What a technical due diligence report is meant to do
A technical due diligence report should show what a buyer is really acquiring, where the material technology risks sit, what evidence supports those conclusions and what actions those findings require before or after the deal.
For PE, VC and C-suite buyers, a technical due diligence report is not a technical appendix. It is a decision document. Good technical due diligence translates software, architecture, security, scalability, delivery and team risks into commercial judgement that investment teams can act on.
In this article, technical due diligence means software, platform and engineering due diligence for acquisition, investment or board-level technology risk. It does not mean a commercial property survey.
Investment teams need the commercial interpretation. CTOs and technical advisers need the evidence trail. A useful report must serve both audiences without forcing either group to translate the other’s language.
A useful report should help the buyer decide:
- What to accept
- What to challenge
- What to price into the deal
- What to remediate before close
- What to fix after acquisition
- What could justify walking away
The best technical due diligence reports do not simply identify issues. They explain what those issues mean for valuation, integration, growth plans, delivery risk and future ownership. Their purpose is not to catalogue technical observations. It is to support better decisions.
Catapult CX’s Independent Technical Review is designed around this principle – engineering evidence needs to be turned into board-level decisions, not buried in technical detail.
What a technical due diligence report should include
Report structures vary by buyer, target, sector, deal context and investment thesis. However, for software, platform and engineering due diligence, most useful reports assess the same core decision areas.
| Report section | What it shows | Why buyers care |
|---|---|---|
| Executive summary | Material risks and headline judgement | Supports investment committee and deal decisions |
| Risk register | Prioritised findings, evidence and impact | Makes issues actionable |
| Product and architecture review | Platform shape, dependencies and constraints | Shows whether the product can support future plans |
| Codebase and maintainability review | Quality, complexity, test coverage and technical debt | Shows how hard the product will be to change |
| Security and supply-chain review | Vulnerabilities, access, dependencies and controls | Shows exposure to cyber, compliance and supplier risk |
| Infrastructure and scalability review | Hosting, performance, resilience and cost exposure | Shows whether the platform can grow safely |
| Delivery process review | Build, test, release and incident practices | Shows whether the team can keep shipping reliably |
| Team and operating model review | Ownership, capability and key-person risk | Shows what capability transfers with the deal |
| Remediation roadmap | What needs fixing, when and why | Shows the true cost of ownership |
| Buyer implications | Deal, integration and post-close actions | Turns findings into decisions |
The exact emphasis will vary depending on the target and transaction. A SaaS acquisition may place greater weight on architecture, scalability and software delivery. A regulated platform may require deeper assessment of security, compliance and operational controls.
The purpose remains the same – to understand whether the technology can support the buyer’s objectives at an acceptable level of risk.
This broader view is consistent with recognised software quality and security frameworks. ISO/IEC 25010 defines a product quality model for software and ICT products that can be used by acquirers, quality assurance teams and independent evaluators. NIST’s Secure Software Development Framework provides secure software development practices that software purchasers and consumers can use to support supplier assessment, acquisition decisions and ongoing risk management.
The executive summary should translate risk into decisions
The executive summary should not repeat every technical observation. Its job is to make the report usable for buyers who need to make commercial decisions quickly.
A good executive summary should answer:
- Is the technology fit for the buyer’s investment thesis?
- Are there material risks that could affect valuation or deal terms?
- Are the risks manageable after close?
- Which issues require immediate action?
- Which risks are normal technical debt rather than deal-level concerns?
This matters because technical findings can influence commercial protections. Reuters Legal notes that where due diligence uncovers vulnerabilities, previous incidents or outdated systems, buyers may seek purchase price adjustments, holdbacks, seller covenants or longer warranty survival periods.
This is why the executive summary matters. For many buyers, it may be the only section read in detail before investment committee discussion, negotiation planning or final deal approval.
The strongest executive summaries do not say, ‘The codebase has problems.’ They explain the commercial consequences of those problems including, slower roadmap execution, higher integration cost, greater cyber exposure, dependency on a single engineer or a required remediation programme after acquisition.
If the report identifies technical debt, it should not leave the buyer guessing. It should help them calculate technical debt in financial terms rather than treating it as an abstract engineering concern.
The risk register is where findings become usable
A technical due diligence report without a clear risk register is hard to act on.
A useful risk register should show what was found, how severe it is, what evidence supports the finding, what the commercial impact could be, who should own the fix and whether the issue is pre-close, post-close or longer-term.
For many buyers, the risk register becomes the working document after the report is delivered. It helps investment teams, operating partners and technical leaders prioritise action, assess remediation effort and understand which findings may affect valuation, integration plans or post-close investment.
