Case Study:Private EquityPARAVERIFY IT REDUCES ACQUISITION RISK AND PURCHASEPRICE FOR PRIVATE EQUITY CLIENTIn today’s high...
Paranet Solutions | www.paranet.comParaVerify IT is the result of Paranet’s 20+ years of experience delivering IT assessme...
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Paraverify IT Reduces Acquisition Risk and Purchase Price for Private Equity - Case Study by Paranet Solutions

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With its new ParaVerify IT methodology, Paranet Solutions - it managed service provider in Dallas can assign value to data and quantify risk that can impact acquisition priorities.

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Paraverify IT Reduces Acquisition Risk and Purchase Price for Private Equity - Case Study by Paranet Solutions

  1. 1. Case Study:Private EquityPARAVERIFY IT REDUCES ACQUISITION RISK AND PURCHASEPRICE FOR PRIVATE EQUITY CLIENTIn today’s highly regulated business environment, accurately assessing Total Cost ofOwnership (TCO) and potential risks have become almost impossible for privateequity firms. When a company sets out to acquire, it will scrutinize every detail ofthat organization’s financials, operations and legal issues. But what is often left outof the due diligence process is a review of the IT infrastructure and security threats.This oversight can result in unanticipated IT spend and possible regulatorycompliance issues down the road.Paranet Solutions recently completed just this type of due diligence for a privateequity firm. The results of this evaluation and analysis made a significant impact onthe acquisition process.THE CHALLENGE. Prior to acquiring a national medical services company, one privateequity firm decided it wanted a clear picture of the entire organization prior topurchase. It looked to Paranet Solutions for some answers. The project objectiveswere as follows:• Determine the company’s’ current technology status, including hardware,systems software and applications software; as well as the level ofautomation the business had in place.• Identify issues related to the company’s ability to maintain its currenttechnology and meet its business plan.• Assess financial implications of the company’s technology environment.• Provide the private equity firm with a clear understanding of the TCO andidentify any business risks associated with the acquisition.• Provide a remediation roadmap once the acquisition was complete.THE SOLUTION. “This private equity firm selected us to complement the work alreadybeing performed by their financial, legal and operational analysts because weoffered a proven and proprietary approach to the IT portion of the due diligenceprocess,” says Alan Bratton, Chief Executive Officer of Paranet Solutions. “By utilizingour comprehensive solution for calculating TCO and risk – ParaVerify IT™ – we wereable to bring tremendous value to this acquisition process.”Paranet reviewed andcataloged:• All server-basedapplications• Hardware and softwareinfrastructure architectures• Voice and data networkinfrastructures• Policies and procedures• All automation processes• Identified major ongoingtechnology expenses“By utilizing our comprehensivesolution for calculating TCO andrisk – ParaVerify IT – we wereable to bring tremendous valueto this acquisition process.”-Alan BrattonParanet Solutions, CEOParanet Solutions Contact:214.623.5150 (phone)214.623.5301 (fax)214.623.5200 (support)Paranet Solutions | www.paranet.com
  2. 2. Paranet Solutions | www.paranet.comParaVerify IT is the result of Paranet’s 20+ years of experience delivering IT assessment services for companies goingthrough a merger or acquisition. It is a methodology that specifically targets the areas often overlooked during thevaluation process. By examining infrastructure and applications, IT security, service delivery and support, Paranet canassign value to data and quantify risk that can impact acquisition priorities.For this particular private equity client, Paranet reviewed and cataloged all sever-based applications; scrutinizedhardware and software infrastructure architectures, as well as voice and data network infrastructures; reviewedpolicies and procedures; identified major ongoing technology expenses; andreviewed all automation processes to determine if they were effective andenhancing productivity.THE RESULTS. As a result of Paranet’s research, report and recommendations,the client was able to lower the purchase price of the medical services companyby more than $1,000,000.Some of the more significant efficiencies and deficiencies identified by Paranet included:• A moderate to high risk to the company’s infrastructure environment due explosive growth coupled with apoorly defined backup and recovery process.• Spam filtering was adequate and viruses were rare and well contained.• Data centers were not operating according to industry best practices.• Hardware and software infrastructure architectures were modern and current, but interfaces betweenapplications were inconsistent and required constant attention.Paranet identified the following business risks:• A disaster recovery plan that was incomplete, unclear and untested. Likewise, the company had no physicalsecurity plan. Mission- and business-critical systems were operating on a single, non-redundant platform.• A vulnerable and limited backup power supply.• A lack of succession planning.• Poor integration of system interfaces that fed into financial software.• No asset management or configuration management plan.• A lack of formal budgeting and planning processes.• No external security audits were being performed.“The assessment summary we provided the client played a critical role in the negotiation process,” says Bratton. “Weidentified several areas of concern that left unaddressed, would have resulted in a significant post-acquisitioninvestment.”As a result of Paranet’s research,report and recommendations, theclient was able to lower the purchaseprice of the medical servicescompany by more than $1,000,000

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