IT Due Diligence Checklist for Private Equity

What Buyers Should Review Before Close

Private equity investors rely on IT due diligence to uncover technology risk, validate operating assumptions, and identify value-creation opportunities before capital is deployed. While every transaction is unique, a consistent checklist helps ensure that material technology issues are identified early and translated into actionable deal implications. Learn more about the role due diligence plays in maximizing ROI.

This IT due diligence checklist outlines the core technology domains buyers should review across platform acquisitions, add-ons, and carve-outs—focusing on the areas that most directly impact valuation, integration complexity, and post-close execution.

How to Use This Checklist

This checklist is intended to support:

• Scoping discussions at LOI
• Management interviews and document requests
• Risk prioritization and deal modeling
• Development of a post-close execution roadmap

Depth and rigor should scale based on deal size, industry, and complexity. The goal is not to inventory everything—but to identify what matters. See also Initial Steps in Due Diligence

1. Business Applications & Architecture

Core business applications sit at the center of operations, reporting, and growth. Their maturity and alignment to the investment thesis directly affect scalability and integration effort.

Focus areas include:

• ERP, CRM, manufacturing, finance, and operational systems
• Custom vs. off-the-shelf applications
• Major enhancements to off-the-shelf applications
• Version levels and vendor support status
• Integration dependencies and data flows
• Redundant, overlapping, or end-of-life platforms
• Systems accessed by 3rd parties (vendors or customers)

Why this matters:

Buyers gain early visibility into modernization needs, integration complexity, and the likelihood of near-term system replacement that could impact valuation and timing.

2. Infrastructure & Cloud Readiness

Focus areas include:

Infrastructure design influence’s reliability, security, and future modernization options.

• On-prem vs. cloud footprint
• Hosting providers and contracts
• Network architecture and connectivity
• Servers, storage, and virtualization platforms
• Backup, disaster recovery, and business continuity

Why this matters:

Identifies capital requirements, resilience gaps, and whether the environment can support growth and integration without major re-platforming.

3. Cybersecurity & Data Protection

Focus areas include:

Cyber risk is a material deal risk and increasingly scrutinized by lenders and insurers.

• Security governance and policies
• Identity access management method
• Endpoint protection and monitoring
• Vulnerability scanning and penetration testing
• Incident history and response procedures
• Regulatory exposure (PII, PCI, HIPAA, etc.)

Why this matters:

Clarifies downside exposure, potential remediation costs, and whether cybersecurity could delay close, affect insurance, or create post-close surprises.

4. Data & Analytics

Focus areas include:

Reliable data is essential for operational control and value creation.

• Data sources and ownership
• Reporting tools and dashboards
• Data quality issues
• Master data management processes
• Analytics supporting operations and decision-making

Why this matters:

Determines whether management can accurately measure performance and execute value-creation initiatives.

5. IT Organization & Operating Model

People and processes determine whether technology can be executed effectively.

Focus areas include:

• Org structure and roles
• Skill coverage and gaps
• Key-person dependencies – is one individual critical to support or operations of a technology
• Outsourced services and managed providers
• Governance and documentation maturity

Why this matters:

Highlights execution risk and informs Day One staffing and outsourcing decisions.

6. Software Licensing & Vendor Contracts

Licensing and contracts often hide unexpected costs.

Focus areas include:

• License counts vs. usage
• Renewal dates and true-up exposure
• Change-of-control provisions – what processes are followed when changes are made
• Support and maintenance agreements

Why this matters:

Prevents surprise compliance costs and supports accurate run-rate modeling.

7. Integration & Carve-Out Readiness (When Applicable)

Separation and integration complexity can materially affect timing and cost.

Focus areas include:

• Shared systems and services
• TSA dependencies
• Data separation complexity
• Standalone Day One requirements

Why this matters:

Clarifies feasibility, sequencing, and cost to achieve Day One readiness. Forms the technology foundation for the TSA. Carve-out present unique challenges. Learn more about carve-outs here.

8. IT Cost Structure

Understanding run-rate and one-time costs is critical to underwriting.

Focus areas include:

• Current IT operating spend
• CapEx vs. OpEx mix. What CapEx is planned
• Vendor spend concentration
• One-time remediation and integration costs

Why this matters:

Supports valuation accuracy and post-close budgeting.

From Checklist to Value Creation Roadmap

Effective IT due diligence goes beyond identifying issues. Findings should be prioritized and translated into a practical execution roadmap covering:

• Risk remediation
• Integration sequencing
• Cost optimization
• Growth enablement initiatives

This approach protects downside while enabling upside.