What Is Technology Due Diligence?

Technology due diligence is the pre-close assessment of a target company's software, architecture, engineering team, and data assets. It establishes what they mean for the deal: where they create financial exposure, what remediation will cost, and whether the technology can support the investment thesis. Done well, it prices risk into the offer rather than surfacing it after close.

How it works in practice

A technology diligence review runs alongside financial and commercial diligence in the weeks before close. It combines document review with interviews of the CEO, the CTO or VP Engineering, and the security lead. The written deliverable is built for a deal partner and board: an executive summary, a quantified view of exposure, and a first-100-days plan. The PRISM™ framework scores five dimensions and routes every finding into one of four actions: Gate, Price, Thesis, or Lever.

Where firms get it wrong

The common failure is treating diligence as a code review. A report can flag technical debt, architecture concerns, and security gaps without translating them into dollar impact, remediation timeline, and deal-thesis risk. Such a report gives a deal team a list of issues but no basis for a decision. A target with thin test coverage and a target with an unresolved data-rights clause both appear as "technical debt" on a slide. One is a multi-month engineering investment. The other can unwind the deal's IP position.

When you need it

A deal warrants a proper technology assessment before close when the investment thesis depends on the technology. The same applies when the technology is at the center of the product, or when it is a material share of the cost base. That is the work in the Assess engagement.