Due Diligence ChecklistDue Diligence Checklist
Technical Due Diligence Checklist
Due Diligence Checklist

Technical Due Diligence Checklist

Riley VanceBy Riley Vance

68% of technology acquisitions face integration delays due to unvetted technology stacks, according to a 2025 Deloitte survey cited by GainHQ. This figure confirms that a checklist is not a bureaucratic exercise but a risk mitigation tool to prevent post-close value erosion.

Evidence-Based Asset Validation

The primary objective is the shift from interview-based claims to evidence-based verification. In a modern leveraged deal, as noted by Peony, technical due diligence has split into two distinct outputs: the acquirer's conviction review to justify the price and the independent report required by lenders for funding.

Verification must focus on the gap between the current state of the code and the desired state required by the business goals. This involves auditing the codebase for maintainability and documentation, evaluating infrastructure reliability, and ensuring security compliance. According to MEV, when these audits reveal missing technology governance, it often manifests as undocumented architecture or critical knowledge that has already left the company. This process is a core component of a broader technical due diligence engagement.

The review window typically spans two to four weeks post-LOI. For a SaaS target, the focus remains on whether the platform can scale (for example, from 5,000 to 50,000 customers) without a total rewrite. This requires checking for load balancers, session state management, and the separation of read and write databases. Evidence of scalability is found in the architecture, not in the CTO's promises.

Operational and Strategic Alignment

Technical health is irrelevant if the technology does not enable the business strategy. A healthy target demonstrates a clear product roadmap where technical choices are driven by business objectives and linked to MRR growth. Red flags include the absence of a written roadmap or constant last-minute pivots that suggest a lack of strategic discipline.

The human element is evaluated through organisational health and leadership stability. Key indicators include the engineer-to-product manager ratio, which typically sits between 4:1 and 6:1, and the tenure of the CTO. Significant churn between 2023 and 2025 is a warning sign of instability. As RingStone highlights, weaknesses in strategy, leadership, or architecture can hinder an investment thesis or require immediate, significant capital expenditure to mitigate.

Specialised scrutiny is now required for AI/ML integration. This includes verifying if data sources are governed for AI use, monitoring models for performance drift in production, and assessing the risk of vendor lock-in. These checks ensure that AI capabilities are grounded in verifiable data rather than marketing claims. Effective AI execution is evidenced by a standardised model lifecycle from experimentation to deployment.

The final output of this checklist is used to determine the valuation impact and establish cost-to-fix estimates. By quantifying the technical debt and the cost of required upgrades, buyers gain a critical lever for price negotiations. This rigorous approach prevents the common failure where deals miss financial targets due to weak initial diligence.

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