Mergers & acquisitions

Last year, acquisitions in the gaming sector hit a record-topping $25billion with deals such as the $8.6 billion acquisition of 84.3 per cent of Supercell by Tencent and King’s $5.9 billion acquisition by Activision-
Blizzard. The gaming industry moves at an extremely fast pace, making it even more vital that mergers and acquisitions in the sector are completed in a timely and secure manner, avoiding downtime at all costs.
There is so much going on in the process of an acquisition or a business merger that IT systems are often neglected. This creates vulnerabilities and can potentially expose sensitive information, which cyber criminals can exploit. IT teams must focus their attention on ensuring the security of existing systems before a company even considers undergoing an acquisition or merger.

Structured technical due diligence

Technical due diligence refers to the period during which IT systems are inspected, reviewed and assessed for areas of vulnerability. Organisations looking to be acquired or merge should begin a process of technical due diligence and address vulnerabilities internally before seeking interested parties. By doing so, the company being acquired can be satisfied its systems are robust, secure and fit for purpose, and the acquirer’s due diligence will not expose any issues that may jeopardise the deal.

In addition to system vulnerabilities, many organisations carry open-source licensing risks. Open-source modules or snippets of code are commonly incorporated by developers into the software to aid rapid development. Although this open-source code is freely downloadable, it is subject to an open-source licence, which places restrictions and obligations on what can be done with it. Companies often have no idea what open-source code is used in their systems and any breach of licensing restrictions can be costly to fix and endanger the deal. So, the internal technical due diligence should include an audit of open-source licensing risk, allowing the company to resolve any problems in advance. By conducting thorough technical due diligence before embarking on the process of an acquisition, organisations will have a greater appeal to interested parties and can ensure the deal will proceed smoothly. Those looking to acquire will have a clearer understanding of the technical assets for sale, with the added reassurance there won’t be any unpleasant surprises.

Pre-implementation barriers

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Once an acquisition has been agreed in principle, senior stakeholders must then address which systems and platforms are being continued, eliminating those that should be decommissioned. This is a stage that should not be under-estimated. With the gaming industry moving at a faster pace than ever before, consumers now have a greater expectation for the speed at which new games are released. In turn, this means platforms require a lot of technical changes, exemplifying the need to conduct thorough technical due diligence in advance of legal papers being signed.

Integration requires a skilled project manager to control and monitor the implementation of systems and platforms, ensuring decisions likely to impact the seamless integration of the acquisition are made on time.

The journey post-acquisition

The sale is agreed and personnel have merged, but it doesn’t stop there. Post-acquisition integration is a separate project and can often take several years to complete, requiring the continued close engagement from senior stakeholders. Merging IT systems across companies can affect the smooth running of daily operations, exposing flaws in acquired systems likely to cause system downtime. By bringing third-party experts on-board, companies facing both pre- and post-acquisition challenges can be kept safe in the knowledge that IT systems are maintained and sensitive data is kept safe.

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