Technical Due Diligence FAQ: What Investors and Acquirers Ask Most

Investors and acquirers running their first or second technical due diligence process often have similar practical questions: what access do we need, how long does this take, what does the output look like, and what do we do when we find something serious? These questions come up repeatedly at the start of engagements, so it is useful to have clear answers in one place.

What access does a technical reviewer need from the target company?

A useful technical due diligence review requires meaningful access to the technical assets, not just documentation. At minimum, expect to provide:

• Repository access: Read access to the relevant version control repositories. This includes the production codebase, infrastructure-as-code repositories, and any related tooling repositories. Branch history matters — reviewers need to see the commit log, not just the current state of main.
• Documentation access: Architecture diagrams, API documentation, data flow diagrams, runbooks, and any prior technical assessments or security audits the company has commissioned.
• Infrastructure access: Read access to the cloud infrastructure console (AWS, GCP, Azure) or equivalent, sufficient to review the current environment configuration. This does not require production data access.
• Access to engineering leads: Structured conversations with the CTO, senior engineers, and where relevant, the data or security lead.

Target companies sometimes resist providing repository access due to confidentiality concerns. The appropriate solution is a mutual NDA and a defined review period, not limiting the review to documentation. A reviewer who cannot see the code is producing a much weaker assessment than one who can.

How long does technical due diligence take?

The timeline depends on scope and system complexity. As a practical reference:

• A red flag report with limited scope takes three to five business days.
• A standard review covering code quality, architecture, security, and team assessment for a straightforward SaaS product takes two to three weeks.
• A comprehensive review of a complex distributed system, or a review requiring specialist coverage for blockchain components or regulated data handling, takes four to eight weeks.

The timeline also depends on how quickly the target company responds to information requests and makes engineers available for interviews. Delays on the target side are common and should be accounted for in deal scheduling.

What does the output of a technical due diligence review look like?

A structured technical DD report should include:

• An executive summary that states the overall risk profile and the key findings in plain language suitable for non-technical readers (investors, board members, deal counsel).
• A categorized findings section covering each area reviewed, with severity ratings for each finding.
• A technical debt register with estimated remediation effort.
• An architecture assessment with specific comments on scalability, resilience, and post-deal fit.
• A team and process assessment covering key-person risk, operational maturity, and hiring capability.
• A remediation roadmap indicating which findings should be addressed before close, which can be addressed immediately post-close, and which are longer-term improvements.

The report should be useful to two different audiences: the deal team making the investment decision, and the engineering team that will execute the remediation. Reports that only serve one audience are less valuable.

What happens when a review finds something serious?

Material findings during technical due diligence are not automatically deal-killers. They are negotiating inputs. The appropriate response depends on the nature of the finding and the deal structure.

Architectural limitations: If the current architecture cannot support the post-deal roadmap without significant rebuilding, that rebuilding cost should be factored into valuation or accounted for in the post-close integration plan.

Security vulnerabilities: Depending on severity, the acquirer may require remediation before close, structure an escrow or holdback tied to post-close remediation, or adjust price.

IP or licensing issues: Depending on the specific issue, remediation may be possible pre-close (replacing a GPL component, obtaining retroactive IP assignments from contractors) or may need to be handled as a deal structure question.

Team capability gaps: If the review reveals that the team cannot execute the roadmap without significant hiring, that should be reflected in the deal terms, the post-close integration plan, or both.

The worst response to a serious finding is to ignore it because the deal momentum is strong. Technical risk does not disappear at close — it just becomes your risk rather than the seller's.

Can the target company commission its own technical due diligence?

Yes, and there are good reasons to do so. A founder-commissioned pre-DD readiness assessment gives the team advance notice of what a buyer's reviewer will find, time to address the most significant issues, and the ability to present their technical risk profile proactively rather than reactively.

The important distinction is that a founder-commissioned review does not substitute for a buyer-commissioned review. The incentives are different, and no investor should accept a founder's own technical assessment as the basis for a deal decision without independent verification.

That said, a well-prepared technical data room — including a honest pre-DD assessment, a technical debt register, architecture documentation, and prior security audit reports — significantly accelerates the buyer's review process and reduces the likelihood of surprises.

Should technical due diligence happen before or after the LOI?

In most structured acquisition processes, a non-binding letter of intent establishes deal terms and provides exclusivity before full diligence begins. Technical due diligence typically runs during the exclusivity period alongside legal and financial diligence.

For venture rounds, the process is less standardized. Some investors conduct technical DD before issuing a term sheet; others make a conditional offer subject to technical review. The trend in recent years has been earlier technical review because the cost of discovering material technical problems after a term sheet has been signed — and after the founder has announced the round — is high for everyone.

For acquisitions, consider running at least a red flag report before issuing an LOI on any deal where technology is a primary value driver. Discovering a deal-breaker after you have exclusivity and have started legal diligence is expensive in time and relationship capital.

How do you find a qualified technical due diligence reviewer?

Look for reviewers who have:

• Direct software engineering or architecture experience, not just management experience.
• Familiarity with your specific domain (Web3, healthcare tech, fintech, enterprise SaaS each have domain-specific risk profiles).
• Experience producing written assessments, not just code review comments.
• References from other investors or acquirers who have used their work in deal decisions.

Ask for examples of past report structure (anonymized). Ask specifically how they approach team assessment, not just code review. A reviewer who is strong on static analysis but has never assessed team capability is only covering part of the risk surface.

Clixo runs technical due diligence engagements for investors, venture funds, and acquirers across software, Web3, and AI-driven products. Reach out to discuss a specific deal or to understand what a scoped engagement would look like.