Merging Your Business? The Essential IT Due Diligence Checklist for SMB Acquisitions

Merging can feel like a fresh start. Two companies are joining forces, new customers are on the horizon and there will be a bigger footprint in the market. However, there is a side of this process that doesn’t make it into glossy press releases and that is the messy and technical reality of blending systems, data and processes.

Many small and medium business (SMB) owners walk into a deal thinking, “Our tech teams will figure it out.” Then day one hits and suddenly payroll takes twice as long, customer records don’t match up or an old and unpatched server becomes a hacker’s dream. It is not the kind of surprise you want when you have just invested in growth.

So how do you prevent those headaches? The answer sits squarely in your IT due diligence which is the process of digging into the technology behind the business you are about to acquire. If it is done right, it uncovers risks you didn’t see coming and gives you a clear plan for merging without chaos.

Why IT Due Diligence Deserves a Spot at the Top of Your M&A Checklist

Business continuity is what keeps customers happy and employees productive when ownership changes hands. If core systems are not aligned, you are risking compliance violations, revenue loss and reputational harm.

If invoices can’t be sent on time because your accounting systems don’t talk to each other, how long before cash flow takes a hit? If a data privacy audit reveals the acquired company never fully complied with GDPR, guess who is responsible for fixing it? You are. That is why improving data management before, during and after due diligence is an essential step to protect both operational efficiency and compliance.

Accenture reports that 96% of CIOs have found technology due diligence to surface major deal-impacting issues However, only 21% of CEOs say they run it for most acquisitions. That gap should make any business owner pause.

For SMBs, there is another layer. Public companies often have more transparent records but smaller firms may not. That means the onus is on you to gather a complete picture before the merger papers are signed.

Your SMB IT Due Diligence Checklist

Due diligence is often thought of as a legal and financial exercise but your IT review is just as critical. Here is a practical breakdown to guide your process.

1. Audit the Technology Infrastructure

Start with a straightforward question: What is under the hood? This looks at how systems are built, how old they are and whether they will scale with your combined business.

Some of the questions worth asking:

• Are core applications cloud-based, on-premises or a mix?
• Is there a standard refresh cycle for hardware or has equipment been patched together over the years?
• Are there hidden bottlenecks in their network setup?

Having an outside perspective can help you avoid blind spots. This is where IT consulting for businesses often pays for itself. You can have someone evaluate not just what exists but also whether it is fit for your future operations.

2. Review Cybersecurity Posture

Cybersecurity is not an optional extra in due diligence. A breach that happened before the merger could still land on your desk afterward. That is why you will want to go deeper than “Do you have antivirus?” and ask for:

• Records of any past security incidents and how they were resolved
• A breakdown of patching and vulnerability management processes
• Details on encryption protocols for data at rest and in transit
• Lists of who has administrative access and why

3. Verify Data and Privacy Compliance

Data privacy rules can be dense and two companies rarely follow them in exactly the same way. Even if both are compliant, their approaches might conflict and create headaches during integration.

Take the time to:

• Compare retention policies: Are you keeping data longer than regulations allow?
• Look at disaster recovery systems. Are backups tested or are they just “there” on paper?
• See how fast they can respond if a regulator or customer requests data removal.

4. Confirm Software and IP Ownership

This one is less glamorous but incredibly important. If the software running your business turns out to be on the verge of a license lapse or if a key application’s code is owned by a long-gone contractor, you could be in for expensive delays.

Look for proof of ownership rather than just verbal assurances. Double-check licensing agreements for transferability and don’t overlook patents, trademarks or copyrights that might have unresolved disputes.

5. Evaluate Vendor and Cloud Agreements

Vendors are part of your infrastructure whether you like it or not. Cloud providers, payment processors and niche software developers all become part of your risk profile.

Review their contracts carefully. Some agreements change dramatically if the company changes hands. Others might contain performance guarantees that look good in writing but haven’t been met in years.

And if a vendor is financially shaky, that is your problem after the deal closes. Better to find out now than when their service disappears overnight.

6. Assess Integration Readiness

Integration is about timing, workflow and minimizing disruption. Two systems might connect beautifully in theory but fail in practice because the migration plan is rushed or incomplete.

Ask yourself:

• How will network traffic change when systems are linked?
• Are databases structured similarly or will you need a full rebuild?
• Is there a realistic cutover plan for moving critical systems without halting operations?

Smooth the Transition With a Strong IT Strategy

A merger is more than two companies signing papers. It is a test of whether their combined systems can work as one without tripping over each other. Without a thoughtful IT strategy, even the most promising deal can get bogged down in avoidable problems.

The real win from IT due diligence is risk avoidance as well as opportunity spotting. You might find chances to streamline operations, cut redundant vendor costs or roll out better tools across both teams.

At Sound Computers, we have walked SMBs through everything from small tech overhauls to complex M&A integrations. We know the signs of trouble and we also know how to spot and act on potential improvements. Whether that is a deep infrastructure review or cybersecurity hardening, we can guide you through it.

If you are getting ready to merge or acquire, don’t gamble on “we’ll figure it out later”. Let’s start your IT readiness review now so you can focus on building the future and not fixing the past. Contact us today.