What technical areas would you investigate in acquisition due diligence?

WHAT THIS TESTS: Whether you can think like a CTO or architect in an M&A context. The interviewer wants to see if you understand that acquiring technology is not about admiring code; it is about estimating the true cost of merging two systems, teams, and roadmaps. You need to demonstrate risk assessment across technical, organizational, and legal dimensions, especially since KPMG research shows sixty-two percent of deals miss financial targets mainly because of poor due diligence.

A GOOD ANSWER COVERS: First, architecture and infrastructure compatibility. You would examine their cloud providers, deployment pipelines, API surfaces, and service boundaries to estimate rewrite versus integrate costs. Second, codebase health and technical debt. Look for outdated frameworks, lack of automated testing, poor documentation, and monolithic bottlenecks that slow feature delivery. Third, data architecture and migration complexity. Since the products overlap, you must compare data models, identify schema conflicts, and estimate the cost of customer data migration and synchronization. Fourth, security and compliance posture. Review certifications, data handling practices, vulnerability history, and regulatory exposure because non-compliance can trigger fines that erase deal value. Fifth, team and process evaluation. Assess the depth of technical talent, key-person dependencies, documentation habits, and whether their engineering culture can mesh with yours. Sixth, product roadmap and technical strategy alignment. Determine if their future architecture conflicts with your platform vision, which could force a costly pivot.

COMMON WRONG ANSWERS: Treating due diligence as a code review session focused on style or language choice. Proposing a full rewrite without analyzing integration alternatives. Ignoring the business cost of technical debt and speaking only in abstract engineering terms. Overlooking compliance or security because you assume legal will handle it. Failing to mention team retention, since talent flight after acquisition is a primary reason integrations fail.

LIKELY FOLLOW-UPS: How would you decide between sunsetting their product versus merging the codebases? What integration timeline would you propose to the board? How do you value technical debt in financial terms for the deal model? What if their stack is completely different from yours?

ONE CONCRETE EXAMPLE: Suppose you run a SaaS platform on AWS using microservices and Kubernetes, while the target runs a monolithic PHP application on managed hosting with no CI/CD. Your due diligence would flag a six-to-twelve month migration to containerization before any feature integration is possible, plus the need to retrain or replace their ops team. You would price this into the acquisition cost or require an earn-out tied to infrastructure modernization milestones.

Source: mev.com