Application security testing is a non-negotiable component of technical due diligence in any M&A transaction involving software assets. Security vulnerabilities in the target's applications can lead to data breaches, regulatory penalties, and reputational damage that materially impact the value of the acquisition. A comprehensive security testing program during due diligence combines static analysis, dynamic testing, and expert-led penetration testing to provide a thorough assessment of the application security posture.
Static Application Security Testing (SAST)
Static analysis examines source code without executing it, identifying potential security vulnerabilities based on code patterns and data flow analysis. SAST tools can detect common vulnerability categories including SQL injection, cross-site scripting, buffer overflows, insecure deserialization, and hardcoded credentials. Run SAST analysis across the entire codebase and categorize findings by severity, exploitability, and business impact.
Evaluate not just the current SAST findings but also the history of SAST adoption and remediation. Has the company been running static analysis as part of its development process, or is this the first time the code has been scanned? A mature security program will show a declining trend in new vulnerabilities and evidence of systematic remediation. A company that has never performed SAST is likely to have a significant backlog of vulnerabilities that will require substantial remediation effort.
Assess the rate of false positives in SAST findings and the effort required to triage results. High false positive rates can obscure genuine vulnerabilities and create fatigue among developers. Evaluate whether the company has tuned its SAST tools to reduce noise and whether findings are triaged and tracked through a structured process.
Dynamic Application Security Testing (DAST)
Dynamic testing evaluates running applications by sending crafted requests and analyzing responses for security weaknesses. DAST testing can identify runtime vulnerabilities that SAST cannot detect, including configuration errors, authentication bypasses, and server-side request forgery. Conduct DAST testing against staging or pre-production environments that mirror the production configuration.
API security testing is increasingly important as modern applications expose extensive API surfaces. Evaluate API authentication and authorization mechanisms, input validation, rate limiting, and error handling. Test for common API vulnerabilities including broken object-level authorization, mass assignment, and excessive data exposure as defined in the OWASP API Security Top 10.
Penetration Testing and Red Team Assessment
Expert-led penetration testing goes beyond automated scanning to simulate real-world attack scenarios against the target's applications and infrastructure. Engage experienced penetration testers who can chain together vulnerabilities, exploit business logic flaws, and assess the effectiveness of security controls under realistic attack conditions.
Review any existing penetration test reports from the target company, paying attention to the scope of testing, the severity of findings, and the status of remediation efforts. Determine how frequently penetration testing is conducted and whether findings are addressed within reasonable timeframes. Companies that conduct annual penetration tests but take months to remediate critical findings have a testing program in name only.
Consider the scope of penetration testing relative to the attack surface. Testing a single web application while ignoring mobile apps, APIs, and internal systems provides an incomplete picture. During due diligence, the goal is to understand the overall application security posture, which requires testing across the full range of externally and internally accessible applications.
Security Development Lifecycle Assessment
Beyond point-in-time testing, evaluate the security practices embedded in the development lifecycle. Assess whether threat modeling is performed for new features, whether security requirements are defined alongside functional requirements, and whether security testing is integrated into CI/CD pipelines. A mature security development lifecycle prevents vulnerabilities from being introduced rather than relying solely on detection after the fact.
Evaluate the security training provided to developers, the availability of secure coding guidelines, and whether security champions are embedded within development teams. Organizations that invest in developer security awareness produce more secure code and respond more effectively to vulnerability disclosures. The maturity of the security development lifecycle is a strong indicator of the ongoing security maintenance costs the acquirer will inherit.