How Technical Due Diligence saved £500,000 in failed investment

• IDS Group conducted technical due diligence on a client’s acquisition target
• Tight four-week window to review with client, undertake audit and produce findings
• Assessment covered security, scalability, compliance and technical debt
• Audit identified risks that would have impacted integration costs and limited ROI
• Investment decision reversed, saving £500,000 in potential losses

A CFO and CEO approached IDS Group through a website enquiry. They were in the process of acquiring a software platform within their sector and required an in-depth technical due diligence audit. The primary goal was to assess:

1. If the acquisition aligned with their strategic objectives
2. Whether or not the technical foundations supported their long-term investment goals.

The client was working in a tight four-week window. Within that, they had to complete the audit process and produce a full report. As such, they had outlined specific areas, focusing on the platform’s security, scalability, dependencies and future development roadmap.

The key concerns included:

• If the technology stack was – in part and as a whole – up to date
• The feasibility of upgrading and scaling components
• Any potential risks related to compliance, security vulnerabilities or intellectual property.

Of particular interest was the platform’s ability to support international expansion into English-speaking markets such as the USA, Canada and Australia. The client wanted to understand the development effort required to achieve this and whether the architecture could scale to five times its current customer base.

With such a substantial investment on the line, they needed clear, actionable insights. This would help them determine whether the acquisition was a viable opportunity – or a potential financial risk.

IDS Group conducted a structured technical due diligence assessment on the target company. This started with detailed workshops. Involving the target company’s developers and product owners gave a deep technical analysis of the platform, with no hidden risks overlooked.

Next, the audit included a full review of code quality, security compliance and infrastructure dependencies. Our specialists assessed:

• Whether the platform’s technology stack was current or outdated
• If all components had a sustainable roadmap or would require major overhauls
• If there were any concerns regarding vendor lock-in.

Particular attention was given to aspects like multi-tenancy architecture, data security, GDPR compliance and technical debt. Key findings were then presented to the client.

Our technical due diligence process highlighted structural threats to integration and long-term scalability. IDS Group’s team also provided strategic recommendations, showing the potential development effort required to resolve these issues. There were also suggestions on improvements that could mitigate risk.

By the end of the audit, it was clear that the platform did not meet the level required for a confident investment. Specifically, it showed concerns over best practices for software development, cyber security and scalability. These insights helped the client make an informed investment decision based on both technical feasibility and commercial impact.

IDS Group’s technical due diligence assessment identified significant issues in the target company’s software and IT infrastructure. Many of these would have made the acquisition a high-risk investment for our client. In particular, the platform’s existing architecture was not suited for long-term growth and did not adhere to several best practices.

Based on these findings, the client decided to withdraw from the acquisition. This saved unexpected future costs to bring the platform up to standards, which would have severely limited their financial returns.

Overall, the engagement demonstrated the value of in-depth technical due diligence. IDS Group’s audit process helped our client make an investment decision with a full, clear, unbiased understanding of the technological risks involved. Realising that the platform did not meet their strategic objectives, the client could move on to better acquisition opportunities.

• Comprehensive technical due diligence allowed for informed decision-making
• High-risk acquisition prevented, protecting long-term investment strategy
• £500,000 saved by avoiding costly post-acquisition remediation