Generally speaking, the aim of a technical due diligence is to help investors get a clear picture of the technical side of a company they want to invest in. It points out both strengths and weaknesses of the technical side of a target company.
The digital transformation clearly points out the importance of a company’s underlying technology. As quickly as companies raise because of technological advantages and efficient IT-based processes, so quickly others fall behind. Taking a company's technology, the responsible team and the used processes into account nowadays is necessary to get the correct valuation of a target company.
We at BitFlow developed a unique approach which delivers quick results. After approximately three days, our clients get our basic report highlighting critical areas that require additional attention. In a second step, we further investigate those critical areas what – depending on the concrete project – takes another 6 – 12 days.
In order to get the necessary information, we combine both qualitative and quantitative aspects with our technical due diligence. On the qualitative side, we conduct interviews with key people; such as CTOs and CIOs, do product walkthroughs, check the system architecture and code quality, examine the underlying processes, and compare the company’s vision and growth plan with the product road map and the employee’s skill sets. On the quantitative side, we evaluate different metrics and key performance indicators, such as the proportions of code written by one person, which helps to identify key person risks.
Depending on our clients’ specific requirements, they receive either slide-based reports, formulated reports, or both. No matter the format, our reports are distinguished by clear statements and are easy to understand, even if you don’t have a technical background.
The development of a report depends on the number of critical areas identified in the basis report, some of which may not be relevant to the client’s strategy (e.g. merger or rollup). This is why after we create the basis report, the client receives a detailed overview of what areas need to be investigated and how much time this will take. The client can select or deselect certain areas depending on their strategy. As we charge according to daily rates, the full price of a technical due diligence is clearly stated after the basis report is created.