In many investment discussions, “IT Due Diligence” gets used as a blanket term for anything involving technology. But in modern deals—especially SaaS, digital platforms, or tech-enabled businesses—that’s not just inaccurate, it’s risky.
Tech DD is not one service.
At Beyond, we separate it into three distinct disciplines:
- IT Due Diligence – operational risk and infrastructure
- Product / SaaS Due Diligence – commercial traction and strategic fit
- Technology Due Diligence – engineering scalability and innovation potential
These can be deployed independently, but often the most effective approach is to run them in sequence.
Why Investors Layer DD
Often, we’re asked to perform a lighter-weight Product Due Diligence first, especially when early stage in assessing the target. We are often asked to provide an ‘outside in’ view of the product as the team explores IF they want to work with the target. Layered DD is also utilised when management access is limited or the Investment Committee simply needs an early directional view before committing deeper diligence budgets.
If results are favourable → we move into full Technology DD.
This creates a faster feedback loop for ICs, reduces deal friction and prevents over-spend on deep technical analysis too early.
Product DD = quick clarity
Tech DD = full execution and engineering validation
The Three Lenses of Technology Due Diligence
1. IT Due Diligence
Assessing operational stability and risk
Suitable for traditional businesses where technology is used to support processes, not as a differentiator (manufacturing, logistics, accounting, engineering).
Focus areas:
- Infrastructure reliability
- Cybersecurity and compliance
- IT operations, disaster recovery
- Scalability to support growth
Use when: The technology is largely off-the-shelf and disruption risk matters more than product failure.
2. Product / SaaS Due Diligence (often Phase 1)
Assessing commercial viability, user value and roadmap credibility
This is typically used to help inform early IC decisions, often with limited management engagement.
Focus areas:
- Product-market fit
- UX and customer journey
- Revenue model scalability
- Roadmap alignment and prioritisation
Ideal when: You’re testing whether the product is genuinely creating commercial value before committing to deeper technical analysis.
If the investment rationale holds → proceed to Tech DD.
3. Technology Due Diligence (often Phase 2)
Assessing engineering capability, architecture and ability to scale
Designed for software-first, platform, SaaS or IP-led businesses. Delivered by CTO and CPO-level experts.
Focus areas:
- Technical debt and scalability
- Architecture alignment with growth strategy
- Engineering team capability
- Innovation processes and delivery pace
Ideal when: Value is dependent on engineering execution.
| Business Type | Recommended DD | Stage |
|---|---|---|
| Traditional / IT-enabled | IT DD | Standalone |
| Tech-enabled but not tech-led | Product → Optional Tech | Staged |
| SaaS / platform / IP-led | Product → Tech (or combined) | Staged |
| Early directional IC assessment | Product DD only | Pre-deal |
| Engineering risk is central | Technology DD | Post-term sheet |
Supporting Statistics
- 31% of global buyouts are in tech-led industries – yet many investors still default to IT-only DD.
Bain Global Private Equity Report (2022) - Over 50% of M&A failures are linked to insufficient diligence, often including overlooked tech issues.
Bain Global M&A Report (2020) - Poor code quality can lead to 15x more defects and 124% longer resolution times, which is critical if technical debt isn’t identified before the deal.
CodeScene (2022) - Technical or product-related issues are among the top three causes of post-acquisition value erosion in digital deals.
Marsh Commercial Tech M&A Risk Report (2025)
External commentary supports adaptive DD scoping:
- Codurance (2025): “Technical Due Diligence must align with acquisition strategy.”
- Alpha FMC (2024): “Tech DD is a driver of operational efficiency, not just risk control.”
- Vaultinum (2025): “Scope DD based on deal type and stage.”
Core Principle
If tech drives commercial traction or you are assessing a business at an early stage → start with Product DD.
If tech drives valuation and scalability → conduct Technology DD.
If it’s both? Use both. But in the right order.
Don’t pay for someone else’s debt
Traditional Due Diligence follows the data room.
Strategic Due Diligence follows the value creation thesis.
In 2025, technology isn’t a support function—it’s often the value driver.
Choosing the right lens early improves speed, improves clarity and avoids paying for someone else’s technical debt.
