Technical Due Diligence Case Studies
How we've helped PE firms and strategic acquirers avoid disasters and maximize value
Under $10M Deals
Early-stage and small technology acquisitions where focused assessments prevent outsized risks
PE Add-On: HR Analytics SaaS Platform
Situation: A PE firm was acquiring a bootstrapped HR analytics tool as an add-on to their portfolio company. The target had 200 customers and $1.2M ARR with "modern tech stack" claims.
What We Found
- $2.1M technical debt — Monolithic PHP codebase with no tests, manual deployments, and database queries that would fail at 2x current load
- Security gaps — SQL injection vulnerabilities, passwords stored in plain text, no audit logging for SOC 2 compliance
- Single point of failure — One developer who built 90% of the system was planning to leave post-acquisition
Outcome
Deal was renegotiated from $8M to $5.5M based on our findings. PE firm used savings to fund immediate remediation and hired two developers before close. Platform was successfully modernized over 18 months.
Strategic Acquisition: Shopify Inventory App
Situation: A Shopify Plus agency wanted to acquire a popular inventory management app with 5,000 merchants and $800K ARR. The seller claimed the app was "ready to scale."
What We Found
- Platform dependency risk — App relied on deprecated Shopify APIs scheduled for removal in 8 months, requiring 3-4 months of rewrite work
- Infrastructure costs hidden — AWS bill was $18K/month and growing 15% monthly due to inefficient architecture
- Positive surprise — Data model was actually well-designed and would integrate cleanly with acquirer's existing tools
Outcome
Buyer proceeded with deal but negotiated $400K escrow holdback for API migration. We provided 90-day post-close support to optimize infrastructure, reducing AWS costs by 60%.
$10M - $25M Deals
Lower mid-market transactions where technology is core to the value thesis
PE Platform: Clinical Data Analytics Company
Situation: A healthcare-focused PE firm was acquiring a clinical data analytics company as a new platform investment. The target processed data for 50+ hospital systems with $3.5M ARR.
What We Found
- HIPAA compliance gaps — PHI data was being stored without proper encryption at rest, audit logs were incomplete, and BAAs were missing for 3 subprocessors
- Data quality issues — ETL pipelines had 12% error rates that customers had learned to work around manually
- Strong IP — Proprietary NLP models for clinical note extraction were genuinely differentiated and would cost $2M+ to replicate
Outcome
PE firm proceeded but required HIPAA remediation as a condition to close. Seller funded $350K remediation from proceeds. Our team provided compliance roadmap and validated fixes before release of escrow.
Strategic Add-On: B2B Payment Processing
Situation: A payments company was acquiring a B2B invoicing and payment platform to expand into accounts payable automation. Target processed $500M annually with $4.2M revenue.
What We Found
- PCI-DSS gaps — While technically compliant, the target was storing full card numbers in logs that weren't properly secured—a ticking time bomb
- Scalability ceiling — Architecture would require $1.5M rewrite to handle 3x current volume, which was the acquirer's growth target
- Integration accelerator — API design was excellent and would reduce integration timeline from 12 months to 4 months vs. building in-house
Outcome
Deal proceeded with $1.2M price reduction and detailed 18-month technology roadmap. PCI issues were remediated within 60 days of close. Platform successfully scaled to 3x volume within 2 years.
$25M - $50M Deals
Mid-market transactions requiring comprehensive multi-vertical assessments
PE Carve-Out: Supply Chain Visibility Platform
Situation: A PE firm was acquiring a supply chain visibility SaaS platform being carved out from a large logistics company. The platform had $6M ARR and 150 enterprise customers.
What We Found
- Hidden dependencies — Platform relied on 12 internal services from parent company that weren't included in the carve-out, requiring $4M+ to replicate or replace
- Data ownership issues — Customer data was commingled with parent's data lake, requiring 6-month separation project
- Team understaffed — Only 8 engineers for a platform that needed 15-20 to operate independently
- Strong moat — IoT integrations with 40+ carrier systems would take competitors 2+ years to replicate
Outcome
Deal was restructured with 18-month TSA (transition services agreement) for shared services. Price reduced by $6M. Our team provided carve-out technical roadmap and advised on team build-out. Platform achieved standalone operations in 14 months.
Strategic Acquisition: Policy Administration System
Situation: A regional P&C insurer was acquiring a modern policy administration system to replace their legacy platform. Target had $7.5M ARR and served 25 insurance carriers.
What We Found
- Technical debt quantified — $3.2M in deferred maintenance, including critical security patches and database upgrades
- Licensing trap — Oracle licensing would cost $800K/year at acquirer's scale vs. $200K currently—a 4x increase not reflected in financial model
- Configuration nightmare — Each customer implementation was heavily customized, making upgrades costly and slow
- Regulatory strength — State insurance compliance frameworks were comprehensive and well-documented
Outcome
Buyer used findings to negotiate $4.5M reduction and required seller to fund database migration to PostgreSQL before close. Licensing costs dropped 70%. Platform standardization roadmap is now in Year 2 of execution.
