When investors think about tech due diligence (Tech DD), they often focus on the technical stack, scalability, and security. But one of the most critical and often overlooked aspects of Tech DD is how it exposes people issues and challenges—specifically, leadership misalignment, lack of diversity in thought, and recruitment patterns that stifle innovation.
The slides below supoort this article and feature in a speech that I give on this topic:
In our business at Beyond M&A, we go beyond the code to uncover these critical people issues that can make or break an investment.
The CEO-CTO Clash: A Common Bottleneck
One of the most frequent challenges we identify in Tech DD is the disconnect between the CEO and CTO. While the CEO is focused on commercial growth, the CTO often operates with a technical mindset that prioritises stability and efficiency. This misalignment can slow down product development, introduce friction in strategic decision-making, and ultimately impact business outcomes.
For investors, identifying this clash early can mean the difference between a high-performing leadership team and one that will struggle to scale effectively. Our approach assesses how well these roles are aligned and whether the technology function supports the overall business objectives.
The Hidden Cost of Hiring Clones
Many tech teams suffer from a lack of cognitive diversity, hiring individuals with similar problem-solving approaches rather than seeking varied perspectives. This creates a risk-averse environment that resists innovation and struggles with rapid scaling.
A recent Tech DD assessment for a target company highlighted this issue starkly. The team had a pattern of recruiting individuals with highly analytical, low-risk profiles, resulting in a culture that was great at maintaining systems but poor at innovating. We recommended changes to the hiring process, ensuring that future hires brought in diverse strategic thinking to drive the business forward.
Leadership Maturity: From Start-Up to Scale-Up
Founders and early technical hires often have an entrepreneurial mindset, building everything from scratch and moving fast. However, scaling a company requires a different skill set—one that emphasises process, delegation, and long-term strategy.
In one case, the Head of IT had built the company’s entire infrastructure but lacked the experience to transition into a structured, scalable operation. The psychological profile showed a strong entrepreneurial drive but a weakness in strategic execution. Our recommendation? A new Head of IT with scale-up experience to support the company’s next phase of growth.
How Tech DD Highlights These People Issues
Through our Tech DD process, we examine teams beyond their technical capabilities, looking at factors like:
- Conative Strengths – Do leaders have the instinctual drive to execute on strategy?
- Cognitive Balance – Are teams overly analytical, or do they include risk-takers and visionaries?
- Organisational Structure – Is there clarity in roles, or are key individuals overloaded with responsibilities?
By addressing these people-related issues early, investors can mitigate risk, strengthen leadership teams, and ensure that the technology function is fully aligned with business growth.
The Cost of Inaction
Ignoring people challenges in tech teams has tangible financial consequences. In one case, failing to address structural inefficiencies and leadership gaps would have cost the business an estimated £250k in lost opportunities. On the flip side, a strategic investment in a well-rounded leadership team could drive innovation, efficiency, and long-term success.
Investors who incorporate people-focused insights into their Tech DD gain a sharper view of the business’s full potential. The right team can turn a good investment into a great one.
Next Steps: How to Address These Challenges
If you’re investing in a technology company, ensure your due diligence goes beyond the tech stack. Ask the tough questions about leadership, team structure, and recruitment patterns.
At Beyond M&A, our Tech DD approach integrates these people-focused insights, giving investors the confidence to make informed decisions. Get in touch with us to learn how we can help you uncover and address the hidden people challenges in your next deal.
