What are the use cases of Tech Due Diligence:
- VCs / Angle Investment purposes
- Merger and Acquisitions (M&A)
- Joint venture and partnerships
- Valuation estimation assistance
In this article, we are going to shed lights the basics of technology due diligence, how long it takes, and exactly what information needs to be scrutinized. We even provide a checklist so you can be totally ready, whether you’re buy-side or sell-side.
IT due diligence, or technology due diligence, involves auditing a company’s IT infrastructure and processes (frequently with a focus on security assessment). This aspect of M&A due diligence allows the acquiring company to evaluate existing IT structures and identify any potential security risks.
Here are the key aspects of a Tech DD:
- Technical / coding quality and best practices
- Software licensing / versioning and debt
- Open source components
- Technical risks
- Cyber security testing
- Compliances and data security
- System architecture
- Technology budgets and spending
- Onboarding and Authentications
- Product agility, scalability, flexibility
- Tech Team quality and review
- Software competitiveness and replicatability
Technology Due Diligence for a buyer
Technology due diligence, for a buyer, is an important step on the road to peace of mind during an M&A deal. A thorough understanding of the target’s IT capabilities, technology products, data protection, and internet security is essential in today’s digitally-driven business world.
It’s about identifying major risks, current or future, that could impact the business; for example, security risks and legacy systems. It’s also an opportunity to look on the positive side for any unique IP, tools and processes.
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