The following are some frequently asked questions I have received over the past few years. This is not an inclusive list, but I have attempted to summarize the most common questions I receive in my M&A experience.

1️⃣ What hidden technology risks could materially impact valuation?

Hidden risks vary by target; however, several issues commonly affect valuation. These include cybersecurity vulnerabilities, unsupported or outdated software, aging hardware, and unmaintained middleware.

A thorough cybersecurity audit is essential to understanding the scope of exposure.
Additionally, a comprehensive technology inventory—covering hardware, software, versions, patch levels, and user groups—is critical. This visibility helps investors understand operational dependencies and identify areas where technical debt may influence valuation. This is discussed in greater detail in Technology Risks in Private Equity Acquisitions and Initial Steps in Due Diligence for an Acquisition

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2️⃣ Is the target’s IT infrastructure scalable enough to support the investment thesis?

Scalability depends on whether the network, servers, and applications can support increased users, expanded operations, or new geographic locations. The timeline in the investment thesis is also important, as infrastructure investments may be phased to avoid premature upgrades.

Reviewing the detailed asset inventory allows investors to evaluate capacity, performance limitations, and potential end-of-life issues that could impact future growth.

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3️⃣ How secure is the target’s IT environment, and have there been any breaches?

Cybersecurity risk is a major concern for private equity investors. The safest approach is to commission a formal audit from a reputable cybersecurity firm.

Buyers should expect full transparency from the seller regarding:

• Security policies
• Compliance requirements
• Historical incidents or breaches
• How controls are implemented and monitored

This step significantly reduces post-close security exposure.

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4️⃣ Are there major systems or platforms approaching end-of-life?

End-of-life (EOL) technology introduces immediate risks, including:

• Higher capital expenditure
• Operational disruption
• Integration limitations

A validated, third-party-reviewed inventory helps identify which systems require near-term replacement versus those that can be scheduled for future upgrades.

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5️⃣ What integration challenges should we expect post-close?

Integration risk often stems from system compatibility issues, outdated APIs, and performance constraints such as timeouts or request overloads (e.g., HTTP 409 errors).

Keeping integration design simple reduces:

• Support costs
• Downtime
• Data loss
• Effort required to maintain complex interfaces

Early assessment helps protect Day One readiness and ensures alignment with portfolio standards. See also Legacy IT Risks in Private Equity Transactions

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6️⃣ What is the true cost of IT operations today—including hidden or deferred expenses?

A full understanding of IT cost requires reviewing:

• Support contracts
• Licensing agreements
• Cloud service commitments
• Maintenance backlog
• Fire and security agreements for on-premises facilities

These elements should be included in the complete technology inventory to reveal both current spend and deferred liabilities.

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7️⃣ Does the IT team have the talent and capacity to support future growth?

Small and mid-market companies often have limited IT staffing, with individuals responsible for multiple roles.

It is critical to:

• Understand each team member’s skills and responsibilities
• Map roles to the systems identified in the technology inventory
• Identify single points of failure (i.e., only one person supporting a critical system)

This helps determine whether the existing team can support scaling or whether augmentation is needed.

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8️⃣ Are IT processes, documentation, and governance mature enough to ensure operational continuity?

Effective IT operations depend on mature processes and governance. This includes:

• Updated documentation
• Regular process improvements
• Consistent enforcement of policies
• Clear accountability for changes and incidents

Interviewing IT staff provides insight into how policies are applied in practice and whether governance is truly operationalized. See also IT Documentation Gaps in M&A: Key Considerations

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9️⃣ What technology investments will be needed during the first 12–24 months post-close?

A thorough inventory—combined with existing documentation and policies—reveals the upgrades and investments required in the first two years.

This information supports:

• Accurate modeling of total cost of ownership
• Prioritization of value-creation initiatives
• Sequencing of modernization projects
• Alignment with portfolio integration plans

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🔟 How does the target’s data quality and reporting maturity affect decision-making?

Poor data quality impacts:

• Data migration complexity
• Operational visibility
• Reporting reliability
• Overall speed of value creation

Weak reporting maturity can slow integration, impair forecasting, and reduce the quality of insights available to leadership.