Is tech DD even necessary?
A rather contrarian, but not uncommon, view in the industry suggests that “if software works, there’s no need to pick it apart.” Instead, the focus should be on the P&L and intellectual property. The code can be left alone.
However, in software M&A, the source code is one of the primary assets being acquired — often jointly with customer relationships. The quality of the code directly influences post-merger execution, from churn rates and new MRR to technical scalability and integration feasibility. This applies even more to enterprise software companies, which frequently carry technical debt to the point of near-obsolescence.
For firms that do carry out Tech DD, the approaches vary widely. Some use third-party consultants like TechMiners, others ask their own CTO or tech lead to fill out a form or provide a brief assessment. While every method has its place, engaging a specialist saves time, provides independent insight, and reduces risk — particularly in high-stakes, high-speed deal environments.
1. Capacity factor In a typical serial acquisition model, a Head of M&A might be tasked with deploying €50M in equity per year. This can translate into 5 to 10 deals annually, each with different products, tech stacks, and geographic footprints.
Compromising on diligence quality in order to maintain deal velocity can eventually erode carried interest. At the same time, delays often cause deals to fall through. The best-performing serial acquirers close deals within six to eight weeks from LOI to SPA. This leaves around four weeks for substantial due diligence, followed by time to define mitigations and negotiate final terms.
Most internal teams cannot deliver 10 deep-dive tech DD sprints per year at this pace. TechMiners solves for this by providing scalable capacity. With good access to the target, TechMiners can deliver a comprehensive, insight-rich report within 10 business days — designed to be both easy to digest and actionable.
2. The "So What" factor A common scenario sounds like this: “We have a coder in Bosnia who will run the penetration test. Our CTO can review the code. We’ll record the product demo — everyone can look at it asynchronously.”
But this often leads to surface-level insight. Most CTOs are highly competent but are not used to evaluating multiple, conflicting tech stacks in fast-moving deal cycles. Nor are they trained for minimally invasive, unbiased assessments — which is understandable, since they usually operate in environments where they select and control the tech stack.
Serial acquirers face a different reality. Inconsistent architecture, mixed code quality, legacy platforms — all common. The temptation is often to dismiss it all as “spaghetti code” — but the real question is: how good is that spaghetti?
At the other extreme, overly long reports that take weeks to produce and block the target team are also unhelpful. Additionally, biases against certain technologies or tools can create unnecessary friction. That’s why TechMiners works alongside M&A and CTO teams to deliver a clear, objective evaluation — without undermining internal stakeholders.
3. The strengthen-your-hand factor Many M&A professionals have experienced it: after weeks of SPA negotiations, a last-minute report from the tech team lands — with a critical finding that requires a price renegotiation.
Likewise, CTOs are often brought in far too late in the process, shown a near-final SPA, and asked for feedback on a due diligence that only started two days prior.
None of this is ideal.
A third-party tech DD report can support deal teams in requesting justified price adjustments or negotiating post-closing KPIs — especially when it includes relevant benchmarking and quantified technical debt. Such documentation often acts as a “neutral arbiter” in difficult conversations, creating alignment where internal teams may disagree.
4. The "I don't trust you" factor Sellers are often highly protective of their source code — and rightly so. In some cases, this leads to extreme caution:
On-screen code walkthroughs only, no recordings allowed Source code escrow requirements until deferred payments are made While these situations are understandable, they are suboptimal for everyone involved. Bringing in an external consultant as a bridge between buyer and seller can help. TechMiners performs confidential, professional reviews — interviewing employees, checking the codebase, and repositioning the DD effort as a near-neutral audit. The output: recommendations that are useful regardless of deal outcome.
By reframing Tech DD not as a “gotcha” exercise, but as a valuable and professional insight process, trust is increased and friction is reduced.
5. The AI factor In 2025, artificial intelligence acts as a double-edged sword in tech due diligence. On one side, AI boosts efficiency, enables new product capabilities, and can set companies apart. On the other hand, it introduces new risks that many founders and investors still underestimate.A common red flag is the uncontrolled use of generative AI tools in daily workflows. Examples we observed recently include:
Engineers pasting sensitive code into LLM or using their responses without double-checking that the code actually works Product teams integrating AI features without auditability Leadership promoting “AI-powered” value propositions that lack technical or legal grounding Employees using LLMs without anonymizing client data Even when AI is not part of the core product, its use in internal tools or processes can lead to intellectual property leakage, data privacy issues, or compliance gaps. Many startups also fail to assess AI’s true impact on their market position - underestimating both the opportunities and threats.From an investment or resource allocation perspective or in an existing portfolio company, a thorough review of AI architecture, tooling, and governance is now essential. At TechMiners, we examine how AI is implemented, where data flows, and whether a clear framework for responsible AI use exists. We also help investors determine if AI is a real strategic asset - or just a buzzword masking technical debt or manual processes.
