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Due diligence for private equity, from people who've run the business.

Independent technical, operational, product, and cyber due diligence for private equity, investment banks and acquirers, plus the integration, engineering and leadership work that follows a close.

What it is

An assessment of the target's technology, operations, product and cyber security.

Technical due diligence is an assessment of the technology, the operations, the product and the cyber security (network and information security) of a company being bought, invested in or merged with. It runs alongside the legal and financial work, on the same transaction timeline, and it answers a different question: not what the business is worth on paper, but whether it can actually do what the thesis assumes.

The principals run it directly. The questions asked, and the ones the team knows to ask next, come from people who have held the COO, CTO, engineering and security roles being evaluated, rather than from a framework applied from outside.

Every engagement is confidential from the first conversation, and the deliverable is an independent third-party document. The firm is not positioning for the integration work when it writes it.

Why it is needed

Technical, operational and security risk gets less scrutiny than legal and financial risk.

M&A teams direct most of their diligence toward legal and financial matters. The technical, operational and security condition of the target receives comparatively limited attention, and those are frequently the areas that determine whether an acquisition performs as underwritten.

A platform that cannot scale, an engineering team held together by two people, a product roadmap that is really a backlog, or an information-security posture that will not survive the first customer audit. None of these show up in the financials until after close, and all of them change what the business is worth.

Telecom and managed services make this harder still. The metrics that matter are specific to the sector, and a generalist firm applying a standard framework tends to miss the nuance in churn, in revenue under contract, in how a network is really provisioned and supported.

What the review covers

People, process and technology, in that order.

People. Whether the leadership and technical team is in place, how much sits with one or two individuals, whether top talent can take time off without disruption, and what the compensation picture looks like across the roles that matter.

Process. Whether tribal knowledge is documented, whether the company manages by numbers, how much visibility and accountability exists across the organization, and whether the way it works is compatible with post-merger integration.

Technology. How effectively the stack is used, whether it scales to the growth the model assumes, what intellectual property genuinely exists, where it overlaps with the acquirer, and whether the same implementation could run at lower cost.

Findings are organized against the investment thesis: what is real, what is risk, what is opportunity, and what each of those implies for the first hundred days after close.

Why it matters to a buyer

Due diligence on operations, technology and product.

Growing by acquisition is one way to increase revenue, but it is not an easy endeavor. Every acquisition is different, and there is no cookie-cutter approach to integrating companies.

M&A teams typically direct the majority of their diligence toward legal and financial matters, while the technical and operational condition of the target receives comparatively limited scrutiny. Those areas frequently determine whether an acquisition performs as underwritten.

For private equity firms, investment banks, and acquirers, engaging a team capable of rigorous technical, operational, product, and cyber due diligence is essential to managing transaction risk. T Advisors also prepares companies in advance of a sale or merger, so they enter the process from a position of strength.

People

  • Is the appropriate leadership and technical team in place
  • The efficiency of the company's operations
  • Whether top talent can take time off without disruption to the company
  • Compensation levels of key employees
  • The extent to which employees wear multiple hats
  • Whether employees are overwhelmed or underworked

Process

  • Whether the company has well-documented technical tribal knowledge
  • The efficiency of the company's operations
  • Whether they are adaptable and compatible for post M&A integration
  • Whether the company manages by numbers or operational metrics
  • The level of visibility and accountability across the organization
  • The existence and effectiveness of information security policies

Technology

  • The effectiveness of the company's technology usage
  • The scalability of the company's technology for expected growth levels
  • The existence and value of any intellectual property
  • Redundancy of the company's technology with the acquirer
  • The availability and geographical redundancy of the company's systems
  • Whether their technology implementation and operation can run at lower cost
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Frequently asked

Why due diligence on operations, technology, and product?

Identifying technical risks: Technical due diligence helps identify any potential technical risks associated with the target company's products, services, technology, and infrastructure. This includes assessing the scalability, reliability, and security of the technology, as well as compliance with industry regulations.

