Technology infrastructure — software systems, hardware, cybersecurity posture, and data management practices — is increasingly important in business acquisitions. A business running on outdated or fragmented technology is more expensive to operate, harder to scale, and creates post-close integration work. Evaluating technology during due diligence gives buyers a complete picture of true acquisition cost.
Core Business Systems
Identify and evaluate: the CRM or customer management system, the accounting and financial reporting software, the scheduling or job management system (for service businesses), the POS system (for retail and restaurant businesses), and any proprietary or custom-built tools. Ask: Is the software licensed, current, and supported? Are there subscription costs that will transfer to the buyer? Are any systems end-of-life or requiring replacement?
Data and Cybersecurity
Customer data — especially in businesses handling personal health information (medical, dental, mental health), financial data (accounting, insurance, financial advisory), or payment card data (any retail or service business) — must be protected and transferred in compliance with applicable regulations. Ask whether the business has ever experienced a data breach. Review current cybersecurity practices including password policies, multi-factor authentication, and backup systems.
Hardware condition — computers, servers, point-of-sale terminals, networking equipment — should be evaluated for remaining useful life. Technology capital expenditure needs that are not obvious in the financial statements represent a hidden cost that sophisticated buyers identify and factor into their offers.