Technology Due Diligence

Validate the value and suitability of your technology assets.

/ Product & Technology / Technology Due Diligence

Analyze and evaluate the tech assets of an organization before an acquisition or investment

What is technology due diligence?

Technical due diligence is the process of analyzing and evaluating the technology related assets of an organization prior to the acquisition of a company or an investment in it.

Why perform tech due diligence?

Reasons for and depth of a technical due diligence process may vary, but they are typically focused on validating the value and suitability of the company’s technology assets to support the businesses current and growth goals. Based on the assumptions presented in a pitch book or strategic plan, our partners will evaluate the technology assets (people, processes, deployed technologies) and their ability to support those assumptions. Of primary emphasis is the identification of any gaps, limitations, or execution risks that should be considered by the investor/acquiring company.

In some cases, a company might elect to engage a 3rd party like TechCXO to perform a pre-diligence assessment to determine any findings that should be addressed prior to seeking investments or acquisition and to maximize the potential value of the company.

Elements of Technology Due Diligence

A properly executed technological due diligence starts with the development of a clear understanding of the nature of the business, its product offerings and strategic growth plan.  Through this understanding, our partners can evaluate the organization’s ability to effectively deliver the results assumed in the pitch book or strategic plan.  

After an in depth review of all available documents, a targeted series of interviews with stakeholders and limited team members is facilitated to collect all of the necessary information.  This information is used to evaluate the assets, capabilities and maturity of the organization.

Although the scope and depth of assessment can vary based on the company’s profile, the following 10 areas of examination are typical:

  1. Product Functionality (Target Market, Product Features)
  2. Organization Structure (Staffing Levels, Roles and Responsibilities, Skill Gaps)
  3. System Architecture (Technology Stack, Tools, 3rd Party Connections)
  4. Product Development Methodology (Requirements , Development, Testing, Deployment)
  5. Change Management (Source Control, DevOps/Continuous Delivery, Patching)
  6. Deployment and Service Quality (Scalability, Disaster Recovery/Failover, Monitoring)
  7. Security and Compliance (Data Protection, Software Assurance, Environmental Controls)
  8. Intellectual Property (Software Licensing, Vendor indemnification, Patents)
  9. Budgets and Spending (IT run rates, staffing, pending development backlog)
  10. Professional Services (Client Implementations, Onboarding)

Having gained a clear understanding of the company’s current state/implementation in these areas, a report outlining all of the findings can be created and communicated to the acquirer/investor for consideration within the larger due diligence process/valuation.  The key objective of the technical due diligence is to identify and quantify gaps or risks that would impact the decision to invest in the business.


Risk/Impact Examples

Some typical risk/impact examples include:

Risk / Finding Impact
Insufficient software development processes Inability to deliver on strategic roadmap
Client implementation process is costly Inability to meet new customer revenue goals
Architecture is not scalable Inability to support scale of customers in strategic plan without significant investment
Gaps in security measures Significant breach or other impact leading to business disruption or loss
Non-compliance with regulatory standard Additional costs, disruption of execution plan, fines

Case Study

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