Assessing the target company's capabilities: Technical due diligence can provide insight into the target company's capabilities, including their technology stack, development processes, and intellectual property. This information can be used to identify potential synergies and inform integration planning.

Evaluating the target company: Assessing the target company's technology, development processes, and intellectual property can provide insight into the company's future growth potential and revenue streams.

Identifying areas for improvement: Technical due diligence can identify areas for improvement within the target company, such as outdated technology or processes, which can be addressed before or after the acquisition.

Making informed decisions: Technical due diligence helps the acquiring company make informed decisions by providing a comprehensive understanding of the target company's technology and operations.

A company can benefit from technical, operational, product, and cyber due diligence when preparing for M&A by identifying potential issues or risks associated with the target company's technology, operations, and infrastructure. This can include evaluating the target company's product or service offerings, assessing the scalability and reliability of their technology, and examining their compliance with industry regulations.

By identifying these issues early, a company can negotiate more favorable terms or even walk away from the deal if the risks are deemed too great. Technical, operational, product, and cyber due diligence also helps the acquiring company understand the target company's capabilities and potential synergies, which informs the integration planning process and helps ensure a smooth transition post-acquisition.

Identifying operational risks: Operational due diligence helps identify potential operational risks associated with the target company, such as inefficiencies, compliance issues, or financial mismanagement. This can include evaluating the target company's financial performance, organizational structure, and business processes.

Assessing the target company's operations: Operational due diligence can provide insight into the target company's operations, including their systems, infrastructure, and processes. This information can be used to identify potential synergies and inform integration planning.

Evaluating the target company's management: Operational due diligence can evaluate the target company's management team, including their experience, leadership skills, and track record, helping the acquiring company determine if the team is a good fit post-acquisition.

Identifying areas for improvement: Operational due diligence can identify areas for improvement within the target company, such as inefficiencies or compliance issues, which can be addressed before or after the acquisition.

Making informed decisions: Operational due diligence helps the acquiring company make informed decisions by providing a comprehensive understanding of the target company's operations and management.

The practice

Six services, from diligence through delivery.

Diligence is where most engagements start. The five that follow carry an investment through integration, growth, execution and the systems that support it.

Due Diligence

Independent assessment across the technical, operational, product, and cyber disciplines for private equity, investment banking, and M&A.

TechnicalOperationsProduct
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Post M&A Integration

People, process, and technology integration following an acquisition, spanning strategy, reorganization, and EBITDA optimization.

PeopleReorganizationEBITDA
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Business Engineering

Operations optimization, process innovation, scalability design, systems integration, and automation to improve measurable efficiency.

ProcessScalabilityAutomation
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Interim Leadership

Interim executive placement for COO, CTO, engineering, IT, product, and strategy roles, with mentoring for incoming permanent leaders.

COO and CTOEngineeringMentoring
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Project Management

End-to-end management of highly complex technical and operational projects, delivered on time, within budget, and to stakeholder satisfaction.

On timeOn budgetDelivered
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Software, AI and Automation

Operational platforms, backend integration and process automation, built and run in production. T Advisors advises on the design and then implements it.

PlatformsIntegrationAutomation
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How a diligence engagement runs

A clear path from question to recommendation.

01

Scoping and access

Align on the question behind the engagement, the timeline, and the access required. Confidential from the first conversation.

02

Independent assessment

Principals conduct the technical, operational, and product review directly, working hands-on with leadership and the existing stack.

03

Findings and recommendations

An unbiased third-party deliverable: risks, opportunities, and prioritized recommendations mapped to the goals and the thesis.

04

Execution support

Where needed, the firm stays on through post-close integration, interim leadership, or project delivery, keeping customers agnostic to the change.

Technology Advisory Group Technology Assessments Go to the other practice
Related work

Where this practice has been delivered

Case study: NewSpring Capital