© Copyright Acquisition International 2024 - All Rights Reserved.

Article Image - Data May Impact on Your Business Valuation in an Acquisition
Posted 30th November 2015

Data May Impact on Your Business Valuation in an Acquisition

With the recent increase in M&A activity, Proven Legal Technologies, the corporate forensic investigation expert, is warning businesses about potential data liabilities and how large data libraries can impact a company’s valuation in an acquisition.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

Data May Impact on Your Business Valuation in an Acquisition
Image

With the recent increase in M&A activity, Proven Legal Technologies, the corporate forensic investigation expert, is warning businesses about potential data liabilities and how large data libraries can impact a company’s valuation in an acquisition.

Due diligence is a process that allows the Buyer to assess post-deal value in any merger or acquisition but Proven Legal Technologies, the corporate forensic investigation and e-disclosure firm, today warns that businesses are failing to consider the liability posed by old data that has been retained by the Seller, and subsequent costs this could incur.

Companies from all industries are concerned about their data, with many storing decades worth of files on back-up tapes in case it is ever required for internal use. However, data archives are costly to store, and are a serious liability to any business should it become embroiled in litigation or a regulatory document request. Should an investigation take place, or an employee file a staff-subject request, all existing data may need to be combed meticulously, incurring great expense and draining company resources. This continues to be the case even after a merger or acquisition, with data liabilities transferring to the new company.

For this reason, large libraries of data can, in some circumstances, decrease the value of the acquiree. Targets of an acquisition should expect potential acquirers to demand full visibility of the data on file and what it contains. The acquirer must question what the data liabilities will look like including any archived material.

Proven Legal Technologies advises that companies should not be retaining data when it is no longer needed or has a legitimate purpose.  Unnecessary data retention  can be avoided by reasonable document deletion in accordance with standard business practices. The acquiree should assess its document retention policies and seek to destroy back up tapes that are unlikely to be referenced by the business and thereby avoid impacting their valuation.   Any data that it deems to have a legitimate purpose may be kept for a specific reason after having been  transferred to a live document management system, that makes retrieval and search of it more viable and cost effective.

Adrian Palmer, Managing Partner at Proven Legal Technologies, comments: 

“We are seeing an increase in the number of businesses who are falling foul to inefficient data management, resulting in inflated costs of searching historical data. It is rare for a due diligence list to contain data retention issues and this state of affairs continues at the acquirer’s peril. Although there is a general fear about discarding back up tapes, companies are in a much stronger position when data storage is managed efficiently, and there is less ‘baggage’ to carry.

“If in doubt, companies should bring in experts and take advice from General Counsel at the earliest stages, to identify issues and manage data storage, ensuring that companies are not negatively impacted by data liabilities or hinder their chances of being acquired.”

Categories: M&A


You Might Also Like
Read Full PostRead - Eye Icon
TowerJazz Finishes Acquisition of Maxim’s Fabrication Facility in Texas
Finance
02/02/2016TowerJazz Finishes Acquisition of Maxim’s Fabrication Facility in Texas

TowerJazz announced today that it completed its previously announced acquisition of an 8-inch wafer fabrication facility in San Antonio, Texas from Maxim Integrated Products, Inc.

Read Full PostRead - Eye Icon
Third-party Cookies Ending 2024: How Will this Affect Marketers?
News
31/07/2023Third-party Cookies Ending 2024: How Will this Affect Marketers?

In recent years, there has been a huge emphasis on user data protection – with new regulations being created and existing regulations being updated, marketers must keep on top of the changes. One of the most prominent upcoming changes is the demise of th

Read Full PostRead - Eye Icon
The Digital Operational Resilience Act: What This Means for the Finance Sector and Its Legacy Technology
Finance
02/11/2023The Digital Operational Resilience Act: What This Means for the Finance Sector and Its Legacy Technology

The main objective of the Digital Operational Resilience Act (DORA) is to strengthen the IT security of financial entities such as banks, insurance companies and investment firms. The EU deems this necessary because of the growing risk of depending on Informat

Read Full PostRead - Eye Icon
Avia Solutions Group acquires Chapman Freeborn
M&A
15/10/2019Avia Solutions Group acquires Chapman Freeborn

via Solutions Group, a global multipurpose aviation holding company with 76 subsidiaries engaged in aircraft maintenance, ACMI, aircraft leasing, pilot training, ground handling and fuelling, logistics, aviation IT solutions and business aviation, has complete

Read Full PostRead - Eye Icon
How Do Worker’s Compensation Laws Differ Around the USA?
News
27/02/2023How Do Worker’s Compensation Laws Differ Around the USA?

IMG Source – https://unsplash.com/photos/p3Ip8U0eNNM Workers’ compensation is essentially an insurance that provides workers with lump sum compensation, a wage replacement, and medical benefits if they incur injuries, or become ill as a result of perfo

Read Full PostRead - Eye Icon
How Do I Ensure My Business Survives in the Modern Day?
Strategy
19/01/2024How Do I Ensure My Business Survives in the Modern Day?

When it comes to the modern day, businesses have an opportunity to fall at the waste side or adapt to the developing technologies. Technological development and the introduction of the Internet have brought various businesses opportunities to grow and succeed

Read Full PostRead - Eye Icon
Innovative Wellness Companies of 2020
Innovation
02/06/2020Innovative Wellness Companies of 2020

When people used to think about how they could improve their lives, they may have focused on physical health or finding a better job. Now people look to personal wellness experts to improve their lives from every angle. Keeping track of your wellness means mon

Read Full PostRead - Eye Icon
Forex Trading for Passive Income: Is It Possible?
News
29/09/2023Forex Trading for Passive Income: Is It Possible?

In a world driven by financial dreams and the quest for economic independence, creating passive income has emerged as a guiding light for many. People tirelessly search for avenues to accumulate wealth that don’t hinge solely on their daily toil. Introdu

Read Full PostRead - Eye Icon
Long-Term Financing for Business Expansion
News
31/08/2023Long-Term Financing for Business Expansion

When growing a business, having the right financial resources is essential. Long-term financing is like having a steady ship to sail the vast seas of expansion. One such option that can provide stability and flexibility is a Term Loan. The article will dive de



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have 14 unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow