IT Due Diligence: The Underestimated Success Factor in M&A

Why IT Due Diligence Matters

In mergers and acquisitions, traditional due diligence focuses on financials, legal matters, and market position. Technology — often the actual value driver — is frequently examined only superficially. A costly mistake: studies show that 30 to 65 percent of deal value depends on successful technical integration.

We have accompanied M&A transactions where it only became apparent after closing that the target platform was built on outdated frameworks, had critical security vulnerabilities, or that the development teams held knowledge monopolies. In every one of these cases, thorough IT due diligence would have been cheaper than the subsequent remediation.

What IT Due Diligence Covers

A thorough technical assessment examines five core areas:

1. Software Architecture & Code Quality

How is the application landscape structured? Is the architecture scalable, maintainable, and documented? How much technical debt exists? We analyze code repositories, dependencies, and architectural decisions — not with automated scanners alone, but with experienced architects who understand context.

2. Infrastructure & Operations

Cloud or on-premise? How resilient is the infrastructure? Are there disaster recovery plans, and have they been tested? What are the operational costs, and how are they trending? Infrastructure significantly determines integration costs after a deal.

3. Security & Compliance

Data protection, access controls, patch management, incident response — security gaps can pose not only technical but also legal and reputational risks. Especially for companies handling customer data, a security assessment is indispensable.

4. Team & Organization

Technology is built and operated by people. We assess team structure, key person dependencies, development processes, and innovation culture. A strong team with solid processes can reduce technical debt — a weak team will multiply it.

5. Intellectual Property & Licensing

Who owns the code? Are there open-source dependencies with problematic licenses? Are patents or proprietary algorithms documented and protected? These questions have direct implications for valuation.

The Three Most Common Risks

Hidden technical debt: Code that works is not automatically good code. Legacy systems, missing tests, undocumented workarounds — all of this costs significantly more post-deal than expected.

Integration complexity: Merging two companies means connecting two technology landscapes. Different tech stacks, data models, and deployment processes can delay integration by months or years.

Key person risk: When critical knowledge resides in the heads of individual developers rather than in code or documentation, losing those people becomes an existential risk.

The deicon Approach

Our IT due diligence goes beyond a checklist. We deliver a strategic assessment that enables investors and management to make informed decisions:

• Technical risk assessment with concrete quantification of remediation costs
• Integration roadmap with realistic timelines and resource estimates
• Team assessment to identify key personnel and competency gaps
• Prioritized recommendations — ranked by urgency and impact

The result: no surprises after closing. Instead, a clear foundation for negotiation, integration, and long-term value preservation.