Due diligence is a key element in any company purchase and sale process. Its objective is to validate all the information provided to the buyer. Each sector has its peculiarities and the tech sector is no exception. Here are 10 observations made by McGaldrey, an expert in DD services in the technology sector. Last year it performed more than 150 DD of software and hardware companies.<\/p>\n\n\n\n\n\n\n\n
1. Complexities with software revenues:<\/strong><\/p>\n\n\n\n Software revenue recognition remains the most common and most complex problem in the IT industry. The concepts are very difficult to understand and equally difficult to apply. The easy part of software revenue recognition is that even if it has an impact on EBITDA impact and reported revenue, it does not affect the timing of cash flows.<\/p>\n\n\n\n 2. Staged proceedings:<\/strong><\/p>\n\n\n\n Los compradores y vendedores est\u00e1n realizando m\u00e1s \u00abdue dilliegence\u00bb y la identificaci\u00f3n de los problemas m\u00e1s importantes de manera anticipada. Se nos pregunta con frecuencia, para fasear nuestra diligencia, abordar primero las \u00e1reas de reconocimiento de ingresos (ingresos diferidos) y, a veces la capitalizaci\u00f3n del desarrollo de software. Si estos temas pasan el examen, a continuaci\u00f3n nos piden analizar la calidad de las ganancias.<\/p>\n\n\n\n Software or SaaS:<\/strong><\/p>\n\n\n\n Is the business to sell software or SaaS model services? There is sometimes confusion about this question, especially now that many companies are selling both alternatives. The accounting issues are very different depending on the answer.<\/p>\n\n\n\n 4. SaaS installation costs:<\/strong><\/p>\n\n\n\n It seems natural to think that revenue is recognized when services are delivered to customers. That couldn't be further from the truth when setting up or implementing a SaaS Client. Instead, suspend rational thinking and recognize configuration revenue over the length of the contract term and the estimated time of customer relationships, this may mean that instead of recognizing configuration revenue in the first month or two of a contract, it could be recognized over the next seven years, if the customer is expected to have this period of relationship.<\/p>\n\n\n\n 5. What about the hardware?<\/strong><\/p>\n\n\n\n Considering the level of knowledge, we often encounter surprises when inventory and cost of sales are sometimes incorrectly recorded in hardware companies, as they are often overlooked to focus on the most common risk areas.<\/p>\n\n\n\n 6. Los ingresos diferidos \u00abhaircut\u00bb:<\/strong><\/p>\n\n\n\n El concepto de que los ingresos diferidos pueden desvanecerse o recibir un significativo \u00abHaircut\u00bb como resultado de la operaci\u00f3n es dif\u00edcil de entender. Por lo general, los ingresos diferidos en el balance de cierre de \u00abOldco\u00bb salta de un acantilado con la aplicaci\u00f3n contable de las compras seg\u00fan el PCGA de EE.UU. en el balance de apertura de la \u00abnewco\u00bb. Para elaborar la contabilidad, los mantenimientos diferidos, suscripciones o los ingresos de implementaci\u00f3n se reducen al coste de la prestaci\u00f3n del servicio, sumando un razonable margen. El comprador debe entender este concepto y aplicarlo en el modelo de los futuros ingresos y ganancias, as\u00ed como la estructura de la convenios de pr\u00e9stamo (si la transacci\u00f3n es apalancada).<\/p>\n\n\n\n 7. Capitalised software development costs:<\/strong><\/p>\n\n\n\n Investors want to know what the company's EBITDA looks like with and without capitalizing software development costs. A common misconception is that management teams sometimes fail to recognize that the accounting treatment representing capitalization of software development is typically different for software companies and SaaS companies.<\/p>\n\n\n\n 8. Working capital or an effective working exchange rate:<\/strong><\/p>\n\n\n\n The idea of stagnant working capital seems old hat today, but it is very nuanced in the technology industry, due to the treatment of deferred revenue, where the focus is on its life cycle and seasonal accounting. If you have historically not recorded deferred revenue in accordance with US GAAP, the design or establishing working capital and subsequent workaround can be very complicated. We work with investors who run the gamut for the treatment of deferred revenue with respect to working capital, from excluding it entirely, to adjusting for the cost of providing future services (see observation. 6), to including the entire lack of adjustment. In the absence of good benchmarks for establishing working capital, sometimes the solution lies in estimating cash instead.<\/p>\n\n\n\n 9. Sell-side due diligence:<\/strong><\/p>\n\n\n\n A medida que el proceso para la venta de un negocio se vuelve cada vez m\u00e1s estandarizado, los vendedores est\u00e1n incluyendo cada vez m\u00e1s \u00absell-side due diligence\u00bb como parte del proceso. Una \u00bb Sell-side due diligence\u00bb ayuda a descubrir cuestiones desconocidas en las que los compradores est\u00e1n involucrados (por ejemplo, el reconocimiento de los ingresos por software), apoya o aumenta el valor de la propuesta del vendedor, y ayuda a disminuir el riesgo de una rotura de acuerdo.<\/p>\n\n\n\n 10. Taxes really matter:<\/strong><\/p>\n\n\n\n The tax ramifications on financial diligence and earnings quality are particularly severe in the software industry. Rules and regulations for sales taxes, which must be included in EBITDA, can vary from state to state or country to country. If a company is unable to recover taxes from customers, the corresponding amounts should be considered a reduction of EBITDA or at least considered a debt similar to an account payable (with interest and penalties) by the vendor at closing.<\/p>","protected":false},"author":8,"featured_media":0,"template":"","meta":{"_acf_changed":false,"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":""},"tags":[],"paso-howto":[2231],"sectores":[],"class_list":["post-64419","diccionario","type-diccionario","status-publish","hentry","paso-howto-venta-due-diligence"],"acf":[],"_links":{"self":[{"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/diccionario\/64419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/diccionario"}],"about":[{"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/types\/diccionario"}],"author":[{"embeddable":true,"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/users\/8"}],"wp:attachment":[{"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/media?parent=64419"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/tags?post=64419"},{"taxonomy":"paso-howto","embeddable":true,"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/paso-howto?post=64419"},{"taxonomy":"sectores","embeddable":true,"href":"https:\/\/techma.bakertilly.es\/en\/wp-json\/wp\/v2\/sectores?post=64419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}