How to Prepare Your Engineering Team for Technical Due Diligence in a Software M&A Process

In a software M&A transaction, technical due diligence is where the rubber meets the road. It’s the moment when a buyer’s team—often composed of senior engineers, CTOs, or external consultants—dives deep into your codebase, infrastructure, and development practices to validate what’s been promised on paper. For founders and CEOs, this phase can be both high-stakes and highly revealing.

So how do you prepare your engineering team for this level of scrutiny? The answer lies in a combination of technical hygiene, narrative alignment, and strategic readiness. Below, we outline a structured approach to ensure your team is not only prepared but positioned to inspire confidence in the buyer’s technical evaluators.

1. Understand What Buyers Are Really Looking For

Before diving into code cleanup or documentation sprints, it’s important to understand the buyer’s perspective. Technical due diligence is not just about code quality—it’s about risk mitigation and value validation. Buyers are typically assessing:

• Codebase quality and maintainability: Is the code modular, well-documented, and scalable?
• Architecture and infrastructure: Is the system designed for reliability, performance, and future growth?
• Security and compliance: Are there vulnerabilities, data privacy risks, or regulatory gaps?
• Team and process maturity: How disciplined is the engineering culture? Are there CI/CD pipelines, version control standards, and testing protocols?
• Technical debt and roadmap alignment: What skeletons are in the closet, and how do they impact future development?

Firms like iMerge often advise clients to anticipate these areas early in the exit planning process, ideally 6–12 months before going to market. This allows time to address red flags before they become deal-breakers.

2. Conduct an Internal Technical Audit

Think of this as a pre-diligence dry run. Assemble a small task force—typically your CTO, lead engineers, and possibly an external advisor—to perform a candid assessment of your technical stack. Focus on:

• Codebase review: Identify areas of high complexity, outdated dependencies, or lack of test coverage.
• Architecture documentation: Ensure you have up-to-date diagrams and explanations of system components, data flows, and integrations.
• Security posture: Review access controls, encryption practices, and any past incidents or penetration test results.
• DevOps and deployment: Document your CI/CD pipeline, rollback procedures, and uptime metrics.

This internal audit not only surfaces issues but also helps your team practice articulating the “why” behind technical decisions—something buyers will probe during diligence calls.

3. Align the Engineering Narrative with the Business Story

One of the most overlooked aspects of technical due diligence is narrative alignment. If your pitch deck touts “enterprise-grade scalability” but your infrastructure is a monolith with no horizontal scaling, that disconnect will raise eyebrows.

Ensure your engineering team understands the strategic positioning of the company. For example:

• If your value proposition is speed of innovation, be ready to showcase agile release cycles and feature velocity.
• If your moat is data, be prepared to explain how your architecture supports data integrity, analytics, and compliance.

As we noted in Due Diligence Checklist for Software (SaaS) Companies, buyers are increasingly focused on how technical assets support long-term defensibility and growth. Your engineers should be able to speak to this fluently.

4. Prepare for Live Sessions: Code Walkthroughs and Architecture Deep Dives

Buyers will often request live sessions with your technical team. These may include:

• Code walkthroughs: Demonstrating key modules, design patterns, and test coverage.
• Architecture reviews: Explaining system design, scalability, and third-party dependencies.
• Security Q&A: Discussing how you handle vulnerabilities, data protection, and compliance frameworks (e.g., SOC 2, GDPR).

To prepare, conduct mock sessions internally. Assign a facilitator (often the CTO) to lead the discussion, and coach team members on how to answer questions clearly and confidently. Avoid overly technical rabbit holes unless prompted—focus on clarity, rationale, and risk mitigation.

5. Clean Up the Codebase—But Be Strategic

It’s tempting to launch a last-minute refactoring sprint, but resist the urge to overhaul your codebase right before diligence. Instead, focus on:

• Removing deprecated or unused code
• Improving documentation and inline comments
• Ensuring test coverage for critical paths
• Standardizing naming conventions and folder structures

Buyers don’t expect perfection—but they do expect professionalism. A clean, well-organized codebase signals engineering discipline and reduces perceived risk.

6. Document Everything—And Make It Accessible

Documentation is often the unsung hero of technical due diligence. Ensure you have:

• Architecture diagrams and system overviews
• API documentation and integration guides
• Security policies and incident response plans
• Development workflows and deployment procedures

Organize these materials in a secure, shareable format—often within a virtual data room. As we discussed in Completing Due Diligence Before the LOI, having this level of readiness can accelerate the deal timeline and build buyer confidence early in the process.

7. Coach Your Team on Buyer Interactions

Finally, remember that due diligence is not just a technical exercise—it’s a human one. Buyers are evaluating your team as much as your technology. Coach your engineers to:

• Be transparent about known issues—but frame them with mitigation plans
• Stay calm under pressure and avoid defensive responses
• Demonstrate pride in the product without overselling

In some cases, the buyer may be evaluating whether to retain your team post-acquisition. How your engineers present themselves can influence retention bonuses, earn-out structures, or even the buyer’s willingness to proceed.

Conclusion

Preparing your engineering team for technical due diligence is not just about passing an exam—it’s about telling a coherent, credible story about your technology, your team, and your future. With the right preparation, you can turn a potentially stressful process into a strategic advantage.

Founders navigating valuation or deal structuring decisions can benefit from iMerge’s experience in software and tech exits — reach out for guidance tailored to your situation.