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Legacy System Migration Assessment in M&A Due Diligence

Legacy systems are often core to business operations but expensive to maintain and difficult to integrate. Understanding migration complexity is critical for accurate deal modeling.

Defining Legacy

A system is "legacy" when:

  • The technology is no longer actively developed or supported
  • Finding skilled developers is difficult or expensive
  • Integration with modern systems is challenging
  • Maintenance costs exceed industry norms

Common Legacy Patterns

  • Mainframe systems: COBOL, AS/400, batch processing
  • Client-server apps: VB6, PowerBuilder, Delphi
  • Early web apps: Classic ASP, early PHP, ColdFusion
  • Outdated frameworks: AngularJS, early Rails versions

Migration Assessment Framework

1. Current State Analysis

  • Technology stack inventory
  • Business logic documentation (or lack thereof)
  • Data model complexity
  • Integration touchpoints

2. Migration Options

  • Rehost: Move to new infrastructure without changes
  • Replatform: Minor modifications for cloud compatibility
  • Refactor: Significant code changes for modernization
  • Rebuild: Complete rewrite with new technology
  • Replace: Adopt off-the-shelf solution

3. Risk Factors

  • Undocumented business rules
  • Data quality and migration complexity
  • Integration dependencies
  • User training and change management
Key Takeaway: Legacy migration projects typically take 2-3x longer and cost 2-3x more than initially estimated. Build significant contingency into your models.

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