PE Platform: Manufacturer Master Data Management
Situation: A healthcare-focused PE firm was acquiring a master data management platform serving pharmaceutical and medical device manufacturers. Target had $8.2M ARR with 45 life sciences customers managing product hierarchies, regulatory data, and supply chain master data.
What We Found
- FDA 21 CFR Part 11 gaps — Electronic signature and audit trail capabilities were incomplete, putting customers at regulatory risk during FDA inspections
- Data model excellence — Proprietary healthcare data model supporting GTIN, NDC, and GUDID standards was genuinely best-in-class and defensible
- Integration debt — 60+ point-to-point integrations with ERP and PLM systems had no documentation, making customer migrations risky
- Scalability concerns — Single-tenant architecture would require $3M+ to convert to multi-tenant for margin improvement
Outcome
Deal closed with $4M price reduction and 12-month FDA compliance roadmap as a condition. We provided integration documentation sprint post-close. Platform achieved FDA Part 11 compliance within 9 months, unlocking enterprise pharma customers.
$50M - $100M Deals
Upper mid-market transactions with complex technology stacks and integration requirements
PE Platform: Manufacturing Analytics Platform
Situation: An industrial-focused PE firm was acquiring an IoT analytics platform for manufacturing as a new platform investment. Target had $12M ARR, 80 factory deployments, and proprietary ML models for predictive maintenance.
What We Found
- ML model validation — Predictive maintenance models achieved 87% accuracy in controlled tests but only 62% in production due to data quality issues at customer sites
- Edge computing gaps — On-premise components were running unsupported OS versions at 60% of customer sites, creating security and reliability risks
- Strong IP portfolio — 8 patents on sensor fusion algorithms were validated as defensible and valuable
- Customer concentration — 3 customers represented 45% of ARR, and 2 had contracts expiring within 6 months of close
Outcome
Deal closed with $5M in escrow tied to customer renewals and ML performance improvements. Our team provided 120-day post-close support for edge infrastructure upgrades. All 3 major customers renewed, and ML accuracy improved to 78% within 12 months.
Strategic Acquisition: Telehealth Platform
Situation: A large health system was acquiring a telehealth platform to accelerate their virtual care strategy. Target had $15M ARR, 2M patient visits annually, and integrations with 30+ EHR systems.
What We Found
- HIPAA excellence — Security and compliance posture was among the best we'd seen, with comprehensive audit trails and encryption
- Scalability validated — Architecture successfully handled 10x surge during COVID and could support acquirer's 5-year growth plan
- Integration complexity — EHR integrations were point-to-point and would require $2M investment to standardize for enterprise deployment
- Technical debt moderate — $1.8M in deferred maintenance, primarily in mobile apps and older API versions
Outcome
Deal proceeded at asking price—one of few where our assessment validated the seller's claims. Integration roadmap we provided reduced EHR standardization timeline from 24 months to 14 months. Platform now serves 5M patient visits annually.
PE Platform: Asset Classification System
Situation: A financial services PE firm was acquiring a wealth management platform specializing in automated asset classification and portfolio analytics. Target had $14M ARR, served 200+ RIAs and family offices, and processed $180B in assets under management.
What We Found
- SEC/FINRA compliance gaps — Audit trails for classification changes were incomplete, and data retention policies didn't meet regulatory requirements for broker-dealer clients
- Algorithm validation issues — Asset classification models had 94% accuracy but failed edge cases for alternative investments, causing client reconciliation issues
- Data feed dependencies — Critical pricing and reference data feeds from 3 vendors had contracts expiring within 90 days of close with no renewal guarantees
- Strong architecture — Core platform was built on modern microservices with excellent API design, enabling rapid integration with custodians
Outcome
Deal restructured with $6M holdback tied to data feed renewals and compliance remediation. Seller renegotiated vendor contracts before close. Classification algorithm improvements achieved 98.5% accuracy within 6 months. Platform now manages $320B AUM.
Strategic Acquisition: Broker-Dealer Risk Management System
Situation: A global financial services firm was acquiring an enterprise risk management platform for broker-dealers. Target had $18M ARR, served 85 broker-dealer clients, and processed real-time risk calculations for $2T+ in daily trading volume.
What We Found
- Real-time performance validated — Risk calculation engine processed 50M+ events daily with sub-millisecond latency, meeting regulatory requirements for real-time margin calculations
- Regulatory model risk — SEC Rule 15c3-1 net capital calculations had manual overrides in 12% of cases, creating compliance audit exposure
- Infrastructure concentration — 100% hosted in single data center with no disaster recovery site, violating FINRA business continuity requirements
- Key person dependency — Original architect who built the risk engine had left, and remaining team lacked deep knowledge of proprietary algorithms
Outcome
Deal closed with $8M escrow for DR implementation and algorithm documentation. We provided 90-day knowledge transfer program to capture institutional knowledge. DR site was operational within 5 months. Platform passed subsequent FINRA examination without findings.
What Will We Find in Your Deal?
Every transaction has hidden technology risks and opportunities. The question isn't whether they exist—it's whether you'll find them before or after you sign.