IT Due Diligence

In the context of an acquisition, investment, or strategic partnership, technology is often the beating heart of the target company. For this reason, IT Due Diligence has become one of the most sensitive and decisive areas in the overall assessment of a business.

IT Due Diligence is a structured process of technical, contractual, operational, and strategic analysis aimed at assessing the health, risks, and value of a company's digital and technology landscape.

It focuses on identifying:

  • The reliability of IT infrastructure

  • The security and compliance of systems

  • Potential hidden technological risks

  • The true value of digital assets and software

When Is It Most Relevant?

IT Due Diligence is especially critical in:

  • Mergers & Acquisitions (M&A)

  • Investments in tech startups

  • Acquisitions of SaaS platforms, e-commerce businesses, or software houses

  • Joint ventures in IT or digital ecosystems

The 7 Pillars of IT Due Diligence

1. Technological Infrastructure

  • Overview of hardware and software architecture

  • Scalability, modularity, and support for future updates

  • Dependence on legacy systems or deprecated environments

2. Cybersecurity

  • Review of security policies and enforcement

  • History of breaches, malware, or vulnerabilities

  • Evaluation of backup, disaster recovery, and business continuity protocols

3. Digital Assets & Source Code

  • Ownership and licensing of intellectual property

  • Review of source code, Git repositories, code quality, and documentation

  • Existence of unit tests, comments, and maintainability standards

4. Licenses & Contracts

  • Use of third-party libraries, including open-source and commercial software

  • Agreements with cloud providers (e.g., AWS, Azure, GCP)

  • Service Level Agreements (SLAs) and risk of vendor lock-in

5. IT Team & Human Resources

  • Structure of the tech team: in-house vs outsourced

  • Internal development capabilities and velocity

  • Risk of key person dependency

6. Compliance & Regulations

  • Adherence to GDPR, ISO 27001, PCI-DSS, and other relevant standards

  • Handling of personal data, data minimization, and consent policies

  • Availability of access logs, audit trails, and data retention policies

7. Technological Roadmap & Innovation

  • Review of the product roadmap and technology stack evolution

  • Alignment with the strategic objectives of the acquiring party

  • Forecast of IT budgets, planned innovations, and upgrade cycles

Conclusion:
A comprehensive IT Due Diligence process not only mitigates acquisition risk but also helps reveal opportunities for synergy, cost savings, and future innovation. It is a strategic necessity in any digital or tech-driven transaction.