Tech Due Diligence

Technology is often the core asset in any software-driven acquisition. Yet most deal teams still rely on financial models, market analysis, and management interviews to make their investment decision - without ever looking under the hood of the technology itself.

Tech due diligence (also called technical due diligence or IT due diligence) is the systematic assessment of a target company’s technology assets, capabilities, and risks. It answers a simple question: Is the technology what the seller says it is?

Why Tech Due Diligence Matters

In software-heavy businesses, technology is not just a cost center - it’s the product. A SaaS company with clean, scalable architecture is worth significantly more than one running on duct-tape code and a single point of failure.

Tech DD uncovers:

Technical debt that will cost millions to fix post-acquisition
Architecture limitations that cap the company’s growth potential
Security vulnerabilities that create regulatory and reputational risk
Key-person dependencies where one developer holds all the knowledge
Infrastructure costs that are hidden or unsustainable at scale

Without tech DD, you’re buying a black box. With it, you know exactly what you’re getting - and what it will cost to fix.

Who Needs Tech Due Diligence?

Tech DD is essential for any investor or acquirer evaluating a technology-driven business:

Venture capital firms assessing startups before writing the check
Micro PE and buy-and-build operators acquiring bolt-on targets
Search fund entrepreneurs buying their first business
Founders preparing for fundraising who want to be investment-ready
Family offices without in-house technical expertise

What Does a Tech DD Cover?

A thorough tech due diligence engagement typically assesses:

Code quality and architecture - Is the codebase maintainable? Is the architecture fit for purpose? See our software due diligence guide.
Infrastructure and DevOps - How is the application hosted, deployed, and monitored? Read more in our IT due diligence guide.
Security and compliance - Are there known vulnerabilities? Is data handled according to regulations?
Team and processes - How mature is the engineering organization? Are there key-person risks?
Scalability and performance - Can the technology handle 10x growth without a rewrite?
Technical debt - How much hidden cost is embedded in the current codebase?

For a detailed breakdown, see our tech DD checklist.

What Does the Process Look Like?

A typical engagement takes 1-3 weeks depending on scope. We review source code, interview the engineering team, assess infrastructure, and deliver an actionable report with findings, risks, and recommendations.

Learn more about our tech DD process and pricing.

Common Red Flags

Experienced tech DD practitioners can spot problems quickly. The most common red flags include monolithic architectures with no test coverage, single points of failure in infrastructure, undocumented tribal knowledge, and security practices that haven’t been updated in years.

Tech DD vs Financial DD

Tech due diligence and financial due diligence are complementary. Financial DD tells you what the numbers say. Tech DD tells you whether the numbers are sustainable. A company might show strong revenue growth, but if the technology can’t scale, those projections are built on sand.