Top 5 IT Red Flags to Catch Before an M&A Deal

When senior living communities or healthcare organizations explore mergers and acquisitions, technology is often an overlooked piece of the due diligence process. IT can make or break an M&A deal. From hidden costs to system incompatibilities, ignoring red flags can lead to major disruptions, unexpected spending, and stalled integration post-acquisition.

Here are the top 5 IT red flags you need to identify before closing any M&A deal.

1. No Strategic IT Roadmap or Technology Assessment

If the organization doesn’t have a documented technology roadmap or has never undergone a formal technology assessment, this is a critical red flag. A lack of strategic planning suggests they may be operating with a break-fix mindset, leading to inconsistent investments, aging infrastructure, and reactive rather than proactive support.

A robust IT assessment should review infrastructure, business systems, network performance, resident technology, cybersecurity, and alignment with strategic goals. Without this, you risk inheriting fragmented systems and costly future surprises.

2. Outdated or Inadequate Infrastructure

Old servers, failing switches, limited Wi-Fi coverage, or lack of redundancy might not be visible on a balance sheet, but they can create massive headaches. For example, 32% of senior living communities Parasol Alliance assessed didn’t have more than one firewall, reducing system reliability and exposing them to higher risk.

You’ll want to look for:

• No or slow internet backups

• Limited access points (especially in large or multistory buildings)

• Wi-Fi dead zones

• No disaster recovery plan

• Systems near or past end of life

These all point to major post-acquisition investment needs.

3. Business Systems Are Siloed or Manual

Many communities struggle with fragmented systems, relying heavily on spreadsheets, paper records, or disconnected applications that don't talk to each other. If staff can't efficiently manage clinical documentation, billing, or HR, it's not just a workflow issue. It's a risk to operational integrity.

Parasol Alliance reports that lack of integration and optimization in business systems is the number one technology gap in the senior living industry. If you’re planning to scale or standardize processes across locations, incompatible platforms will quickly become a barrier.

4. No Clear Ownership of IT Responsibilities

If IT leadership is unclear (or worse, spread across multiple departments with no central accountability) that’s a big problem. During M&A transitions, quick decision-making and unified direction are essential. When no one owns the business systems, infrastructure, or strategy, integration timelines drag and costs spiral.

Whether it’s a CIO, MSP, or an internal team, you need clear roles and accountability around technology governance. An experienced technology partner or assessment firm can help identify gaps in roles and responsibilities.

5. Security and Compliance Are Afterthoughts

In healthcare and senior living, cybersecurity is non-negotiable. Yet many communities still lack basic protection, including:

• Email encryption

• Penetration testing

• Regular vulnerability scanning

• Multi-factor authentication

• Ongoing user training

Many communities only take security seriously after a breach or because their cyber insurance provider forces them to. That’s too late. A lack of HIPAA compliance, disaster recovery testing, or security roadmaps can pose serious liabilities during and after a merger.

Bonus: A Culture That’s Resistant to Tech

Even if the systems and infrastructure are in place, a culture that views technology as a burden instead of an opportunity is a long-term risk. Ask: Is leadership aligned with tech strategy? Do staff embrace innovation or fear it? Technology culture isn’t always on the checklist, but it should be.

Final Thoughts

Technology can be a competitive differentiator or a hidden liability. Before you sign an M&A deal, make sure IT is fully evaluated as part of the due diligence process. A comprehensive technology assessment, strategic roadmap, and clear visibility into infrastructure, security, and business systems can save you from costly surprises and set you up for scalable success.