The difference between a weak and strong finding is specificity and commercial relevance.
| Weak finding | Strong finding |
|---|---|
| Security needs improvement | No formal vulnerability management process was evidenced. This increases exposure to unresolved dependency and application vulnerabilities. |
| The platform may not scale | Current architecture has a single database bottleneck and no clear evidence of load testing against the buyer’s growth assumptions. |
| Technical debt is present | Test coverage is limited in core transaction flows, increasing regression risk and likely slowing roadmap delivery and future product change. |
Example. What a report finding might look like
| Field | Example |
|---|---|
| Finding | No formal vulnerability management process evidenced |
| Evidence reviewed | Dependency scan, security policy, release records and engineering interviews |
| Risk | Known vulnerabilities may remain unresolved across production services |
| Buyer implication | Additional security remediation investment may be required before platform scale-up or enterprise customer growth |
| Priority | High |
This is where the report becomes useful. It turns concern into priority. It helps buyers distinguish between manageable issues, material risks and the real delivery constraints that may affect growth, integration or post-acquisition performance.
Product, architecture and scalability review
The product and architecture section should assess whether the platform can support the buyer’s future plans.
That means reviewing more than the product demo. A working demo shows that the product can perform in controlled conditions. It does not prove that the architecture is maintainable, scalable, resilient or easy to integrate.
The report should assess the architecture, core dependencies, data flows, integration points, hosting model, resilience assumptions, performance limits and platform cost drivers. The objective is not simply to understand how the platform works today, but whether it can support the buyer’s future objectives.
The buyer question is simple. Can this platform carry the investment thesis?
A platform that supports today’s customer base may not support tomorrow’s growth plans. The architecture review should test the assumptions behind the deal rather than assuming future scale, integration or market expansion will happen without significant technical change.
If the investment thesis depends on entering a new market, adding enterprise customers, integrating with another platform or scaling transaction volume, the report should assess whether the architecture can realistically support that direction.
Where performance or scale is material, the report should help buyers determine assess whether the platform can scale safely and economically. Where older technology creates constraints, it may also need to identify legacy systems, architectural bottlenecks and technical limitations that could affect future growth.
Codebase, maintainability and technical debt
Technical due diligence is not the same as code review.
Code review can be part of the process, but a buyer needs more than comments on coding style. The report should assess whether the codebase can be understood, changed, tested, secured and extended at the pace the buyer expects.
The buyer is not simply acquiring the software that exists today. They are acquiring the ability to keep changing that software in the future. Maintainability matters because it affects delivery speed, roadmap execution, integration effort and the cost of future development.
The core evidence is usually code structure, maintainability, test coverage, documentation, dependency health, build quality, developer onboarding risk and known areas where change is slow or risky.
Technical debt is not automatically a deal-breaker. Most growing software businesses carry some. The issue is whether that debt is visible, understood, manageable and priced into the plan.
Not all technical debt signals the same risk.
| Type of debt | Buyer interpretation |
|---|---|
| Known, documented and actively managed | Usually manageable |
| Hidden or denied | Higher risk |
| Concentrated in critical systems | Potentially material |
| Blocking roadmap delivery | Commercially significant |
| Creating security or compliance exposure | May affect valuation, deal terms or remediation requirements |
External research supports the business relevance of code quality. One study of 39 proprietary production codebases found that low-quality code contained 15 times more defects than high-quality code and that resolving issues in low-quality code took 124% more development time on average. We would recommend that you treat that as study-specific evidence rather than a universal benchmark.
The precise numbers matter less than the broader principle. Code quality affects delivery speed, change cost, defect rates and engineering productivity. For buyers, the question is not whether technical debt exists, but whether it is likely to slow growth, increase operating costs or require significant remediation after acquisition.
Where technical debt is material, the report should help buyers understand its likely commercial impact rather than treating it as a purely engineering concern.
Security, software supply-chain and access risk
Security should not be an afterthought in technical due diligence.
A report should assess whether the target has reasonable control over application security, infrastructure access, data exposure, incident history and third-party software risk.
The evidence should normally cover application security posture, vulnerability management, identity and access control, privileged access, audit logging, incident history, data handling, open-source dependencies and supplier risk.
The UK Government’s Cyber Security Breaches Survey 2025 found that 43% of UK businesses and 30% of charities reported a cyber breach or attack in the previous 12 months. That matters in acquisition due diligence because buyers may inherit risks they did not create.
Reuters Legal notes that in a stock purchase or merger, buyers generally inherit not only the target’s assets and opportunities but also its liabilities and risks.
