We bought a distributor in 2024. Eighty staff, three depots, a good customer book. I was told nine days before completion, in a meeting where somebody asked how long it would take to put them on our systems and clearly expected an answer measured in weeks.
The first month produced four facts that nobody had gone looking for. Their order system was licensed to the seller's parent group rather than to the company we were buying, and the licence was not transferable, so we either bought a new one at a hundred and ninety thousand pounds or migrated in eleven weeks. Their finance system ran on a server in a building the seller kept, under a transitional services agreement at fourteen thousand pounds a month that everyone assumed would be needed for three months and which ran for fourteen. Their email sat in a tenancy the seller's IT administered, which meant the people who had just sold the business could read the mail of the people we had just acquired. And the integration carrying orders from their two largest customers had been written by a contractor in 2018 who was no longer reachable.
The value case put synergies at nine hundred thousand pounds over three years, and roughly two thirds of that assumed one system, one team and one set of supplier contracts. The cost of getting there appeared in the model as nothing at all. We have spent about one point one million pounds over two years and we still run two of most things.
I am not blaming the deal team. Advisers were engaged for financial, legal, property, pension and environmental diligence, each with a standard checklist refined over decades. There is no such checklist for the systems the business actually runs on, so the only part of the company that touches every transaction is the part nobody is asked to examine.
Our finance director and I wrote two pages. What software runs this business and who holds the licence. Where does it physically run and who owns that building. Which contracts are with the seller's group rather than the target. What does leaving the seller's services cost per month. Advisers now request it under the same confidentiality as everything else, and a range for integration goes into the model before the board sees a number.
– Serguey Shinder
