Beyond the Due‑Diligence Checklist: Why Standard Tech Assessments Leave You Exposed

Private equity firms heavily rely on standardized due‑diligence checklists which include security scans and infrastructure inventories and vendor questionnaires to ensure complete coverage. History demonstrates that strict box-ticking procedures fail to detect the actual operational and qualitative risks which cause M&A integrations to fail.

The Hidden Gaps

• Network diagrams and compliance certificates displayed publicly do not reveal the existence of unsupported legacy systems and custom forks that remain outside DD reports.

• Self-provisioned cloud resources together with rogue SaaS subscriptions and home-grown scripts produce unexpected operational expenses and compliance issues that become problems after the acquisition closes.

• Checklists fail to detect team norms because they do not reveal the release cadence differences and risk-tolerance mismatches which become apparent when the buy-side CIO transfers control.

Case Study: HP’s Autonomy Write‑Down

HP purchased Autonomy in 2011 for $11 billion which now serves as a warning to others. HP wrote down $8.8 billion in goodwill after discovering Autonomy used different revenue recognition methods than HP had anticipated following the acquisition. The CFO admitted to only glancing at the DD binder while HP's auditors discovered that top management displayed "hubris" instead of proper risk assessment of non-financial elements.

Checklist Blindspots

• Sellers use DD rooms to present flawless demonstrations which fail to operate when deployed in customer settings.

• The exclusive use of slide decks instead of live proofs of concept enables critical gaps to remain undetected.

• Engineers' widespread workarounds together with their "secret" tooling become visible only during casual conversations that lack pressure.

A Better Approach

• Frontline engineers should receive structured interviews instead of only conducting C-suite executive interviews.

• Perform multiple quick proof-of-concept tests on essential integrations to prove statements in actual operational settings.

• The evaluation system should include qualitative assessments for team autonomy and change tolerance and leadership alignment.

True integration risk discovery requires moving past false positives so we can connect for better results. A IMPACT Due Diligence engagement will transform your technology DD process to ensure you only pursue deals that you can deliver with confidence. Visit www.theimpactcto.com for more information.