Due Diligence and VDD
A comprehensive data-oriented approach for minimizing risks and maximizing valuation
Sell-Side Tech Due Diligence|
Why A Sell-Side Technical Due Diligence Is Important?
Sell-side tech due diligence is an assessment that helps a seller or a company with readiness. Still, more importantly, it helps surface issues before buy-side diligence, allowing them to understand potential concerns and often time to rectify before a buyer gets involved.
The result is a much more streamlined process for the buyer with fewer surprises. The seller benefits from better readiness, a less painful diligence process, and typically a higher value deal or at least a fair valuation price.
Sell-side technical due diligence can help eliminate potential deal killers saving everyone time and costs.
What Are the Benefits Of A Sell-Side Technical Due Diligence?
Here are the top benefits and reasons companies conduct sell-side technical due diligence.
Explore Risks Early: Helps the seller uncover issues and potentially resolve or put a plan in place to mitigate them
Practice Makes Perfect: A sell-side helps a team practice and exercise what they need to do. This is especially important for teams that have not been through a similar process
Diligence Is A Demanding Exercise: Having gone through one helps make the future process for potential buyers easier where the necessary documentation and data are prepared and ready. The headstart preparation also makes it easier for the team
Uncover Blind Spots: Assessing oneself with an external unbiased view can provide an advantage point to point out blind spots that may not be visible to the team
Increase Appeal: Being proactive and ready indicates commitment that makes sellers/companies more appealing to potential buyers
Trusted Documentation: The resulting reports are helpful to both the buyers and sellers. The buyers will have a VDD (Vendor Due Diligence) report ready for their consumption, and the sellers will have an internal report with improvement opportunities to address
Technical Due Diligence Capabilities
At RingStone, we take a pragmatic and strategic 360 holistic approach to Sell-Side Technical Due Diligence. This allows us uniquely positioned to uncover risks early in full collaboration with the team and help them mitigate potential concerns earlier. We also emphasize readiness to help them prepare and reduce the overhead and stress from a potential buy-side technical due diligence.
The end-to-end diligence comprises business and technology strategy, roadmap, architecture, code health, team capabilities, deployment setup, IT infrastructure, security, and leadership.
What Makes Us Different?
At RingStone, we run sell-side diligence with those six goals in mind. We take a friendly, pragmatic and strategic 360 holistic approach to help prepare a company for a potential buy-side technical due diligence. The process is structured to cover hidden concerns and outline a stack-ranked set of optimizations for better readiness while we’re helping the team prepare.
The process is efficiently structured to ensure minimal impact on the team in the least amount of time.
The due diligence and reports are data-driven, with quantifiable benchmarks and dual benefits. On one hand, they provide concrete and comparative data for the company to understand its current state. On the other, the data is presented in a VDD report allowing the acquirer to get a measurable and healthy 360-view of the company.
The exercise takes a thorough look at the overall suitability and health of the technology and its ability to evolve to accommodate the business strategy and technology landscape changes.
It explores the business and technology strategy, roadmap, software architecture, code health, team capabilities, software development lifecycle, deployment capabilities, IT infrastructure, security, services, and leadership.
Our approach combines human, machine, and tools using senior technology practitioners and CTOs with solid business acumen. Benchmarks are provided throughout proprietary software for industry and best practices comparisons. Our focus is to partner with the company, and provide them with clear pragmatic guidance, practical risk mitigation, and preparedness for potential buy-side diligence.
Years of execution and experience working with investors, and companies, and hands-on with teams globally, provide us with the experience to make the process painless for the team while providing them the most value.
When To Kick Off a Sell-Side Technical Due Diligence?
While we advise starting the sell-side due diligence process as early as possible, for example, 6-12 months before a potential sale, to get the maximum benefits. We’re happy to move fast with a dedicated senior team and accommodate aggressive timelines.
Sell-Side Technical Due Diligence Prep (~ 4-5 weeks)
End-to-end Sell-Side technical due diligence to help prepare, mitigate, practice, and produce a buyer consumable vendor due diligence report.
When to Consider?
6-18 months before a sale event
The team has never been through diligence before
You expect underlying surprises in the technology or team
A company with a troubled past or legacy
Need to optimize for a better valuation
Vendor Due Diligence - VDD (~ 3 weeks)
Conduct technical due diligence and produce a VDD report with quick mitigations.
When to Consider?
2-6 months before a sale event
Not expecting significant risks, but want to be prepared
Need a VDD report ready for potential buyers
Need a comprehensive VDD to share with potential investors
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, technical due diligence practices, software architecture, cloud, and security topics.
Custom Education Sessions: We offer 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
Technical Due Diligence Checklist and Quiz: Review and download the tech due diligence checklist
Infographic Definitive Guide: Download the technical due diligence infographic definitive guide