Technical Due diligence

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What is Technical Due Diligence?

When working in technology, many likely have been part of Technical Due Diligence (a.k.a Technical Assessment). Technical Due Diligence is the process of analyzing and evaluating the technology, product, architecture and processes in an organization prior to the acquisition of a company or investment in it.

Why Technical Due Diligence?

Technical Due Diligence usually happens when:

• Company is being sold
• Company got a new investing partner
• Large contract/partnership is about to happen
• Your Company is being merged into the large company

As a CTO or IT Architect can find yourself either on examination side or your team/company is being examined. I will try to describe both aspects and what to do in both cases.

How and Who to perform a Technical Due Diligence?

Mostly some senior IT member like CTO or Senior Architect is doing the Technical Due Diligence. Nothing is wrong with this selection, but this is not always optimal. Different people, using different methods while doing evaluations will most likely lead to different results.

The main use case for Due Diligence nowadays is some VC investment. Especially for VCs we always suggest that the same person is doing evaluation, based on the company domain and technology it can always select additional help. It is important that all evaluations are baselined (easier to compare companies and investments from a technology point of view, similar as using story points to measure complexity of stories in an agile methodology).

Process:

1. Discuss with a Client about what plans they have with a company. Focus can then be on different aspects (e.g. Quick time to market and scale user base from 10k to 10M is something completely different than just buy off certain technology and integrate it either by refactoring or new implementation in already existing solution/product)
2. Before performing official Due Diligence a lot can be checked as an outside observer (trial of companies released products,inspection of company webpage, social media, Linkedin, Github, sometimes when their solutions are already used in the market, a customer visit can be done to inspect the solution in real life scenario)
3. Written documentation request
4. Overview interviews with CTO, CPO, CMO, VPs, can be done also remotely (I assume that CEO and CFO are also being interviewed by the business, if not can be also included). If company is smaller and above organization is not established, discussion with some senior staff is needed
5. A few days to grasp what was told, detailed look into documentation and specifications to build your own picture, think about weak points, prepare some interview questions upfront

6. On-site thorough review of the:

   

   1. Architecture, Technology and Infrastructure
   2. Personal
   3. Company Processes and Organization
   4. IP and Software Licenses (also open source software)
   5. Roadmap and Future plans, Past Roadmaps and realization of them
   6. Software Development Life Cycle (SDLC)

7. More detailed discussions about particular parts which are not clear and have some gaps

8. Deliver Final report to the Client

How Dunbit can help?

Dunbit can lead Due Diligence process or can be a part of already formed Due Diligence team. In either way, it can help to evaluate technical potential of the company being checked.

If you need more information please drop us a note.