An M&A technology due diligence checklist is usually written by engineers and read by people making a price decision, which is why so much of it does not matter to the outcome. Code quality is real and it is rarely what moves a number. Two of the five areas change prices, and both are about ownership and obligation rather than craft. This page sets out the five and marks the two.
Area one, price-changing: does the company own its code?
Assignment from every founder, contractor and employee who ever contributed, plus any university or previous-employer entanglement. A gap here is not a discount, it is a condition, and it takes weeks to resolve because it means finding people who left years ago. It is the single most common fatal finding in technology diligence.
Area two, price-changing: what is the licence obligation?
Open-source components and their licences, particularly anything copyleft in a product that ships. A dependency that obliges disclosure of proprietary code is a real constraint on what the buyer can do with the asset, and it is discovered by scanning rather than by asking.
Areas three and four: architecture and the team
Whether the system can carry the growth in the projections, and whether the people who understand it are staying. Both matter enormously to the buyer's plan and both are usually handled with retention packages and a roadmap rather than with a price change.
Area five: security and data handling
What data is held, where, under what commitments, and what has happened historically. In a regulated sector this can become a condition; in most it becomes an integration workstream. It is worth doing properly and it is rarely the thing that moves the number.
Questions people ask about m&a technology due diligence checklist
What actually changes the price in technology diligence?
Code ownership gaps and open-source licence obligations. Architecture and team questions are usually handled with retention and a roadmap.
Is code quality worth reviewing?
Yes, for the buyer's plan. It rarely moves the number, because the buyer expects to invest in the codebase either way.
What is the most common fatal finding?
Unassigned IP from a contractor or a founder who left. It is a condition rather than a discount and it takes weeks to resolve.