M&A Technology
The Technology Diligence That Decides Whether an Acquisition Pays Off
Most acquirers get financial and legal diligence right and treat the technology as a box to check. The technology you are buying is either an asset that scales with your thesis or a liability that shows up later on your budget. Here is what I actually pressure-test before a deal closes.
The Framework
Six Questions That Decide the Deal
Scale
Will the technology carry the growth thesis, or quietly need a rebuild you have not priced in?
Key-Person Risk
Who actually understands how it works, and what happens if that person leaves?
Security and Compliance
What is the real posture behind the questionnaire answers?
Integration
What will it truly cost to combine systems, and how long will it take?
Contracts and Licenses
What lock-ins, true-ups, and ownership questions are you inheriting?
Technical Debt
What does it cost to keep this running, and to change it later?
Here is what each of the six means in practice.
1. Does the technology scale with the thesis, or does it need a rebuild you have not priced in?
Software that works at the seller's current size often cannot carry the growth the deal is built on. That gap is real money, and it belongs in the model now, not after.
2. Who actually understands how it works?
A lot of value sits in the heads of one or two people, or a contractor who is not part of the deal. If the systems are undocumented and that knowledge walks, you have bought a black box.
3. What is the real security and compliance posture?
Not the questionnaire answer. The actual controls, the incident history, and the regulatory exposure, especially in regulated spaces like healthcare or anything touching SOC 2 or HIPAA. This is where quiet liabilities live.
4. What will integration actually cost, and how long will it take?
This is the number that rarely makes it into the model. Overlapping ERPs and CRMs, data migration, and contracts that do not cleanly transfer can turn a clean thesis into an eighteen-month slog.
5. What are you inheriting in contracts and licenses?
Auto-renewing vendor lock-in, license true-ups that trigger on a change of control, and unclear ownership of custom-built code can all cost real money or narrow your options after close.
6. Is it technical debt wearing the costume of working software?
It runs today. The real questions are what it costs to keep running and how hard it is to change. Debt you cannot see is debt you will pay for later.
The goal is not a perfect technology stack. It is knowing exactly what you are buying and pricing it correctly, so there are no surprises after the deal closes. I have done this as the CIO who owned diligence and integration across a dozen acquisitions, sitting on the side that had to live with the answer.