What private equity investors miss in technology due diligence 

Technology due diligence assesses a company’s systems and technical capabilities to identify risks and highlight opportunities before an investment or acquisition. While they provide valuable insight into the technology, they do not always assess the organisational factors that influence a business’s ability to realise value after a transaction. Leadership alignment, process maturity, data quality and governance, user adoption and organisational delivery capability and capacity can all affect the outcomes and should form a part of technology due diligence assessment. Understanding the links and the gaps between technology and value creation is essential which is why Fluid’s Digital Maturity Assessment incorporates both an evaluation of the value creation plan, and the supporting capabilities highlighted above. It provides a clearer picture of whether technology investments can be translated into measurable business results. 

One of the risks to assess beyond traditional technology due diligence is an overreliance on key individuals. During a review, firms should evaluate whether critical processes and technical knowledge are held by a small number of employees, particularly where documentation is limited. This creates vulnerabilities during leadership transitions, employee departures or periods of rapid change and can potentially lead to negative financial and operational consequences. 

For investors pursuing growth, integration or buy-and-build strategies, understanding where undocumented knowledge exists is essential. A business may have robust technology, but if critical knowledge cannot be easily found, transferred or scaled, transformation plans can quickly become more complex and costly than anticipated. 

As businesses increasingly turn to AI especially usage of GenAI LLMs as personal productivity tools, these risks from undocumented ‘shadow IT’ are increasing exponentially. 

When assessing technology maturity, it is important to look beyond the capabilities of core business systems, and understand whether systems are being used as intended to support decision-making, efficiency and growth.  

The successful implementation of an enterprise resource planning (ERP) or business system does not guarantee business value. While a system may be technically deployed, its effectiveness depends on how consistently it is adopted across the organisation and the extent to which it supports and enables business goals. Poor user adoption often leads to employees relying on spreadsheets or manual processes to complete their work. This creates culture of workarounds and shadow IT, where employees use unauthorised tools outside of internal IT environment. This can result in fragmented processes and poor data quality.  

As part of a technology due diligence review, cyber security assessments often focus on technical controls, infrastructure and compliance requirements. While these are important, they only provide part of the picture. An organisation’s cyber resilience is also shaped by employee behaviour, security awareness and the culture surrounding risk management. Weak governance, unclear accountability and poor incident response planning can expose businesses to significant risk, regardless of how strong their technical defences appear.  

Understanding how cyber security is embedded across the organisation helps investors assess not only the likelihood of an incident, but the business’s ability to respond and recover effectively if one occurs. 

Technology is often used as a measure of digital maturity, but systems alone do not provide a complete picture of an organisation’s ability to grow and transform. A technology due diligence assessment should consider factors such as change capability, process maturity, leadership alignment, data quality and workforce readiness. Together, these elements determine how effectively a business can adopt new technologies, respond to market demands and execute strategic initiatives.  

By looking beyond the technology stack, investors can gain a clearer understanding of an organisation’s strengths, potential barriers to change and overall capacity to deliver long-term value. 

Technology due diligence should go beyond systems and infrastructure to assess the people, processes and capabilities that drive successful transformation. By identifying these factors early, investors can gain a clearer view of risk and value creation potential.  

Get in touch to learn how our technology due diligence assessments go beyond the technology stack.