Technology Due Diligence for Acquisitions
Technology due diligence evaluates the technology assets, capabilities, and risks of an acquisition target — informing the deal valuation, identifying integration challenges, and revealing technical liabilities that could affect post-acquisition value. Poor technical due diligence leads to expensive surprises after deal close.
What Technology Due Diligence Covers
- Architecture and technical debt: Current architecture quality, estimated technical debt, modernisation roadmap and cost
- Codebase quality: Code quality metrics, test coverage, documentation, bus factor (knowledge concentration risk)
- Security posture: Vulnerability management, security incident history, compliance certifications, data handling practices
- Infrastructure and cloud: Infrastructure costs, scaling characteristics, vendor dependencies and lock-in
- IP and licensing: Open source licence compliance, IP ownership clarity, third-party component licences
- Team capability: Engineering team strength, key person dependencies, culture and retention risk
Red Flags
- Significant undisclosed technical debt that will require substantial remediation investment
- Critical knowledge concentrated in one or two individuals (bus factor risk)
- Open source licence violations (GPL code in proprietary products)
- Poor security hygiene — unpatched vulnerabilities, poor access control, security incident history
- Infrastructure costs that don't scale economically with growth
Structuring the Assessment
Engage technical advisors with relevant expertise. Request access to the codebase, architecture documentation, infrastructure diagrams, and security assessments. Interview the CTO and engineering leads. Produce a written assessment with risk ratings, cost estimates for remediation, and integration complexity assessment.