What PE Operating Partners Should Ask About IT Before Closing a Deal

Most operating partners have a mental model of what good IT looks like in a portfolio company. What they often don't have is a structured way to assess whether an acquisition target meets that standard before the deal closes.

The questions below aren't exhaustive. They're the ones that surface the most consequential issues most reliably. An acquisition target that answers all of them cleanly is in meaningfully better shape than one that can't.

Who Is Responsible for IT, and What Do They Actually Do?

This sounds basic. It isn't. In many small to mid-sized businesses, "IT" is handled by whoever is technically inclined, an office manager who also manages the network, an outside MSP that operates largely unsupervised, or a part-time IT person who handles break-fix and not much else.

The answer tells you whether there's real IT management in place or just reactive support. It also tells you what you're inheriting -- specifically, whether the institutional knowledge about the IT environment walks out the door if that person leaves post-close.

What Software Are You Running, and Is It Properly Licensed?

Software licensing compliance is one of the most common sources of post-close surprise. Licenses that were purchased for the seller aren't automatically transferable to the acquirer. Volume licensing agreements need to be renegotiated. Software that was acquired informally -- not purchased through proper channels -- creates exposure that becomes the acquirer's problem.

A proper answer to this question requires an actual software inventory, not a list of the applications the seller is aware of. The two are often different.

When Was the Last Security Assessment, and What Did It Find?

Security assessments produce findings. If the seller has had one recently, asking to see the findings report and the remediation status is reasonable. If they haven't had one, that's itself a finding.

In regulated industries -- healthcare, financial services -- this question also opens into compliance posture. A healthcare acquisition with an undocumented HIPAA security posture isn't just a compliance risk. It's a liability that begins accruing on day one of ownership.

What Does Integration With Our Environment Actually Require?

This question rarely gets asked pre-close because the assumption is that it can be figured out post-close. That assumption is expensive.

Integration complexity depends on what the target is running and how it needs to connect to the acquirer's infrastructure. Identity systems, network architecture, business applications, and data migration requirements all affect scope and cost. Estimating integration cost without understanding these specifics produces a number that doesn't resemble the actual cost.

Getting a real answer before close requires someone with integration experience to look at both sides of the equation. That's not a long process -- a focused assessment takes less than two weeks -- but it has to be done by someone who has done this work before, not estimated from a distance.

What Infrastructure Will Need to Be Replaced in the Next 18 Months?

Hardware has a lifecycle. Servers, network equipment, and workstations that are past their supported life create risk and cost that should be reflected in financial projections. They often aren't.

Asking specifically about infrastructure age and planned replacement surfaces capital expenditures that may not have been discussed. In many small to mid-sized businesses, hardware refresh has been deferred -- sometimes for years -- because it wasn't in the budget. You're not inheriting that budget discipline. You're inheriting the deferred cost.

Are There Any Ongoing IT Issues We Should Know About?

The open-ended version of this question is worth asking even if you've asked all the specific ones. Sellers sometimes disclose things in response to a broad question that they wouldn't have volunteered otherwise -- not from bad faith, but because they didn't connect it to the specific questions being asked.

Common things that surface here: a system migration that's mid-process and not yet complete, a vendor relationship that's in dispute, an IT project that started and stalled, and recurring operational issues that have been accepted as normal but aren't.

Using the Answers

The value of these questions isn't just in the answers themselves -- it's in what you can do with them before close. Findings that surface pre-close can affect purchase price, representations and warranties, holdback arrangements, or remediation obligations on the seller. That leverage is gone the moment you close.

Operating partners who make IT a real part of their due diligence process consistently find that the cost of the assessment is a small fraction of the value of what it turns up. The ones who skip it find out what they missed later, at full price.