The Challenge
The Private Equity firm faced a significant challenge when they acquired a company under a strict 'close at all costs' directive. The seller provided only 15 days of technology access before the acquisition, forcing the buyer into a rushed and poorly grounded plan. Multi-year IT service contracts lacked Service Level Agreements (SLAs) and were billed at rates five times the market standard. Vendor management was non-existent, and the internal IT staff was unable to explain the environment due to their lack of understanding. The seller CEO’s constant reassurance, 'Trust us, we got you,' only masked the underlying chaos.
The Solution
The Private Equity firm realized the need for immediate intervention to salvage the acquisition. They explored various solutions and ultimately decided to engage fractional CTO services. This decision was driven by the need for expert oversight to navigate the complexities of the tech acquisition. The fractional CTO began by assessing the multi-year IT contracts, renegotiating terms to include SLAs, and aligning support costs with market rates. Improved vendor management was instituted, and the IT staff was provided with comprehensive training to understand and manage the environment effectively.
The Results
After implementing the fractional CTO services, the Private Equity firm saw a significant turnaround. The operational recovery took months, but the organization eventually stabilized. Employees experienced more streamlined workflows, and operational costs were brought under control. The firm successfully transformed a disastrous acquisition into a functioning, efficient operation. This case study highlights the importance of thorough tech due diligence and effective vendor management in avoiding acquisition pitfalls.