Software supply-chain review is especially important. Modern software products depend on complex ecosystems of open-source components, third-party libraries and external services. Vulnerabilities can be introduced, inherited or exploited at multiple points across that supply chain.
A Software Bill of Materials (SBOM) can provide useful visibility into software dependencies, but it is not proof that the supply chain is secure. The more important questions are whether dependency ownership is clear, vulnerabilities are monitored, fixes are prioritised, access is controlled and secure development practices are evidenced.
For buyers, the objective is not simply to identify vulnerabilities. It is to understand whether security risks are visible, manageable and consistent with the investment thesis, regulatory obligations and future growth plans.
Where access and auditability are central to the target’s risk profile, the report may also need to review identity, access and audit risk.
Delivery capability and engineering process
An acquisition does not just buy software. It buys the ability to keep changing that software.
That is why a technical due diligence report should assess delivery capability. A product can look strong but still be difficult to operate if release processes are fragile, testing is manual, deployments are risky or knowledge sits with a small number of individuals.
The report should test whether delivery is repeatable, scalable and resilient, or whether progress depends on undocumented knowledge or a small number of key individuals. The key evidence is usually release cadence, automated testing, failed-change recovery, rollback capability, incident handling, monitoring and change governance.
DORA identifies five software delivery performance metrics:
- Change lead time
- Deployment frequency
- Failed deployment recovery time
- Change fail rate and
- Deployment rework rate.
DORA also warns that these metrics should be applied in the context of a specific application or service and that comparing very different applications can be misleading.
A weak report says, ‘The team uses agile.’ A useful report asks whether the team can release safely, recover quickly and keep delivering systematically. The underlying question is whether the buyer is acquiring a sustainable delivery capability or a fragile process that depends on exceptional effort to maintain momentum.
Where release process is a concern, the report may point buyers towards a deeper need to review build, test and deployment pipelines. Where operational visibility is weak, buyers may need to assess operational visibility and incident response.
Team, ownership and operating model
Technical risk is not only in the codebase. It is also in the operating model around it.
A good report should assess whether the target has the people, ownership and processes needed to keep the product stable and moving after acquisition.
The practical questions are whether engineering leadership is clear, product and technical ownership are defined, delivery knowledge is documented, support responsibilities are understood and the product depends too heavily on founders, contractors or a small number of key individuals.
The buyer needs to know what capability transfers with the deal.
A strong architecture can still be risky if only one person understands it. A clean-looking roadmap can still be fragile if delivery depends on a founder, contractor or undocumented support arrangement.
The underlying question is whether the buyer is acquiring a sustainable operating model or inheriting hidden dependency risk that could affect delivery, support, integration or future growth plans.
This is also where buyers should consider whether the due diligence provider has the right operating experience.
For related supplier assessment questions, see Catapult CX’s guide on how to evaluate a technical due diligence consultant.
Remediation roadmap and post-acquisition plan
A technical due diligence report should not stop at diagnosis.
The buyer needs to understand what to do next. That means the report should convert findings into a practical remediation roadmap.
A useful roadmap should separate pre-close blockers, first 30 – 90 day actions, medium-term remediation and longer-term modernisation options.
Not every issue needs fixing immediately. Some risks need to be accepted and monitored. Some should be priced into the deal. Some should be fixed before close. Some become part of the post-acquisition operating plan.
The report should sequence recommendations by severity, commercial impact, effort, dependency, cost exposure, risk reduction and effect on the investment thesis.
This matters because remediation planning is part of understanding the true cost of ownership. A buyer needs to know not only what the risks are, but what it will take to address them.
Diligence findings can shape both the transaction and the post-close plan. In the cybersecurity context, Reuters Legal notes that findings may prompt purchase price adjustments, holdback or escrow mechanisms, seller covenants and longer warranty survival periods.
The underlying question is whether the identified risks are fixable, containable or structural. A useful report helps buyers distinguish between issues that can be addressed through planned remediation and risks that may materially affect future performance, integration or growth.
What a weak technical due diligence report looks like
Weak reports usually have one of two problems. They are either too vague to act on or too technical to use commercially.
Common warning signs include generic risk statements, no evidence trail, no severity weighting, no commercial interpretation, no distinction between normal debt and material risk, no remediation sequencing, no ownership recommendations and no link to the buyer’s investment thesis.
The consequence is that buyers are left with information but not judgement. They know issues exist, but not which ones matter, what the likely impact will be or what action should be taken.
