Technology Due Diligence for Funding and Acquisitions
What investors and acquirers should look for in a company's technology and security posture.
When a funding round or acquisition is on the table, the technology and security posture moves from back-office detail to deal term. I have sat on both sides of this: building the systems that get diligenced, and advising on what to look for. The questions that matter are surprisingly consistent.
Can they prove who has access to what?
Identity is the fastest read on operational maturity. If a company can produce a current access review, show MFA enforced everywhere, and demonstrate that departures are de-provisioned promptly, the rest of the program is usually sound. If they cannot, expect to find more.
Is the data defensible?
Where does sensitive data live, who can reach it, and what stops it from walking out the door. Look for data classification, encryption at rest and in transit, and Data Loss Prevention on the paths that matter. For regulated targets, ask which framework they map to: SOC 2, ISO 27001, HIPAA, or NIST 800-171, and ask to see the evidence, not just the claim.
Will the systems scale with the thesis?
Integration debt is the quiet killer of post-deal value. Fragmented ERP and CRM systems held together by spreadsheets do not survive a growth plan. Assess whether finance, sales, and operations share a governed flow of data or whether someone reconciles it by hand every month.
What is the real run cost?
Vendor sprawl, auto-renewing contracts, and overlapping tools hide real money. A clear-eyed look at the technology spend often surfaces both immediate savings and a sense of how disciplined the team is.
The bottom line
Good technology diligence is not about finding reasons to walk away. It is about pricing the risk and planning the first 100 days accurately. The companies that diligence well are usually the ones that ran their technology like it mattered all along.