M&A Divestiture Strategy: IT Due Diligence in NDA Mode

Avoid pitfalls by masking information requests.
By William Blandford, Managing Director at Blandford Associates and Member of the Board of M&A Standards

In estimating and planning for a divestiture, it is necessary to gather key data about the business to be carved out, to understand the scope and complexity of the carve-out, develop a sound Transition Services Agreement (TSA), and provide an estimate of the cost of the carve-out. But it can be difficult to collect data for a possible divestiture while under a Non-Disclosure Agreement (NDA), and trying to minimize the number of people under an NDA.

Overcoming the Non-disclosure Challenges of IT Due Diligence

One of the key functional areas most impacted by a potential carve-out is IT.

When there is a formal IT M&A resource/ team that is involved in early due diligence about a possible carve out divestiture, it can be too transparent for the IT M&A person to directly ask IT colleagues about a specific business, location or business system; that could easily indicate which business is being divested and could possibly violate the NDA agreement. 

The best technique for avoiding this pitfall is to mask the information requests by asking for more general data from the key contacts who would normally gather that data as part of their typical job functions. This might include individuals or teams who manage IT infrastructure, IT business applications, IT Security and IT Product Development Support. Read more.