In general, many startup software development companies aspire to attain two things. First, achieve a crucial investment to meet its target growth. Second, as the company grows, it will soon be acquired by one of the global giants. However, the path toward the finish line is a long journey full of obstacles and challenges. One of them is securing technical due diligence to succeed as a company. This article serves as a guide with the best recommendations to make the company succeed with a dedicated team to achieve the software project’s endeavors.
Preparing for the best
Every development team seeks to achieve their goals and the required investment that can assist them to get over the end line. Their dedicated teams want to partner with one of the big players in the industry or be acquired by leading global software development firms. As the race to innovate continues and be on top of the game, many development teams of software companies are willing to provide their customers with quality products and services. In the process, one of the hurdles they must overcome is conducting technical due diligence to stay competitive and compliant to global best practices and standards.
Understanding technical due diligence
Technical due diligence consists of a process of evaluating the technology and technical components of a product or service. This involves analyzing the architecture and methods employed by a software development company before acquiring the company or investing in it.
This usually occurs prior to having funding, mergers or acquisitions. These complex activities require stringent due diligence evaluation. The technical due diligence process may need a thorough investigation or several examinations that focus on various topics. Firms that spare about 20 hours on undertaking due diligence have higher chances of getting an improved and positive return of investments.
Basic processes of technical due diligence
- Intro – the technical due diligence begins before the project commences. A proper briefing between the team members is the initial step. Everyone should be transparent, honest, and punctual to assist in creating the right framework for the succeeding steps. Otherwise, if details are not properly discussed, it would be difficult to build trust among the team members in the process.
- Kick-off meeting – this the ‘official’ starting point of the due diligence process. It is where the requirements and full details are shared between the people involved, including the timelines.
- Documentation assessment – Before meeting in person, analysts carry out due diligence by checking all the current documentation such as architecture, backup and recovery processes, monitoring procedures, and servers’ specifications. The more details you have regarding how things are well-documented the better.
- On-site DD / remote call – Regarding growth phase investments, a live, in-person meeting is necessary. Investors would like to be sure how things work as described. It requires a day or so to check the various technical parts of the service or product being evaluated in real-time.
- Follow up – oftentimes, many queries occur during the initial discussions. All questions and clarifications are responded in the succeeding two to three follow-up iterations.
- Report preparation – the technical due diligence reports are handled by hired independent specialists or dedicated team. The final result of the due diligence process is a written detailed report. The development team cites all the pros and cons when pursuing the software project. Also, the overall judgment by the third-party examiner is disclosed, sharing their findings whether the product or service is technically reliable when carried out.