Technical Diligence

Technical diligence is the assessment of a software company's engineering organization, codebase, architecture, infrastructure, data and security posture during a transaction, and the translation of what it finds into underwriting inputs.

The review covers architecture and scalability limits, the codebase and its accumulated debt, the engineering organization and its delivery practice, cloud cost and COGS exposure, data management, security posture, and third-party dependencies and their licensing.

Reported uptime, security certifications, customer counts and net revenue retention, and stated model capability are checked against the systems and the data that would have to support them.

The same review identifies what the asset can do next: the value creation levers available in the first year, where revenue can be added or accelerated, what each one costs, and how long it takes.

Findings go to the deal team as risk, remediation cost and time, alongside the opportunities they surface.

This site holds reference material on the subject. There is a guide to what a full review covers, and a comparison of the two models private equity firms use to commission one.

I am Mo Battah. I run technical diligence for private equity through Blackmere, an independent advisory practice in Los Angeles. Every diligence client to date has elected to retain me beyond the original mandate, in several cases after I advised that no remediation was required. Blackmere's mandates are described at blackmere.ai.