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Database Assessment in M&A: Performance, Scale, and Migration Risk

The database layer is often the hardest and most expensive component to change. Assessment during due diligence reveals constraints that affect scaling, integration, and ongoing operations.

Database Assessment Framework

Technology Stack

  • What database technologies are used?
  • Are they appropriate for the use cases?
  • What versions are in use? (End-of-life issues)
  • Licensing implications (especially Oracle, SQL Server)

Architecture and Design

  • Data model quality and normalization
  • Indexing strategy effectiveness
  • Sharding or partitioning for scale
  • Read replicas and caching

Performance

  • Query performance and slow query analysis
  • Resource utilization trends
  • Bottleneck identification
  • Performance under load

Operations

  • Backup and recovery procedures
  • High availability configuration
  • Monitoring and alerting
  • Disaster recovery capability

Common Database Issues

Scaling Ceiling

Single-instance databases that can't scale horizontally. At some volume, the only option is larger (more expensive) hardware—until that runs out.

Schema Debt

Data models that have evolved poorly over time. Adding features requires increasingly complex queries and workarounds.

Missing Indexes

Poor indexing causes slow queries that consume resources and degrade user experience.

Licensing Traps

Oracle and SQL Server licensing can explode with scale. A database that costs $50K/year at current size might cost $500K at 3x scale.

Migration Considerations

If the target's database needs to migrate (to buyer's environment or to a different technology):

  • Schema compatibility: Will the schema work in the target platform?
  • Data volume: How long will migration take?
  • Application changes: What code changes are needed for new database?
  • Downtime requirements: Can migration happen with zero downtime?
Key Takeaway: Database assessment is foundational to technical due diligence. Database issues are expensive to fix and can constrain growth. Licensing costs, scaling limits, and migration complexity should all be factored into valuation and planning.

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