The hidden IT issues that can hurt a PE deal thesis and RoI
Summary
Likewise, private equity firms know that any given deal thesis might not realize the expected return on investment, even after meticulous due diligence. Unaddressed, these four technology-related risks can put a PE firm in a precarious position when it is creating a deal thesis or assessing the potential RoI. For portfolio companies, particularly those in ecommerce and fintech, mitigating the risk of a cybersecurity breach is an integral part of the PE firm’s due diligence, as well as its active management strategy. A PE firm must thus fully evaluate an investment’s infrastructure before signing a deal, figuring out how flexible the systems are and calculating the potential costs if they are structured poorly. A deep dive into every candidate portfolio company’s IT will help firms more accurately assess the future value of a business, as well as how it can most quickly bring the company up to speed and realize a successful investment.