TrueValue M&A Network
Technology due diligence
For a business whose product or operations run on software, technology due diligence tests what a buyer is actually acquiring: the code, the architecture, the infrastructure, the technical debt, the team, and the licences and ownership behind all of it.
Technology due diligence
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What technology due diligence do
A technology due diligence provider reviews the codebase and architecture, the development process, the infrastructure and its cost, open-source licence compliance, ownership of intellectual property, scalability and the key-person risk in the engineering team. The output is a view on the investment needed to sustain and grow the product, and on the risks — a licence that contaminates the code, a platform nobody left can maintain — that should change the price or the warranties.
When to engage them
In exclusivity, before the SPA, on any acquisition where software is the product, a significant operational dependency, or a stated reason for the price. Scope it early enough that a finding on IP ownership can reach the lawyers before the warranties are drafted.
Usually active at
- In due diligence
What they typically help with
- Code, architecture and infrastructure review
- Technical debt and the cost to remediate
- Open-source licence and IP ownership checks
- Engineering team, process and key-person risk
- Security posture at a high level, with cyber specialists for depth
Questions to ask before you engage
- 1. What technology stacks have you assessed, and have you reviewed a business like this one?
- 2. How do you review the code without disrupting the team or exposing the target’s IP?
- 3. What does your report say about cost — the investment needed over the next two years?
- 4. Do you cover security, or should I engage a cybersecurity specialist separately?
- 5. How long do you need, and what access?
How technology due diligence are paid
Fixed fees for a scoped review are usual, scaled to the size of the codebase, the number of systems and the depth of the security and licence work. A lighter architectural review suits a business that uses software; a full code and IP review suits one that sells it.
How TrueValue fits alongside
TrueValue’s due diligence software carries the technology request list alongside the financial and legal ones, files the target’s responses as evidence, and lets a red flag raised by the technology reviewer sit on the same checklist the committee reads.
Frequently asked
Does every acquisition need technology due diligence?
- No. A business that uses ordinary business software does not; one whose product is software, whose operations depend on a bespoke system, or whose price rests on a technology claim does.
What is technical debt?
- The accumulated cost of shortcuts in a codebase — decisions that were expedient at the time and now make change slower or riskier. It is normal in every codebase; the question for a buyer is how much there is and what it will cost to address.
Who owns the code?
- Not always the company. Code written by contractors without an assignment, or built on open-source components under restrictive licences, may not be the target’s to sell. Technology due diligence checks, and the SPA warranties should follow.
Listings in the TrueValue M&A Network are provided for information. A listing is not an endorsement or a recommendation, and TrueValue does not guarantee any professional’s performance. You must carry out your own due diligence before engaging anyone, verify regulated status independently with the relevant regulator, and seek qualified legal, financial and tax advice where appropriate.