IT Due Diligence

IT Due Diligence For Tech-Enabled Companies

IT vs Tech Due Diligence|

What Is An IT Due Diligence?

An IT due diligence is focused on companies that are not software companies and are instead more tech-enabled companies. While the company may still have a software product or a line-of-business tool they build, software building is not their primary core business. There are some overlaps between IT and tech due diligence, the focus of the former is on technology as an enabler for the business.

An IT due diligence is an exploration of a potential company (i.e. target) against a specific investment thesis. This would include the IT infrastructure, processes, data, reporting, LOB tools, and Cybersecurity.

The goal of IT due diligence is to assess risks that can get in the way of the investment thesis and surface potential surprises. 

Ultimately, the assessment would advise the investor on whether the thesis is possible or not. In the cases where it is possible, it would identify important risks and how to mitigate these.

An IT due diligence could have 3 potential outcomes:

  • Not a great investment based on the thesis

  • Good investment, but risks must be mitigated in value creation

  • Great investment and some optimization opportunities exist

The best IT due diligence would also go above and beyond to explore what opportunities exist to do things better, more efficiently, faster, and with less cost. These would be quantified against value creation levers. This would have a positive effect not only on the outcome of the investment but also on the EBITDA and exit multiples expansion.

 

A great IT due diligence should also be data-driven with quantifiable benchmarks that feed into the value creation cycle for maximum benefits. It should also identify immediate risks as well as potential future risks with an eye for an exit.

What Is Inside An IT Due Diligence?

The IT due diligence process takes a pragmatic and strategic 360 holistic approach. The comprehensive view helps with checks and balances and allows for different angles to get a more accurate view. 

The core IT due diligence includes business strategy, IT strategy, roadmap, team capabilities, ability to execute, LOB tools, productivity tools, data strategy, reporting insights, organization, cybersecurity, and leadership.

What Makes Us Different?

Years of execution experience working with investors, companies, and hands-on with teams globally, provide us with a competitive edge.

Our approach combines humans, machines, and tools. Our team comprises senior technical experts such as CTOs, CIOs with strong business acumen complimented by proprietary software, industry, and best practices data to help us to deliver the best value for our clients with a pragmatic focus on practical risk mitigation and value creation.

Diligence packages are tailored based on the target situation, stage, size, revenue, maturity, and more importantly the investment strategy and goals. We help you decide which package is best for your situation.


Whether it is a stealth mode that requires an outside-in approach, a competitive deal with limited access and a compressed timeline, or standard due diligence, we offer multiple products ranging from outside-in to full-diligence to accommodate your needs.

We move fast and accommodate fast-moving deals.

IT Due Diligence Core Offerings

Stealth IT Due Diligence (~ 1 week)

Outside-in approach to validate thesis, confirm interest, and answer specific questions

When to Consider?

  • You have an initial interest in a company and exploring

  • You are in discussion with a company, but no commitments on either side

  • You need a high-level validation to limit future effort and spend

  • You are interested in a minority interest and need a high-level validation

Standard IT Due Diligence (~ 2-3 weeks)

Full in-depth due diligence with full risks and opportunities backlog, industry benchmarks, best practices benchmarks, costs optimization opportunities, and a value creation roadmap

 

When to Consider?

  • You have an LOI in place or soon to be

  • You are in exclusivity or have a healthy access

  • You prefer in-depth risks, opportunities, and value creation options

Basic IT Due Diligence (~ 1-2 weeks)

High-level red flag thesis validation with top risks

When to Consider?

  • You have an LOI in place or soon to be

  • You are in exclusivity or have some or a healthy access

  • You have a very limited time and need a quick red flag

Competitive IT Due Diligence (~ 3-4 weeks)

Combined standard and stealth diligence. Full in-depth diligence IT due diligence with full risks and opportunities backlog, industry benchmarks, best practices benchmarks, costs optimization opportunities, and a value creation roadmap with extended time to accommodate access challenges. 

When to Consider?

  • You are in discussion with a private or public company

  • You are part of a competitive process with other bidders

  • You have limited access with some management access

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Resources|

  • Free Soundboard Sessions: Chemistry has to work and you and your team must have confidence in our execution. We offer a no-strings-attached session to discuss potential acquisitions and deals at no cost to you. Contact us to book a session

  • Attend RingStone Academy: Our team shares insights and experience about technology best practices, IT and technical due diligence practices, software architecture, cloud, and security topics. Check our webinar events calendar

  • Custom Education Sessions: We offer free sessions to help deal teams and operating partners in Private Equity with technology best practices for technical due diligence execution and what to look for in the early exploration stages. Contact us to discuss availability

  • Other Resources