Insights

Australia: Jewel in the crown or ticking time bomb? Understanding data during an M&A transaction

Rhys Jewell 17 Dec 2020

The value of data is at an all-time high. Data has been both a driver for and time bomb in M&A transactions across all sectors over recent years, both in more traditional businesses where data is not typically recognised as a core component of the business, and where data is the critical asset.

The value of data is at an all-time high. Data has been both a driver for and time bomb in M&A transactions across all sectors over recent years, both in more traditional businesses where data is not typically recognised as a core component of the business, and where data is the critical asset. 

Despite often representing a significant share of the value of a company, the value of a company’s data and data risk profile is frequently underestimated during the course of an M&A transaction. This creates three key risks:

• The transaction has been undervalued, with the seller inadvertently selling at a discount.
• The risks and liabilities have not been properly identified during the sale process, with the existence and/or extent of a liability only being identified after completion.
• The parties do not put in place appropriate transitional services arrangements, which creates risk around business integration/separation and continuity of business and use of data post completion.

We consider below how these three risks can be minimised during the sale process. Those that take the time to properly diligence and understand the value of data during an M&A transaction will benefit exponentially long after completion.

Discover more: Australia: Jewel in the crown or ticking time bomb? Understanding data during an M&A transaction

Article tags

Australia | M&A Tax