Technology Exit Readiness
How to prepare your technology for investment, acquisition or exit, and why the work should start 12 to 24 months before technical due diligence.
Find the problems now. Fix them before the buyer finds them.
- 24 to 18 monthsFindClearView assessment and a remediation plan
- 18 to 6 monthsFixResolve what matters, with senior hands-on help
- 6 months to goPrepareVendor DD and the data room
- The dealDue diligenceThe buyer's technical review
Found here: fixable.Time to resolve it, evidence it and present it on your terms.
Found here: a deal issue.Leverage for the buyer, or a reason to walk away.
- What is Technology Exit Readiness?
- Why does technology readiness affect the deal?
- When should a company start preparing for technical due diligence?
- What does technical due diligence examine?
- What technology issues can affect a company sale?
- What is vendor technical due diligence?
- What does a fractional CTO do before a transaction?
- How can a company prepare its technology for private equity investment?
- Further reading
- How Stable State helps
What is Technology Exit Readiness?
Technology Exit Readiness is the work of examining and improving the technology a business depends on, so that it stands up to investor and acquirer scrutiny before formal technical due diligence begins. It covers strategy, product, team, engineering approach, platform and security.
It is not the same as technical due diligence. Due diligence is carried out for a buyer, on the buyer's timetable, and its findings feed into the price and the terms. Exit readiness is carried out for management, early enough to act on what it finds.
For any business where software, data or a technology platform is part of the value, investors and acquirers now examine the technology as closely as the numbers. A codebase nobody can explain, a single engineer holding the institutional knowledge, or a platform that has never been tested at scale rarely shows up in the accounts. It does show up in due diligence, and it shows up in the price.
Why does technology readiness affect the deal?
Technology problems found during due diligence become commercial problems. They give the buyer leverage over price and terms, and they can slow or stop a transaction.
- DelaysUnanswered technical questions push out the timetable and keep advisers on the clock.
- Warranties and conditionsKnown issues turn into specific warranties, indemnities, retentions or conditions.
- Buyer confidenceOne poorly answered question makes a buyer look harder at everything else.
- Remediation costsUnbudgeted fixes tend to get priced into the offer.
- ValuationTechnology that cannot support the growth plan weakens the case for the valuation.
- DependencyReliance on one developer, one supplier or one legacy system raises questions about continuity.
- Perceived riskThe less evidence there is, the more risk a buyer assumes.
When should a company start preparing for technical due diligence?
Ideally 12 to 24 months before a transaction. That is long enough to fix most technology issues and build the evidence to prove it, and early enough that the work does not collide with the deal itself.
Architectural change, reducing dependence on key people, improving security controls and building a credible engineering track record all take quarters, not weeks. With less than six months to go, the options narrow to documenting issues and explaining them.
If a transaction is closer than that, preparation is still worth doing. Knowing what a buyer will find lets management prepare honest, evidenced answers rather than being caught out in the data room.
What does technical due diligence examine?
Technical due diligence examines whether the technology can support the investment case: the strategy behind it, the product roadmap, the team, how software is built and released, the platform and its ability to scale, and security.
A technical due diligence team will typically look at architecture and code quality, hosting and infrastructure costs, open-source licensing and IP ownership, data protection, documentation, engineering processes, key person dependency and the technology roadmap. The Stable State Technology Readiness Framework groups that ground into six areas, each with the question a buyer is really asking:
Strategy
Does the technology plan support the growth the investment case assumes?
Product
Can the roadmap deliver what the forecast depends on?
Team
What happens if two key people leave after completion?
Approach
Can the team ship change safely and predictably?
Platform
Will the platform scale, and what will it cost to maintain?
Security
Where is the data, who can reach it, and how exposed is the business?
What technology issues can affect a company sale?
The issues that matter are the ones that create cost, risk or dependency a buyer will inherit: key person dependency, technical debt, scalability limits, security gaps, unclear IP ownership, data protection weaknesses and undocumented systems.
