In today's business landscape, technology is crucial for companies across industries, including non-tech enterprises. It enhances operational efficiency, enables personalized customer experiences, expands market reach, and drives innovation. From automation to data analytics and digital marketing, technology empowers businesses to stay competitive and adapt to the digital age. This also has a significant impact on the M&A sector. On the one hand, the number of tech-related deals is increasing and, on the other hand, tech companies are also valued at higher multiples than average. The tech sector accounts for 20% of M&A activity in 2021. Given the far-reaching implications of technology, it is essential to identify all risks and potentials, followed by possible mitigation measures along with specific actions to realize them. We address precisely these topics end to end in our tech due diligence.

Understand the multifaceted roles of technology within a company

Technology is integral to a company's growth and competitiveness across several fronts. Scaling the business requires a robust codebase, architecture, infrastructure and know-how to serve more customers seamlessly. Tech flexibility drives product disruption, enabling rapid innovation and allowing the company to stay ahead of the competition. Tech readiness facilitates market entry, ensuring the alignment of systems and compliance with new market dynamics. Adapting products to changing customer needs demands agility and customer centricity. However, high technical debt poses a hindrance, slowing down development cycles and impeding adaptability. To thrive, companies must prioritize reducing their tech debt and embrace scalable, flexible solutions. By doing so, they can successfully scale operations, disrupt products, enter new markets, and swiftly adapt to evolving customer needs, ensuring their position at the forefront of the digital era.

In the M&A context, however, there are additional facets of technology. If an investment is made with the goal of corporate synergies, the role of technology is important in another way, since 60% of synergies are are directly or indirectly dependent on technology. Therefore, our tech due diligence also identifies cross-company dependencies and critical paths for the feasibility of synergies.

The Roland Berger approach to tech due diligence

A successful tech due diligence requires a multidimensional approach that delves into various aspects of technology and its integration within the business. Our experts analyze not only the company's technical infrastructure, IT stack, and code quality but also explore its alignment with the broader industry trends and benchmarks. We look at the company's strategic initiatives, customer cohorts, and customer lifetime value to uncover valuable insights at the intersection of business strategy and technology.

For a more in-depth understanding, we are also able to scan a product's code to gain deeper insights into the company's software quality and its environment.

At Roland Berger, we strive to provide a comprehensive view of a company's technological landscape, identifying key opportunities, risks, and potential value drivers. Our tech due diligence assessments draw upon industry expertise and leverage data-driven analysis to derive actionable recommendations. These recommendations are essential for risk mitigation and the feasibility of strategic goals. We tailor our recommendations to each situation and stakeholder.

Our tech due diligence provides the following benefits:

• Identification of risks
• Identification of potentials
• Derivation of mitigation actions
• Derivation of a roadmap
• Clear understanding of financial and chronological impact of risks and potentials

The set of questions we aim to answer can be summarized as follows:

Development & deployment

• How does the development process in the organization ensure efficient collaboration between different teams and minimize deployment time?
• What strategies and tools are in place to automate the deployment process and ensure continuous integration and delivery?

Technical debt

• How does the organization measure and prioritize technical debt? What strategies are in place to address high-priority technical debt items?
• What steps are taken to ensure that technical debt does not accumulate over time and impact the long-term stability and scalability of the system?

Architecture

• What architectural principles and patterns are followed in the organization to promote modularity, scalability, and maintainability of the system?
• How does the organization ensure that the architecture is aligned with the business goals and supports future growth and innovation?

Data & analytics

• What data management practices are followed to ensure the quality, integrity, and security of the organization's data assets?
• How does the organization leverage data and analytics to gain insights, make informed decisions, and drive business value?

Product services & tech strategy

• How does the organization define and prioritize its product and service offerings based on market trends and customer needs?
• What is the organization's technology strategy to stay competitive in the market, foster innovation, and adapt to evolving technologies?

Team & knowledge

• How does the organization foster a culture of continuous learning and knowledge sharing among its technical teams?
• What strategies are in place to attract and retain top technical talent and ensure a diverse and inclusive workforce?

Tech uniqueness

• What sets the organization's technology apart from its competitors in terms of innovation, performance, or user experience?
• How does the organization protect and leverage its unique technology assets to gain a competitive advantage?

Security & compliance

• What security measures and practices are implemented to protect the organization's systems, applications, and data from potential threats and breaches?
• How does the organization ensure compliance with relevant regulatory standards and industry best practices related to security and data privacy?

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