Tech Due Diligence for M&A: code, architecture, security, team

Why Tech Due Diligence matters in M&A

In mergers and acquisitions, technology is often either the biggest value accelerator or a hidden risk that only surfaces after the deal is signed. Tech Due Diligence (TDD) has one goal: to identify technology risks and costs before they become problems, and to assess whether the product and engineering organization can sustain growth post-transaction.

Well-executed TDD is not just a code audit. It is an assessment of:

• quality and maintainability of the solution
• architecture and scalability
• security and compliance
• maturity of DevOps and operations
• competence and stability of the team
• and the real costs: technical debt, migrations, refactors, and maintenance.

Below is a practical checklist you can use as a foundation for Tech Due Diligence – both when acquiring a product company (SaaS) and when evaluating a software “build-up” within a larger business.

Scope and context (before you even open the code)
Goal: understand what is being acquired and how technology supports (or blocks) the business.

• What are the key products/systems (core vs. supporting)?
• Which critical business processes does the system support?
• What is the revenue model, and which parts of the platform are revenue-critical?
• Which components are single points of failure?
• What does the roadmap look like and what are the commitments to customers (SLA, contracts)?
• What are the dependencies on vendors (cloud, licenses, third‑party services)?

Outcome: a system map plus risk priorities – i.e., where TDD should “dig” the deepest.

1. Codebase & Engineering Quality
   Goal: assess maintainability, regression risk, and the cost of further development.

Repository structure and code hygiene

• Do repositories have a clear structure and ownership?
• Are there coding standards, code review practices, and a style guide?
• Is there consistency in naming, modularity, and separation of layers?
• What does the technical debt look like (TODO/FIXME, legacy modules, “hot spots”)?

Testing and QA

• Which types of tests exist (unit/integration/e2e)?
• What is the real coverage of critical paths (beyond raw coverage %)?
• Are tests stable (flaky tests) and run in CI?
• How often do regressions occur after deployments?

Dependencies and vulnerabilities

• Are dependencies updated regularly?
• Is there a process for managing vulnerabilities (SCA)?
• Are there end‑of‑life components (frameworks/libraries without support)?

Technical documentation

• Is there a meaningful README, runbook, and contribution guide?
• Are architectural decisions documented (ADRs)?
• Can a new engineer be onboarded in a reasonable time?

Red flags: no tests, no CI, heavy reliance on tribal knowledge, manual deployments, a high number of critical vulnerabilities in dependencies.

2. Architecture & Scalability
   Goal: assess whether the system can handle growth and how costly integration or modernization will be.

Application architecture

• Monolith or microservices – and is the choice justified?
• Are domain boundaries (bounded contexts) clearly defined?
• How are data consistency and transactions handled?
• Where are the bottlenecks (single database, single service, single queue)?

Data architecture

• Which databases are used and why, and are they used appropriately?
• Are there caches, indexes, and query optimizations?
• Are there issues with data quality, duplication, or inconsistency?
• Are there data pipelines / integrations, and how are they maintained?

Performance and reliability

• Are there SLOs/SLAs and real uptime metrics?
• What does observability look like: logs, metrics, traces?
• Is there a disaster recovery (DR) plan, backups, and restore testing?
• How does the system handle traffic spikes?

Integrations and dependencies

• What are the critical integrations (payments, ERP/CRM, providers)?
• How resilient is the system to provider outages (retries, circuit breakers)?
• How are API versions and backward compatibility managed?

Red flags: no monitoring, no DR tests, no scaling strategy, “accidental” architecture, dependence on a single non‑redundant component.

3. Security & Compliance
   Goal: assess incident risk, audit readiness, and impact on the transaction.

IAM and access

• Is there SSO/MFA? How are permissions managed?
• Are there shared accounts and a lack of auditability?
• Is access to production controlled and logged?

Secrets and keys

• Are secrets stored in a vault/secret manager or in code?
• How are keys rotated and who has access?​

Application security

• Are SAST/DAST/SCA integrated into CI/CD?
• Are regular penetration tests performed?
• How are vulnerabilities and patching managed?

Data and privacy

• How is sensitive data (PII) protected?
• Is data encrypted at rest and in transit?
• Are there data and log retention policies?

Incidents and operational readiness

• Has the company experienced security incidents, and how did it respond?
• Is there an incident response plan (IRP) and regular exercises?
• Is anomaly monitoring in place?

Red flags: secrets in repositories, no MFA, no patching process, no vulnerability management, no audit logs.

4. DevOps, Cloud & Operations
   Goal: assess whether the company can deploy and operate the system safely.

• Is there CI/CD? What does the release process look like?
• Is infrastructure defined as code (IaC)?
• Are environments (dev/stage/prod) reproducible?
• What do monitoring and alerting look like?
• Are there runbooks and incident response procedures?
• How are run costs managed, and is there any FinOps practice?

Red flags: manual deployments, “click‑ops” infrastructure, no rollback strategy, no non‑prod environments, heavy dependency on a few key people.

5. Team & Engineering Organization
   Goal: assess the ability to maintain and evolve technology after the acquisition.

Structure and skills

• Which roles are present (backend/frontend/QA/DevOps/data/security)?
• Are there strong technical leaders and a clear decision‑making process?
• How is product management organized and how is the backlog handled?

Stability and personnel risk

• Who are the single points of knowledge?
• What is the turnover like and how dependent is the company on contractors?
• Are there onboarding processes and documentation?

Engineering culture

• Are there code reviews, quality standards, and tests?
• How is technical debt managed?
• Are there retrospectives and continuous improvement?

Red flags: no QA/DevOps, no technical leadership, knowledge trapped in a few heads, high churn, chaotic backlog.

6. Licenses, IP & Legal Risks (often overlooked)
   Goal: assess IP risks and licensing costs.

• Does the company own the code (contracts with employees and contractors)?
• Which open‑source licenses are in use, and are they compliant with policy (e.g., copyleft)?
• Are there commercial components/licenses with a risk of cost escalation?
• Are there patents or third‑party IP embedded in the product?

What a good Tech Due Diligence outcome looks like (a format that actually helps M&A)

‍A good TDD should end not just with a list of issues, but with a decision‑support map:

• Critical risks (deal breakers) – e.g., serious security gaps, lack of IP rights, inability to scale.
• Material risks (for valuation) – technical debt, required migrations, DevOps gaps.
• Operational risks (for integration planning) – processes, team, monitoring, onboarding.
• A 30/60/90‑day post‑acquisition action plan – what to do first to stabilize the situation.
• Cost and effort estimates – what it will take to bring the technology up to “standard”.

Where Altimi can help: Tech Due Diligence as part of a partnership‍

In a partnership model, Tech Due Diligence does not end with the report. The real value appears when the audit flows directly into execution: stabilization, modernization, security improvements, and delivery alignment.​
In practice, Altimi supports organizations in:

• analyzing architecture and code quality
• assessing and implementing DevOps/CI/CD, IaC, and observability
• raising the level of cybersecurity (IAM, secrets management, scanning, processes)
• assessing team maturity and providing organizational recommendations
• and executing remediation plans in consulting / managed services / BOT models.

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