Recently, I was asked to conduct Tech-focused due diligence for a Micro-SaaS that my employer planned to acquire.
Just sharing a summary of some of my notes —

  1. Verify Infrastructure Costs
    Are they on a Free GCP Plan that will end in a few months and later cost thousands? Does the software use any 3rd party services?
  2. Review code commits and code contributors
    Did the company recently create a repository just for the wrong purposes? Did the lead dev leave?
    Best to conduct a brief overview of the code commits on GitHub/GitLab, focusing on the contributor profiles, and commit dates, frequency.
  3. Audit licenses of 3rd party Open-source libs
    Using Open-source code does not mean it’s free to use. Some OSS projects have the whole codebase publicly available, but using it without a license can cause legal consequences. E.g., you can use Legally to audit licenses for JS-based projects.

Some more points (though less technical, more on Product & Legal) -

  1. Legal: Data leak or GDPR issues
    Assuming there are live/production users of the tool, worst case, if there’s a data leak reported, or a GDPR case gets filed after the acquisition for some pre-acquistition incident, the tool’s existing owners should be held legally responsible.
  2. Usability of the Product and Edge Cases
    Try to connect with the right customers of the product, and get some unbiased reviews of the product. E.g., if it is a Community-tech product, ask Community Managers to use it and gain feedback around the use-cases.
  3. Talk to real existing customers
    Try to talk with a couple of existing paying/production users.
  4. Dev Team: Existing Devs should be available to assist for at least 2 months post-acquisition.
    Onboarding a new developer to a codebase takes months. Best if we can onboard as dev contractors (if they’re willing to)
  5. Monetary Agreement: Hold partial cash up to 1–2 months post-acquisition. (Just to be on the safer side during this acquisition)

I’m always learning! If you have any suggestions, please reach out/comment!

PS: Some bias in the following notes: we plan to integrate the product within our offering and not monetize it. The Customers/Market is not a major deal-breaker.

PS: At the time of writing the article, the acquisition was still undergoing negotiations. There might be more learnings I share in the future!

WIP!
Sameer