In the world of tech due diligence, imperfection isn’t just expected—it’s a fundamental part of the process. Every business has flaws, and rather than seeing them as deal-breakers, we view them as opportunities. Some of the best investments arise from identifying and addressing these gaps post-deal. The real question isn’t whether a business has imperfections—it’s whether the team is self-aware enough to acknowledge and address them.
Why Imperfection Works
Investors don’t necessarily want a perfect company. In fact, it’s the imperfections that often create the clearest paths to adding value quickly. Consider common operational inefficiencies:
- Lack of automation between revenue and cash systems
- Inefficient cash collection processes
- A complex or outdated purchasing experience for customers
These aren’t catastrophic problems. They’re low-hanging fruit—fixing them can make an immediate impact on growth and profitability. That’s why, if we flag these issues, we’d much rather you take the initiative to resolve them before a deal closes. Doing so can increase the value of your business and make it more attractive to potential buyers or investors.
A Tale of Two Firms
The Self-Aware Powerhouse
One of the best companies we’ve worked with was run by five equal founders. They knew exactly what they did well and, crucially, what they didn’t. Their technical platform had gaps, and they recognized their lack of expertise in global expansion. But rather than hiding these imperfections, they were transparent about them. This openness made it easy to collaborate and help them build solutions post-deal. Their self-awareness didn’t just make our job easier—it increased investor confidence, making them a far more attractive acquisition target.
The Defensive Founder
On the other end of the spectrum, we worked with a company riddled with operational and strategic flaws. But the biggest issue wasn’t the technology—it was the founder’s mindset. His approach to customer data security was outdated, yet he refused to acknowledge it. He was aggressive in meetings, dismissive of feedback, and vague about future costs.
The imperfections in his business could have been fixed, but his unwillingness to engage in a productive dialogue was the real red flag. This illustrates a key point: it’s not about whether a company is imperfect. It’s about whether its leadership is easy to work with.
The Levels of Imperfection Differ
Not all imperfections are created equal. Some are technical and easily addressed. Others are strategic and require more nuanced problem-solving. But the most dangerous flaws aren’t in the code or the processes—they’re in the mindset of leadership. The best founders and teams understand that imperfection isn’t failure. It’s an opportunity for growth, collaboration, and post-deal value creation.
So, before an investor or buyer points out what’s wrong with your business, ask yourself: do you already know? And more importantly, are you willing to fix it? The firms that do aren’t just more investable—they’re more successful in the long run.
