Technology Due Diligence
Excellent IT systems and organizational structures are the backbone of digital products and services. The right balance of in- and outsourcing, the chosen framework or platform can be a competitive advantage or crucial detriment, which must be examined in a Technology Due Diligence (Tech DD) or IT Due Diligence (IT DD).
In the context of a Technology Due Diligence, an in-depth analysis and assessment of the application landscape, IT infrastructure, organization and costs is recommended. Depending on the focus, the Technology Due Diligence, IT Due Diligence (IT DD) or Software Due Diligence is a valuable means of securing your investment in the long term.
The aim is to determine the target value through corroborating facts and to realistically evaluate risks for the future.
Our approach within a TechDD is generally based on the business model or core value chain of the target company. For example, we focus differently in the scoping for the Technology Due Diligence of an online community than when taking over a global video-on-demand platform, an eCommerce dealer or a SaaS provider – the personnel, the software basis, the server infrastructure or the contracts with third parties each carry different significance.
The first step is to identify the elements of IT that are crucial to value creation, and to consolidate and prioritize these according to their influence on the business of today and tomorrow.
In the second step, the consolidated work packages are reviewed by our specialists both by analyzing data and by means of interviews (remote or on-site).
Recurring assessment items included in our Technology Due Diligences are
- the technical infrastructure (hardware, backup, scalability),
- the software architecture (technical excellence, development process, legacy code, maintenance effort, extensibility, documentation)
- the operation (scalability, data security, internationalization),
- contracts with third parties (software-as-a-service, infrastructure providers),
- the organization (personnel skills & costs, know-how, processes, atmosphere) and
- the IT costs.
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As a result of our Technology Due Diligence, a detailed valuation and a management summary of the IT situation in the target company is produced. Depending on the focus, the result is provided in the form of a Red Flag Report, IT Audit or Expert Opinion. The description of the current situation is complemented by a risk assessment and an estimation of the future viability. In addition, our experts derive recommendations and measures to support the target business case. This provides an initial blueprint for post-acquisition integration.
We thus help our customers to improve the cost of investment or individual deal terms and to take the necessary IT resources and measures into account in business planning.
Industries and Technologies
Our Transaction Services Team with focus on Commercial (CDD) and Technology Due Diligence (TechDD) has facilitated 150 M&A processes in various industries and markets. Our reference projects of past investments provide a small insight.
We have several years of experience in auditing corporate IT in established industries, with a focus on optimal support of ongoing business. Our experts are also well-versed in the field of emerging technologies, conducting technical deep dives in IoT, Augmented Reality or Artificial Intelligence to highlight the relevant details.
Excerpt from industries and markets:
- Trade & e-commerce (B2B & B2C)
- Health & Pharmaceuticals
- Service Provider & Consulting
- Human Resources
- Public Administration
- Consumer Goods
- Real Estate
- Artificial Intelligence & Machine Learning
- Virtual & Augmented Reality
- SaaS, Cloud Computing & Multi-Tenant Systems
- Corporate IT Systems (ERP, CRM, CMS, CAD, PIM, BI)
- Web Applications & Mobile Apps
- Shop Systems
- Edge Computing
- IoT & Industry 4.0
Within the context of a company take-over (transaction volume > EUR 8 m.) of a German special interest community we were asked to – among others – conduct an IT due diligence.
While doing so the main tasks were to secure the stability and future-compliance of the existing community platform, to enable further development of the product by assessing the quality of the code and finally finding answers to personnel questions (especially key person risks and know-how).
Afterwards the customer received a sound red-flag report, comparing chances and risks of the IT infrastructure and – on this basis – classifying the IT value creation.
In explicit recommendations for further actions in the post-merger phase, we prioritized the necessary measures for rectifying the core risks.
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Success in Numbers
with deep and diverse expertise in digital
More than 750 references
with the resulting businesses turning-over hundreds of millions of euros
Over 20 billion Euros
in transaction volume where we ran due diligence and post-merger integration projects
Over 350 transaction projects
in the digital context
Partner Transaction Services
Tel.: +49 221 67787410
Tech DD Scoping and Approach
With the right focus, hidden potentials and risks can be uncovered in a Technology Due Diligence. In this article we present our 360° Technology Due Diligence Framework as well as the approach we take on in a Tech DD.