IT considerations are not given adequate attention in the due diligence prior to mergers and acquisitions, according to research from Ernst & Young. As a result, said E&Y, deals can lead to problems further down the line. E&Y questioned 220 senior corporate and private equity executives across Europe and found that only half the respondents conducted separate pre-deal IT diligence for their last transaction.
In addition only 21% of corporate and 11% PE respondents included technology-related considerations into their transaction negotiations. In the survey, 47% said that in retrospect more detailed IT due diligence could have prevented "value erosion" in past deals. E&Y said IT can "be a key vehicle for growth and value creation if leveraged effectively in transactions".
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