAT) is expected to make the most significant contribution from a theoretical point of view to the design of IT DD in the context of M&A. It is expected that this will lead to a clear overview of suitable signaling solutions in the context of IT DD to overcome the asymmetric distribution problem with respect to the acquired IT.
Expert Interviews for Impacts of IT Due diligence 134
APPLICATION INTERVIEW GUIDELINE FOR IT DUE DILIGENCE
- Briefing Initial Situation for the Expert Interviews
Before the expert interviews begin, personal contact between the researcher of the study and the experts, if any, takes place where necessary to create a trusting atmosphere in the relationship. The subject of IT DD is viewed from the perspective of the purchaser in the context of the expert meeting.
Expert Interviews for Impacts of IT Due diligence 136
Briefing objectives of the expert interviews
Identification of the basic technology scope (what should be considered?) and evaluation criteria used in the status quo or from your experience. Identification of the role and importance of IT DD in other areas of DD audit (such as finance, HR, legal, etc.) in the status quo and in the future with digitalization.
INTRODUCTION OF RESPONDENTS OF THE STUDY
Note: On the one hand, the positive formulation scope and its evaluation criteria can be made and / or "negative" based on past experience that only became clear in the past after the conclusion of the contract. Identification of the need for adaptation for the subject IT DD due to the digitization for the previous paragraphs 1.
- Respondent Marc Freiburg
- Respondent Robert Liess
- Respondent Jens Minneker
- Respondent Danny Phung
Currently Jens Minneker Chief Information Officer (CIO) at DPD, Germany, a leading logistics service provider in business to business. Prior to his current position as head of the CIO office at HEIDELBERGER Druckmaschinen AG.
Expert Interviews for Impacts of IT Due diligence 140
- Respondent Florian Schneider
- Respondent Harry Schuster
- Respondent Carlo Selwat
- Respondent Kassian Siorpaes
- Respondent Marcus Würker
- SOFTWARE SUPPORTED DATA ANALYSIS FOR EXPERT INTERVIEWS
CAQDAS does not replace a detailed written analysis by the researcher that is part of the Chapter 7 findings. The use in this thesis of CAQDAS does not replace a meaningful coding of the search grid and analysis of the processed expert interviews.
Expert Interviews for Impacts of IT Due diligence 144
Analytical Methodology
MAXQDA - Frequency Tables
Expert Interviews for Impacts of IT Due diligence 146
MAXQDA - Code Matrix Browser
The application of MAXQDA to this study is performed with the default parameterization of the MAQDA software vendor. The information regarding addressed codes and subcodes is shown in the rows of the CMB below.
Expert Interviews for Impacts of IT Due diligence 148
Code Relations between SRQ and Theory Related Code System As described in chapter 6.4.1 regarding the analytical methodology this
7 MAIN FINDINGS OF THE IT DUE DILIGENCE EXPERT INTERVIEWS
Results SRQ 1_1 | Technological Scope of Investigation
The object for IT infrastructure includes all layers5 everything from physical cabling, network LAN/WAN, data center, Client/Server hardware including operating system level. All internal or external contracts for development, operation, maintenance of IT as well as necessary hardware and software licenses are part of the contracts and licenses category.
Expert Interviews for Impacts of IT Due diligence 152
Results SRQ 1_2 | Evaluation Criteria
This provides a clear structure and traceability for the intended IT DD framework approach (for details see Annex VI-II). The subject matter application has a total of nine assessment criteria segments relevant to the assessment of the applications.
Expert Interviews for Impacts of IT Due diligence 154
In this regard, the "Post-deal Maintainability" evaluation segment from the buyer's perspective has been found in this study to evaluate the "operational stability" of the post-merger situation. For the study object IT-Infrastructure, a total of four evaluation criteria segments have been found which are relevant for the evaluation of the IT-Infrastructure.
Expert Interviews for Impacts of IT Due diligence 156
Software licenses are reflected in this study by the "License Model Fit" and "License Coverage" sub-evaluation segments. The criterion amount of current and future licenses and the criteria of software vendor license termination clauses following M&A fall within the sub-evaluation segment “License Coverage”.
Expert Interviews for Impacts of IT Due diligence 158
The sub-evaluation segment "Service Management" as the result of this study is represented by the evaluation criteria, such as capacity assessment of the vendor's IT organization, process capabilities and tools for planning, developing and maintaining the IT landscape, including documentation level. Market price/cost ratio for standard IT services and an implemented benchmarking process for continuous improvement reflect the criteria as a result in the sub-evaluation segment "Benchmarking".
Expert Interviews for Impacts of IT Due diligence 160
Results SRQ 1_3 | Process Steps
For the analysis related to the process steps, nine respondents (n=9) contributed to the organizational aspects of planning and executing an IT DD project. This also means that two respondents did not contribute without any information on how an IT DD is organized.
Expert Interviews for Impacts of IT Due diligence 162
Results SRQ 1_4 | IT Due Diligence Deliverables
In the next part of this sub-research question, the analysis focus is on the deliverables of an IT DD.
Expert Interviews for Impacts of IT Due diligence 164
Results SRQ 1_5 | Trust Building Measures
The time it takes the seller to respond to the buyer's information needs is seen by the buyer's IT DD team as a measure of confidence building. Once the information provided is understood by the buyer, the possibility of face-to-face interviews with the IT experts of the seller's organization to close information gaps by the buyer's IT DD team is seen as a critical aspect for building trust as well.
Expert Interviews for Impacts of IT Due diligence 166 Following figure summarizes the results for trust building
Summary of Findings regarding RQ 1
Regarding the technological scope of SRQ 1_1, it was found that the respondents mentioned nine technological objects of investigation. The nine technological objects of investigation were then used as a basis for identifying the evaluation criteria regarding these objects in SRQ 1_2.
Expert Interviews for Impacts of IT Due diligence 168
- Results SRQ 2_1 | Aspects as Deal Breakers
In practical terms, this means that if one of the deal breakers occurs, the recommendation to the overall lead M&A process will be not to buy the intended acquisition target due to unacceptable risk in IT that cannot be resolved or reduced by investment or reduced purchase price by the buyer. The analysis regarding the potential deal breakers eleven respondents (n=11) has been contributed to answer this research question SRQ 2_1.
Expert Interviews for Impacts of IT Due diligence 170
Furthermore, obsolescence leads to the aforementioned deal breakers “No maintainability” and/or “No availability of IT experts / skill”. From a compliance and legal perspective, several following aspects lead to the deal breaker “Not acceptable compliance / legal risk”.
Expert Interviews for Impacts of IT Due diligence 172
Results SRQ 2_2 | Behavior of Seller Side
The results show that the overall M&A process significantly determines or guides the IT DD's behavior as part or member of the overall acquisition. The respondent states that the attitude towards valuing the vendor's IT staff as experts is a good instrument for influencing.
Expert Interviews for Impacts of IT Due diligence 174
There is also the result in this study that the IT DD is efficient enough in relation to the acquisition price and that there is no need to improve the efficiency. Adaptation of scope with tailored to the nature of the transaction seems to be awarded as a favorable approach.
Summary of Findings regarding RQ 2
Expert Interviews for Impacts of IT Due diligence 176
FINDINGS RQ 3 | IMPROVEMENTS OF IT Due Diligence
- Results SRQ 3_1 | Interrelations to other DDs
Respondents named these DD audit fields as an overlapping audit area related to IT DD. The results of this study show that there are common points in the field of IT DD audit, but also show that the exact definition regarding the exchanged inputs/outputs or findings remains unclear.
Expert Interviews for Impacts of IT Due diligence 178
Results SRQ 3_2 | Changes due to digitalization
