The Acquirer's Advantage: Your Essential IT Due Diligence Checklist

1. Document Your Server & Network Inventory

Key takeaway: Maintain a living inventory of all physical & virtual assets so there are no hidden surprises post-close.

[ ] Server & Network Inventory: Is there a complete inventory of all on-premise servers, network hardware (switches, routers, firewalls), and their age/warranty status?
[ ] Performance & Reliability: Are there records of system uptime, performance bottlenecks, or recurring hardware failures?
[ ] Scalability: Can the current infrastructure support projected business growth, or will immediate capital expenditure be required?
[ ] Cloud Services: What cloud services (AWS, Azure, etc.) are in use? Review configurations, costs, and security settings.
[ ] Backup & Disaster Recovery: Is there a documented and regularly tested backup and recovery plan? Where are backups stored, and how quickly can the business be restored?

2. Strengthen Your Cybersecurity & Risk Posture

Key takeaway: A single vulnerability can crater deal value—verify policies and recent test results.

[ ] Security Policies: Are there formal, written cybersecurity policies in place? Are employees trained on them?
[ ] Access Control: How are user access rights managed? Is multi-factor authentication (MFA) implemented on critical systems?
[ ] Vulnerability Management: When was the last vulnerability scan or penetration test performed? Were critical issues remediated? According to the Verizon DBIR 2024, 32% of breaches involve unpatched systems.
[ ] Endpoint Security: What antivirus/antimalware software is deployed on workstations and servers? Is it centrally managed and up-to-date?
[ ] Incident History: Has the company experienced any security breaches or major cyber incidents in the past? How were they handled?

3. Rationalize the Software & Application Portfolio

Key takeaway: Map license costs & custom code risks early to avoid expensive technical-debt surprises.

[ ] Software Licensing: Is all software (Operating Systems, Microsoft Office, industry-specific applications) properly licensed and documented? Are there risks of non-compliance?
[ ] Proprietary/Custom Software: Does the company rely on custom-built software? Who developed it, and is the source code accessible and documented? This is a major area of potential technical debt.
[ ] SaaS Subscriptions: Obtain a list of all Software-as-a-Service subscriptions (e.g., Salesforce, Slack, etc.) and their associated costs.
[ ] Integration Points: How do the core software systems (e.g., ERP, CRM, accounting) connect and share data? Are these integrations stable and well-documented?

4. Evaluate the People & Processes Behind IT

Key takeaway: Talent gaps or over-reliance on single contributors are red flags for post-close execution.

[ ] IT Team Structure: Who is responsible for IT? Is it an internal team, a single person, or an outsourced Managed IT Services Provider? (If the answer reveals a gap or risk, this is a key area where a strategic partner like Preferred Data can add immediate value).
[ ] Key Personnel Dependencies: Is critical IT knowledge held by only one or two key individuals ("tribal knowledge")? What is the risk if they depart?
[ ] Vendor Contracts: Review contracts with all IT vendors, including the MSP, internet service providers, and software providers. Note contract terms, costs, and renewal dates.

Your Strategic Partner in M&A Technology

Navigating IT due diligence requires deep technical expertise and an understanding of the M&A landscape. As your dedicated technology partner, Preferred Data specializes in providing this clarity. We move beyond simple checklists to offer comprehensive Technology Due Diligence services, delivering a detailed report that highlights risks, opportunities, and a strategic roadmap for post-acquisition integration and optimization.

An acquisition is a bet on the future. Let us help you ensure that bet is built on a solid technological foundation. Contact us today to discuss how we can support your next acquisition.

Frequently Asked Questions

Why is technology due diligence so critical in small & mid-market deals?
Because IT flaws often only surface after the hand-over, impacting EBITDA and integration timelines.
How long does a typical technology due-diligence engagement take?
For SMB acquisitions Preferred Data can complete an assessment in as little as 10 business days.
What does an outsourced MSP like Preferred Data actually deliver during diligence?
A written report covering risks, remediation budget, and a 90-day post-close action plan.

Next Step

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