- Key person dependencyCritical knowledge held by one or two people, with no documentation or succession.
- Technical debtCode or architecture that slows change and will need investment after completion.
- ScalabilityA platform untested at the volumes the growth plan assumes.
- Security gapsWeak access control, unpatched systems or no evidence that controls work.
- IP and licensingUnclear ownership of code written by contractors, or open-source licences that conflict with the commercial model.
- Data protectionPersonal data handled without clear records, processes or controls.
- Undocumented systemsNothing written down about how the platform works or how it is run.
- Third-party dependencyReliance on suppliers, platforms or legacy systems that are hard to replace.
What is vendor technical due diligence?
Vendor technical due diligence is a technical review commissioned by the seller and shared with prospective buyers. It sets out the technology position on the seller's terms, before buyers form their own view.
Done well, vendor technical due diligence shortens the buyer's own review, reduces the number of questions and lets management explain known issues alongside the plan to address them.
It is most effective when the material issues have already been fixed, which is why it belongs at the end of an exit readiness programme, not the start. More on vendor technical due diligence.
What does a fractional CTO do before a transaction?
A fractional CTO gives the business senior technology leadership for part of the week, without a full-time hire. Before a transaction, that means leading the remediation work, preparing the technology evidence and representing the technology to buyers.
- Own and deliver the remediation plan.
- Strengthen the team and reduce dependence on key people.
- Improve engineering and security practices, and evidence them.
- Prepare documentation and the technology section of the data room.
- Brief management and advisers, and answer buyer questions during due diligence.
How can a company prepare its technology for private equity investment?
Start with an independent assessment of where the technology stands, fix the material risks, and build evidence that the platform and team can support the growth plan the investment case depends on.
Assess
Review the technology against what an investor will examine, independently and from evidence.
Prioritise
Separate the issues that affect value or risk from the ones that do not.
Fix
Resolve the material risks and document the rest honestly.
Prove
Show the platform and team can scale with the plan. For SaaS businesses, expect particular scrutiny of hosting costs, reliability and the ability to ship product changes safely.
Further reading
Practical guides to the questions founders, management teams and investors ask most often before a transaction.
Technical due diligence checklist
What investors examine, area by area, and the evidence management should have ready before the first request list arrives.
ReadPreparing a SaaS business for sale
A practical timeline for getting a SaaS platform, team and evidence ready, starting 12 to 24 months out.
ReadTechnical due diligence red flags
The issues most likely to worry a buyer, what each one signals, and how to deal with them before a transaction.
ReadVendor technical due diligence
What it is, when it is worth commissioning, and how it differs from buy-side due diligence and exit readiness.
ReadKey person dependency in technical due diligence
Why buyers care, how due diligence finds it, and how to reduce it in the months before a deal.
ReadTechnical debt and company valuation
How debt in the codebase shows up in investment decisions and negotiations, and how to present it credibly.
ReadHow Stable State helps
We get the technology ready for the transaction. It starts with ClearView, a two-week assessment against the six areas a buyer will examine. Where it helps, we then stay involved, working with management to resolve the issues and prepare the evidence.
-
Find
- ClearViewA two-week assessment across six areas, scored and ranked.
- Remediation planThe findings turned into a prioritised plan the board can own.
-
Fix
- Technical Partner or fractional CTOSenior, hands-on help to resolve what matters, alongside your team.
- Quarterly readiness reviewProgress re-scored so the board can see the risk coming down.
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Prepare
- Vendor DD preparationEvidence, documentation and answers ready before a buyer asks.
- Data room preparationThe technology section of the data room, complete and consistent.
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Transact
- Technical due diligenceSupport for management through the buyer's technical questions.
- TransactionTechnology becomes a reason for confidence, not a reason to renegotiate.
Preparing for a transaction?
Start with ClearView and find out what technical due diligence will uncover, while there is still time to fix it.