Prior to making an investment or completing an M&A transaction, it’s critical to thoroughly assess the target company’s underlying technology. By conducting a structured and thorough technology review, you will gain the insights you need to make a more confident investment or acquisition decision.
Astute Diligence conducts a comprehensive technological review on your behalf, including a strengths and weaknesses analysis of the target’s product(s), a review of the target’s positioning against comparable competing products and technologies, and a discussion of the target’s organizational capabilities with regards to technology. A complete list of the deliverables we prepare is included below.
- Customer Survey. We interview customers who have purchased the target company’s products. Customers are selected randomly to ensure that they will provide unbiased and unrehearsed opinions (although we also take steps to guarantee that we talk to the right mix of customers). We conduct an extensive survey with customers, covering functional and technical satisfaction with the products; comparison to competitive alternatives; desired new features; and satisfaction with customer service.
- Customer Pipeline and Trend Analysis. We interview prospective customers and determine their level of interest and their likelihood of buying the target company’s products. This provides a sanity-check against target company revenue projections. If a prospective customer has recently opted not to purchase the product, we contact them and find out why. We also evaluate revenue trends to determine if future projections seem realistic.
- Research Review and Analyst Interviews. We conduct a thorough research survey and interviews with leading industry analysts concerning key trends, issues, and market dynamics in the target company’s business. We summarize our findings, the implications for the client, and conclusions as to what actions may be necessary.
- Competitive Assessment. We describe and evaluate major competitors. We contrast their objectives, strategies, strengths, weaknesses, and product and technology feature-function mix with that of the target company.
- Customer Service Records Review. We randomly select correspondence between customers and the target company and review these records. This provides insights on customer satisfaction with the products. We assess the history of refund requests and call select customers that have returned the products.
- New Product Release Schedule Review. We review Maintenance and Upgrade release history. We look at how often products have been upgraded and what the criteria have been for a new product release. We evaluate the target company’s ability to deliver new features critical bug fixes on a timely and appropriate basis.
- Development Team Review. We interview members of the target company’s technology team. We assess the development team’s capabilities in the areas of management talent and development talent. We look at the number of resources available to achieve target goals and assess whether the target is over-staffed or under-staffed. We evaluate compensation levels to determine if they are above or below market. We identify “what if?” scenarios that will be of interest to our clients — for example, how bad would it be if the lead developer left for another job? Who is critical to continued success? Who has critical undocumented knowledge?
- Development Processes, Procedures, and Documentation Review. We evaluate whether the development process is appropriately structured and documented. We drill down and evaluate specific areas such as source code control, virus checking, on- and off-site backup and recovery. We assess compliance with procedures. We review coding standards, functional specifications, detailed design and technical architecture documents, and comments within programming code to determine the quality of primary and updated technical documentation within the target company.
- Technical Architecture Review. We review component technology use, compliance with standards, data structure design, module structures and code reuse, control flow, and code structure. We examine source code, review documentation, and evaluate plans and processes. We assess scalability and performance issues. We identify possible problem areas related to the target company’s technical architecture.
- Quality Assurance Review. We look at staffing within the QA group and review test hardware and software environments to ensure that all appropriate hardware/software configurations are tested. We look closely at bug tracking and resolution, regression testing, and alpha and beta release processes.
- Technical Support Group Review. We look at staffing within the technical support group and assess its sufficiency in terms of quality and quantity. We review all technical support procedures and processes, both in their documented form and as they are practised on a day-to-day basis. We assess the hardware and software infrastructure used by technical support for functional adequacy, performance, reliability and scalability. We survey customers at random regarding their satisfaction with customer support. We document key metrics such as average callback time.
- Infrastructure Assessment. We evaluate several important questions concerning internal systems. Does the company have an adequate technical infrastructure? Are team members supplied with adequate development hardware and development software?
- Corporate Culture Review. It’s important to understand the underlying culture of the target company. We evaluate numerous components of organizational culture, such as the overall tempo of the organization (laid-back vs. hard-driving), the extent to which authority is formally centralized or informally distributed, management’s approach to employee relations, the approach to quality and speed of development (quick fixes and get-to-market vs. methodical detailed design), and the target’s motivating beliefs and value systems (customer-driven vs. sales- or tech-driven) .
- Legal Protection Assessment. We determine how well protected the target is in a number of important dimensions. We review marketing materials to ensure product capabilities have not been misrepresented. We review copyright notices, nondisclosure agreements, and software license agreements that the company has issued or entered into. We check whether the company has full rights to all of its source code, ensuring that employees and contractors have appropriately granted rights to the company. Finally, we evaluate patents and whether they are enforceable, as well as whether the company may infringe on anyone else’s patents.