We don't need technical due diligence as it is not a technology company.

When investing in companies, legal, financial and commercial due diligence is the focus for most private equity firms. Technical due diligence can often be left out of the process because the company is "not a technology company", but every company is a technology company. Focusing on technology can often lead to opportunities to unlock future value.?

Technology has become increasingly integral to business operations, and technical due diligence has emerged as a crucial component of the due diligence process. It is true even for companies focused on something other than technology. This article will explore why technical due diligence is essential for private equity firms investing in non-technical companies.

Understanding the company's technology stack

Even non-technical companies rely on technology to some extent. Whether it's its website, backend systems, customer relationship management system, or supply chain management software, understanding the technology stack used by the company is critical to assessing its ability to compete in the market. Technical due diligence can help private equity firms evaluate the company's technology infrastructure, identify potential issues or bottlenecks, and determine whether it can support its current and future needs.

Assessing cybersecurity risks

Data breaches and other cyber threats are a growing concern for companies of all sizes and industries, which can harm company performance. Investment firms need to be aware of the cybersecurity risks associated with the companies they invest in. Technical due diligence can help identify any vulnerabilities in the company's systems, processes, and policies related to data protection and cybersecurity and create a plan to mitigate risks and avoid financial and reputational issues.

Evaluating intellectual property

Intellectual property (IP) is a critical asset for many companies, regardless of their focus. Patents, trademarks, and copyrights can be a significant source of revenue and competitive advantage. Technical due diligence can help private equity firms evaluate the company's IP portfolio, including any patents, trademarks, or copyrights, and determine their value and potential for revenue generation.?

Identifying opportunities for process improvements

Non-technical companies often benefit from a system review and access to process improvements that leverage technology. Technical due diligence identifies opportunities to optimize processes using technology, such as automation or data analytics. Creating improvements in increased efficiency, cost savings, and better decision-making.

Anticipating future technology needs

After reviewing the technology, we can advise on how the tech infrastructure can evolve and scale based on the future business plan. Additionally, we can recommend and guide decisions about investing in new technology or upgrading existing systems and processes. Due to the speed of technology development, this can have a significant impact on future costs and business value creation.?

Mitigating integration risks

When investment firms acquire a company, they often must integrate it with other companies in their portfolio or operations. Technical due diligence can help identify any potential integration risks related to technology, such as compatibility issues or data migration challenges. Understanding these risks can help the investor develop a mitigation plan and ensure a smooth integration process.

Data?

In today's data-driven world, data has become a critical asset for businesses, and private equity firms need to understand how a company collects, stores, manages, and uses its data. Technical due diligence can evaluate a company's data infrastructure, including the systems, processes, and policies related to data management and security. This information is essential for assessing the risks associated with investing in the company and developing a plan to mitigate those risks. Additionally, data analytics can provide valuable insights into customer behaviour, market trends, and business performance. Technical due diligence can help identify opportunities to leverage data analytics to optimize processes, improve decision-making, and increase revenue.?

While non-technical companies may not be primarily focused on technology, it is still essential for investors to conduct technical due diligence as part of the overall due diligence process.

As a company focused on technical due diligence, we can provide critical insights into the company's technology infrastructure, cybersecurity risks, intellectual property, data, process improvements, future technology needs, and integration risks. This information can help guide the investment decision, inform the development of a strategy for maximizing the company's value and assist investors in making better and more informed investment decisions.