10 Must-Know Statistics About Tech Due Diligence

Data and statistics in tech due diligence

Introduction

Due diligence is an essential process that businesses undergo before making a merger or acquisition decision. It thoroughly evaluates the target company’s financial, legal, and operational status.

For technology-based companies, tech due diligence is critical to the process. This article will explore ten important statistics related to tech due diligence that every business leader should know.

Here are ten statistics related to tech due diligence:

  1. 62% of mergers and acquisitions (M&A) fail to meet their financial objectives, with poor due diligence cited as one of the primary reasons for failure. (Source: Harvard Business Review)
  2. 76% of technology acquisitions fail to meet their financial objectives. (Source: McKinsey & Company)
  3. Companies that perform due diligence on the target’s technology are 2.8 times more likely to achieve a successful outcome than those that don’t. (Source: McKinsey & Company)
  4. The average time spent on due diligence for technology companies is 12 weeks. (Source: KPMG)
  5. 80% of tech executives said data security and privacy are the most important factors to consider during tech due diligence. (Source: West Monroe Partners)
  6. The average cost of due diligence for a technology acquisition is $50,000 to $150,000. (Source: KPMG)
  7. In 2021, the number of technology deals that underwent due diligence increased by 8% compared to 2020. (Source: Mergermarket)
  8. 70% of private equity firms conduct tech due diligence before investing. (Source: PitchBook)
  9. The due diligence process typically involves reviewing the target company’s financial statements, contracts, intellectual property, technology, cybersecurity, and regulatory compliance. (Source: PwC)
  10. The primary goal of tech due diligence is to assess the risks associated with the target’s technology and determine its true value. (Source: Deloitte)

Conclusion

In today’s fast-paced business environment, mergers and acquisitions have become commonplace, especially in technology. However, many such transactions fail to achieve their financial objectives.

Tech due diligence can help mitigate the risks associated with technology acquisitions and pave the way for successful outcomes. Business leaders should pay close attention to the ten statistics highlighted in this article to ensure they make informed decisions during the tech due diligence process.

The most common IT due diligence traps
Hutton Henry
Hutton Henry
Hutton has worked with Private Equity Portfolio firms and Private Equity funds since 2015. Having previously worked in post-merger integration for large firms such as Ford and HP, Hutton understands the value of finding issues prior to M&A deals. He is currently the founder of Beyond M&A and provides technology due diligence for VC, PE and corporate investors, so they understand their technology risks before entering into a deal.

Take our FREE Scorecard to find out if your investment is at risk.

Discover the value of technology in your portfolio and target investments to gain more confidence and uncover potentially significant risks that could affect the value of a sale or an acquisition.
TAKE THE TEST

More Stories

Back To Top