Complex spreadsheets have been used extensively in mergers and acquisitions. Although spreadsheets can provide rapid and immediate results to speed due diligence efforts, the potential for error is high and left undiscovered such errors can lead to disastrous results.
We saw an example of this last year during the Lehman fire sale when a complex spreadsheet containing hidden data for 179 contracts went undetected in a spreadsheet, causing Barclays to acquire more assets in the deal. Due to the tight timelines to complete the transaction before a bankruptcy court dealine, the spreadsheet was converted to PDF and the unwanted contracts (apparently in a hidden worksheet tab) were included in the deal.
To avoid this type of risk, organizations relying on spreadsheets for M&A activity should ensure they are inventoried, managed in a controlled environment with access control, versioning and audit trails, and finally analyzed for errors using diagnotic tools prior to the close of the deal. For more information on technology to satisfy these needs, check out www.prodiance.com.
The complete details of the Lehman-Barclays story are in this PC World article.
Eric Perry
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