Dr. Karl Michael Popp
M&A, Business Models, platforms and ecosystems in the software industry

Karl´s blog is in the Top 25 M&A blogs worldwide according to Feedspot

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How do startups best prepare for technical due diligence before getting acquired?

To prepare for technical due diligence before an acquisition, startups should focus on several key technical and licensing topics. Here are five paramount areas to consider:

1. Code Quality and Documentation

  • Objective: Ensure that the codebase is well-structured and documented.

  • Execution: Conduct regular code reviews and maintain comprehensive documentation. Use automated tools to check for code quality and consistency.

2. Security and Compliance

  • Objective: Demonstrate robust security practices and compliance with relevant regulations.

  • Execution: Perform security audits and vulnerability assessments. Ensure compliance with data protection laws like GDPR or CCPA.

3. Intellectual Property (IP) and Licensing

  • Objective: Clarify ownership and licensing of all IP assets.

  • Execution: Review all IP agreements and ensure that all software licenses are up-to-date and compliant. Address any open-source software usage and its implications.

4. Scalability and Performance

  • Objective: Show that the technology can scale with increased demand.

  • Execution: Conduct load testing and performance benchmarking. Optimize infrastructure to handle growth efficiently.

5. Technical Team and Processes

  • Objective: Highlight the strength and capability of the technical team.

  • Execution: Document team roles, responsibilities, and processes. Showcase the team's ability to innovate and maintain the technology stack.

By focusing on these areas, startups can effectively prepare for technical due diligence and present themselves as attractive acquisition targets.

This relates to my new book “Automation of Mergers and Acquisitions“.

digitalmandaKarl Popp