As part of the Pardot acquisition a few years ago, there was an extensive technical review during the due diligence. As you would expect, the idea was to evaluate the technical underpinnings of the product and to try and assess if it was well made and will continue to perform as the company grows. Only, a technical review by a third-party is incredibly difficult as languages, frameworks, deployment strategies, etc. are all different and nuanced.
Here are a few areas of technical review in a company acquisition:
- Code Walkthrough – Much time was spent walking two senior engineering managers through how the code was organized and styled. Here, the goal wasn’t to evaluate every line of code, but rather to see that it was maintainable and that we were thoughtful in our approach.
- Architecture – After the code walkthrough, the next step was to draw out the architecture of the product and explain how all the modules interfaced with each other. With a standard Model-View-Controller approach, the basics are usually straightforward.
- Data Storage – With so much information being stored across so many different customers, data storage and retrieval was a big deal. Of particular note were the areas where data was growing the fastest as well as our strategy for keeping up with the growth.
- Deployment – When a software engineer makes a change, what happens before customers get to see or use that change. How much human intervention is required? Is it automated? What tests have to pass? Where does the code go?
- Hosting – With a complicated web-based application, the number of servers and services can be quite large. An acquirer wants to understand how manageable the hosting configuration is and how hosting costs grow as the customer base grows (hopefully there are some economies of scale in the hosting costs as revenue grows).
Note that nowhere during the process was there a consideration for how well our product could integrate with their product or if our product was written in the same language and/or style as their product. For acquisitions whereby the product is going to continue on as a standalone application, the goal is make sure that it’s well made and will continue to perform as the business grows. Technical reviews, in my limited experience, are much easier than expected.
What else? What are some other thoughts on technical reviews in a company acquisition?