A weak report tells the buyer that issues exist. A strong report tells the buyer what those issues mean.
| Weak report | Strong report | Why it matters |
|---|---|---|
| Lists observations | Prioritises risks | Buyers need decisions, not technical commentary |
| Uses technical language only | Translates into commercial impact | Investment teams need usable judgement |
| Treats all risks equally | Separates critical, manageable and low-priority issues | Not every issue should affect the deal |
| Gives no evidence | Shows what was reviewed | Findings need to be defensible |
| Ends with generic recommendations | Gives sequenced remediation options | Buyers need a post-close plan |
The difference is not the amount of technical detail. It is whether that detail helps the buyer make better decisions. The strongest reports combine technical evidence with commercial judgement rather than treating them as separate conversations.
How PE and VC buyers should use the report
PE and VC buyers should use the technical due diligence report as a decision tool, not a technical appendix.
It can inform investment committee discussion, valuation assumptions, deal negotiations, warranties and indemnities, remediation budgets, post-close integration plans, leadership decisions and whether to proceed, pause, renegotiate or walk away.
The report should not reduce the target to ‘good technology’ or ‘bad technology’. That is too simplistic. Most acquisition targets have some level of technical debt, process weakness, security exposure or architectural constraint. The presence of risk is rarely the issue. The buyer’s real question is whether those risks are understood, manageable and consistent with the investment thesis.
Technical due diligence should help distinguish between normal operational debt that can be managed after close and structural risks that may affect valuation, integration cost or long-term growth plans.
Ultimately, the question is whether the technology can support the investment thesis at an acceptable level of risk, cost and effort.
In summary, a useful technical due diligence report should answer five buyer questions:
- Can the platform support the investment thesis?
- Which risks could affect valuation or deal terms?
- What needs fixing before close?
- What should be funded after acquisition?
- What evidence supports the judgement?
If the report shows manageable technical debt, strong delivery systems and clear remediation options, the buyer can proceed with more confidence. If it shows hidden security exposure, fragile architecture, weak release control or key-person dependency, the buyer has decisions to make.
For buyers who need an independent view of software, platform and engineering risk, Catapult CX’s Independent Technical Review helps translate technical evidence into investment, integration and ownership decisions.
FAQs about technical due diligence reports
What is a technical due diligence report?
A technical due diligence report is an evidence-backed assessment of a software product, platform, architecture, codebase, security posture, delivery process and operating model. For buyers, its job is to translate technical findings into acquisition, investment and remediation decisions.
What should a technical due diligence report include?
It should usually include an executive summary, risk register, architecture review, codebase and maintainability review, security review, delivery capability review, team assessment, remediation roadmap and buyer implications.
The exact structure depends on the target company and deal context.
Is technical due diligence the same as code review?
No. Code review can be part of technical due diligence, but it is not the whole process.
Technical due diligence should also assess architecture, scalability, security, software supply chain, delivery process, team capability and post-acquisition risk.
Who reads a technical due diligence report?
The report is usually read by PE or VC investment teams, C-suite buyers, CTOs, operating partners, legal advisers and sometimes lenders or board members.
Different readers need different levels of detail. Engineers need evidence. Investment teams need risk interpretation and buyer actions.
How should PE or VC buyers use the report?
They should use it to support investment committee discussion, valuation assumptions, deal terms, remediation planning and post-close integration.
The report should help the buyer understand what risk is acceptable, what needs pricing into the deal and what needs fixing.
Should the report include cybersecurity?
Yes, if the target product, platform or data environment creates cyber exposure. For many software acquisitions, that will be the case.
The report should assess application security, vulnerability management, access control, incident history, supplier risk and software dependencies.
Should the report include an SBOM?
A report may include or request an SBOM where software supply-chain visibility is important. But an SBOM is only one piece of evidence. It does not prove that the software supply chain is secure.
The report should also assess vulnerability management, ownership, remediation and supplier-risk processes.
How long does technical due diligence take?
The timeframe depends on the complexity of the target, the scope of the review and the availability of evidence. A focused assessment may take a few days, while a deeper review of architecture, security, delivery capability and operating model can take several weeks. The objective is not to create paperwork. It is to gather enough evidence to support investment and acquisition decisions.
What makes a technical due diligence report weak?
A weak report lists technical observations without evidence, priority, commercial interpretation or remediation guidance.
If the report does not help the buyer make a clearer decision, it has failed its purpose.
How is technical due diligence different from an Independent Technical Review?
Technical due diligence is usually tied to an acquisition, investment or transaction. An Independent Technical Review can be used more broadly to assess platform health, delivery capability, architectural constraints, security exposure or remediation priorities outside a formal deal process.
Both approaches rely on evidence-based assessment, but technical due diligence is specifically focused on supporting investment and acquisition decisions.
