The Buyer’s Playbook for Technology Due Diligence in M&A

Katie Tibbetts
May 26
3 min read

Evaluating a target company’s technology and cybersecurity infrastructure is no longer optional, it’s essential. Whether you're acquiring a SaaS company, a tech-enabled business, or any company that relies heavily on digital operations, tech due diligence plays a critical role in reducing risk and identifying value.

In this guide, we’ll walk you through the key components of technology and cybersecurity due diligence to help modern buyers make informed, confident decisions.

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What Is Technology Due Diligence?

Technology due diligence is the process of assessing a target company's digital assets, infrastructure, and security posture during an M&A transaction. The goal is to uncover risks, validate proprietary technology, and evaluate scalability and integration readiness.

Tech Due Diligence Checklist

Here’s a high-level checklist of what buyers should review:

IT Infrastructure: On-premise vs. cloud setup, network architecture, vendor relationships
Software Architecture: Code quality, frameworks used, scalability, performance bottlenecks
Product Roadmap: Alignment with business goals, delivery history, technical debt
Technology Stack: Third-party dependencies, outdated tools, licensing issues
Team & Capabilities: Key personnel, development practices, documentation quality
Disaster Recovery: Business continuity plans, backup processes

Pro tip: Involve a CTO-level advisor early to spot red flags that a general due diligence team may miss.

Cybersecurity Audits: What to Look For

A company’s cybersecurity vulnerabilities can quickly become a buyer’s problem. Inadequate security can lead to data breaches, regulatory fines, and reputational damage.

Key areas to assess in a cybersecurity audit include:

Security Policies & Governance: Are formal security protocols in place?
Access Controls: Are user roles and privileges tightly managed?
Incident History: Any past data breaches, ransomware events, or downtime?
Penetration Testing & Risk Assessments: When was the last test conducted?
Third-Party Risk: Vendor access and supply chain security
Security Certifications: ISO 27001, SOC 2, etc.

IP Validation: Who Really Owns the Code?

One major risk in tech M&A is discovering post-deal that you don’t own the code. IP validation confirms that:

All developers (in-house or outsourced) have assigned rights to the company
Open-source components are used in compliance with licenses
Patents, trademarks, and copyrights are registered and properly maintained

Watch out for: code created by freelancers or contractors without signed IP transfer agreements.

Evaluating System Scalability

If you’re buying a company to scale it, the underlying tech must be ready to grow with you.

Questions to ask:

Can the current system handle increased user loads?
Is the infrastructure modular or monolithic?
How easy is it to integrate with other platforms or tools?
Is the tech team staffed and skilled enough to support future demands?

Data Privacy Compliance: GDPR, CCPA & Beyond

Non-compliance with data privacy laws can result in massive fines and legal headaches post-acquisition.

Review the company’s compliance posture on:

GDPR (EU) and CCPA (California) standards
User consent and data storage policies
Data subject access request procedures
Privacy notices and terms of use

If the company operates globally, ensure it's prepared for multi-jurisdictional compliance.

Document Requests for Tech Due Diligence

Ensure your data room request includes:

Network architecture diagrams
Source code repositories and access logs
Security policies and incident reports
DevOps documentation
Product roadmap and release history
Software license summaries
IP registrations and legal documents

Final Thoughts: Tech Due Diligence as a Deal Maker (or Breaker)

Technology and cybersecurity risks are deal-critical. Skipping thorough tech due diligence can result in costly surprises, integration nightmares, or lost value.

On the flip side, identifying scalable, secure, and well-managed tech infrastructure can justify a premium valuation and even create new growth opportunities post-close.