If you are planning to sell in the next two or three years, the state of your ERP will show up in the price. What a buyer's technology diligence team actually checks, the findings that cost a turn of the multiple, and the eighteen-month plan to make sure they find nothing.
Owners preparing a business for sale spend a lot of time on the numbers, the customer contracts and the management team, and almost none on the systems that produce the numbers. Then the buyer's advisers arrive, ask for the technology pack, and the business spends the exclusivity period explaining why month-end is a spreadsheet and the ERP cannot be upgraded. Every explanation is a chip off the price.
This is the other side of technology due diligence: what the buyer's team will look for, and how to make sure, eighteen months out, that they find a business whose systems are an asset rather than a liability.
A competent buyer's technology diligence, whether done by a Big Four team, a specialist or the acquirer's own CTO, will want:
And then they will spend a day on site, talk to the finance team and the warehouse, and look at the system themselves.
From experience, these are the ones that turn into price adjustments, warranties or retentions:
Months 1 to 3: find out. Have someone independent do the diligence on yourself, exactly as the buyer would. The output is the list above with your name against each line, in red, amber and green. It will not be comfortable. It is far better to read it now than in a buyer's report.
Months 3 to 12: fix the expensive ones. Get the numbers coming out of the system: if that means a Business Central implementation or upgrade, this is the window, because it needs a year to bed in before a buyer looks at it (a six-month-old ERP is itself a diligence question). Document the customisations and integrations, or better, retire the ones that are not needed. Reconcile the licences. Test the backup and write down the result. Sort out MFA and access. Get the second person trained on every system.
Months 12 to 15: write it down. The one-page roadmap, the risk register, the systems inventory, the month-end procedure, the IT organisation chart. The buyer's team should be able to read the pack in an afternoon and find nothing they did not expect.
Months 15 to 18: run it like a public company. Monthly roadmap updates, quarterly board reporting on technology, a clean month-end that closes in five days from the system. By the time the IM goes out, the technology section is a paragraph you are proud of, and the data room has a folder ready.
The buyer's technology team spends their day on site, asks their questions, gets straight answers and documents, and writes a short report that says the systems are current, supported, documented and producing the numbers, with a modest list of improvements the acquirer might make. The financial DD carries no systems caveat. The integration plan has a known cost. Nobody negotiates a retention over the IT manager. The technology does not come up in the price discussion at all, which is the whole point.
For a portfolio company, this is the same work done across several businesses at once, and it is where a group-level fractional CIO earns their fee several times over. Our investor and portfolio services page covers the diligence and the exit-readiness work; it starts with a conversation about where the business is and when you are planning to go.
