You've built your business with care, navigated challenges, and now you're considering an exit strategy. Whether you're in active acquisition talks or just beginning to think about your company's future, there's a critical element that many business owners overlook until it's too late: technology due diligence.
When a potential buyer evaluates your business, they're not just looking at your revenue, client list, and growth potential. Increasingly, they're scrutinizing your technology infrastructure with forensic precision.
Why? Because technology integration problems can derail an otherwise perfect acquisition.
"We've worked with clients where, because of going in and setting security standards or certain IT standards in place, they were able to present their company to different buyers and get a higher valuation," explains John Ohlwiler, CEO of Sentry Technology Solutions. "Meeting IT standards, meeting compliance standards, meeting security standards, are usually pretty important to buyers."
Outdated systems, security vulnerabilities, and technology debt aren't just operational issues—they're direct threats to a company's valuation.
Today's acquirers aren't just kicking the tires of your technology; they're performing a comprehensive evaluation that includes:
According to research from McKinsey & Company, companies that perform technology due diligence on acquisition targets are 2.8 times more likely to achieve a successful outcome than those that don't. Yet the statistics are sobering: 76% of technology acquisitions fail to meet their financial objectives, and according to a recent UK Tech News report, "more than 70% of integrations are currently failing to meet their expected value, often due to overlooked technology gaps." This represents billions in lost value annually.
Consider this scenario we've witnessed firsthand:
A pest control company was acquired by a larger firm. The owner had used outdated software and manual customer management systems for years. A year and a half after acquisition, the new owners were still manually extracting data from legacy systems, trying to integrate it with their platform, and dealing with customer service disruptions.
The result? Reduced acquisition price, delayed integration, frustrated customers, and significant unexpected costs for the buyer.
This isn't an isolated case. We regularly see companies:
Preparing your technology infrastructure before acquisition talks begin can significantly increase your company's valuation. Here's how:
Beyond M&A reports that 80% of tech executives consider data security and privacy the most important factors in technology due diligence. This focus on security isn't just about compliance—it's about protecting the value of the acquisition itself. A 2024 Gartner study found that "poor data quality costs organizations an average of $12.9 million annually, and this figure rises significantly in the context of M&A integration."
Technology that can easily scale demonstrates future growth potential—a key factor in valuation calculations.
Modern, integrated systems with proper automation show operational efficiency that translates to better margins.
Systems designed for smooth transition mean less customer and operational disruption during integration—a major concern for buyers.
As we move through 2025, several M&A trends are directly impacting technology due diligence:
When preparing for acquisition, an independent technology assessment provides credibility that internal evaluations can't match.
"No one wants to call their own baby ugly," notes Ohlwiler. "Sometimes it takes a good third party to come in and look at both [merging companies'] systems and say, 'We're going to take the phone system from here, the client management system from here...because of this merger and size, this particular system from either firm isn't going to work.'"
Many deals falter because technology evaluations happen too late in the process—often after the letter of intent is signed and major terms are already negotiated.
Whether your exit timeline is months or years away, strategic technology planning should start now. Here's your roadmap:
The biggest mistake we see? Treating technology as a cost center rather than a strategic asset that drives valuation.
Companies focused solely on minimizing IT costs often miss investment opportunities that could return 5-10x their value in an acquisition scenario. Strategic technology investments made 18-24 months before an exit can yield significant returns.
As M&A specialists with deep technology expertise, Sentry Technology Solutions has guided numerous companies through successful technology due diligence processes. Our team has sat on both sides of the acquisition table and understands exactly what buyers are looking for—and what raises red flags.
Learn more about our comprehensive M&A technology services and how we help companies maximize their valuation through strategic technology planning.
Don't let technology issues diminish your company's value after years of hard work. Take control of your technology narrative before buyers write it for you.
Thinking about preparing your company for acquisition? Schedule a confidential discovery call today to discuss how your technology infrastructure could impact your valuation.