Technology Due Diligence – Effective through Targeted Scoping and a Lean Approach
As the person responsible for preparing and executing a deal, it is essential to determine which aspects are relevant to the transaction in question. With the right focus, hidden potentials and risks can be uncovered. The aim is an optimal determination of the acquisition or sales price based on facts and a realistic evaluation of risks for the future. In the post-merger phase, the findings can be used to professionalize processes, streamline integration and lay a solid foundation for stable growth. On this page, we have compiled an overview of the key information on Technology Due Diligence.
Which scope does a Technology Due Diligence have?
In the following, we will present the typical assessment categories within the scope of a Tech DD. Since every company and industry is unique, the scope of the Technology Due Diligence must be specifically adapted for each project. Our proven 360° Technology Due Diligence Framework ensures a technological end-to-end analysis along the value chain.
Assessment categories and corresponding assessment items (excerpt):
- Application landscape
- Technical Maturity & Excellence
- Support of Business Operations
- Integration Scenarios/Future Readiness for Post-Merger Activities
- Organization & Processes
- IT Strategy & Roadmap
- IT Organization
- Product/Software Development Processes
- Operations, Infrastructure & Security
- Architecture & Hosting
- Data Security & Protection
- Operational Implementation
- IT Costs
- Recurring IT costs
- Cost and Investment Planning
- Foreseeable Refactoring Costs
What does a typical Tech DD process look like?
The Technology Due Diligence process spans two to six weeks, depending on complexity and urgency. Our experts work effectively to combine our lean approach with the necessary depth. During this time, our due diligence specialists collect and consolidate all the information provided, conduct confidential expert interviews and support other work streams as necessary.
Before any Tech DD begins, it is usually preceded by getting acquainted with all those involved in order to lay the foundation for a trusting cooperation. During this time, the Non-Disclosure Agreement (NDA) is signed, an Information Memorandum (IM) is provided and the scope of the project is determined.
The official start of a due diligence takes place in a kick-off meeting. The target’s contact persons receive clarification on the process and a timeline is established. Understanding the needs of the investor and the target is of utmost importance.
Inspection of Documents
The first stage of a due diligence takes place virtually. Our experts examine the documents provided in virtual data rooms. The principle is: the more the better. If our experts find comprehensive information, they can perform in-depth analyses. Depending on the maturity level of the target, varying density of documentation is expected and evaluated.
Management and Expert Interviews
An important element of a Technology Due Diligence is a personal impression gained in management and expert interviews. These can be held either on site at the respective target or remotely via video conference or telephone. On-site appointments usually present an ideal opportunity to test the technical elements of the service or product. Following the interviews, our experts offer the investor an update call for an initial assessment.
The final result of our Technology Due Diligence is a detailed assessment and a management summary of the IT situation in the target company. Depending on the focus, the results can be prepared in the form of a red flag report, an IT audit or an expert opinion. In addition to a description of the current situation, the report includes a risk assessment and an evaluation of future viability as well as derived recommendations and measures to support the target business case. This provides an initial blueprint for post-acquisition integration.
Following a presentation of the report i. a. in a management meeting and a successful investment, wdp offers various support for investor and target:
Our transaction team prepares a 100-Day Action Plan based on the recommendations and risks of the Technology Due Diligence. Investor and target can use this plan e.g. to close any security gaps, professionalize processes or prepare for successful integration.
In further active cooperation wdp can develop a digital strategy, provide support in organizational development or enable data-driven analyses of the business model.
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
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