Bravedo: Tech Due Diligence – the merger and acquisition lifesaver

Mergers and acquisitions are very involved processes. All kinds of numbers – financials, the number of clients, staff count, overall cost structure and so forth – are examined closely, again and again.

But typical metrics leave something important out in IT and especially the SaaS space: How can you know the software development process is in good shape? Or that information security is at a good level? Or that the codebase of the service is future-proof? That’s why Bravedo chose to take a page out of the book of experienced players and carry out a tech due diligence project.

Bravedo is a Finnish supergroup of companies that share the mission to bring out the best of humanity through technology and services. They have a combined revenue of over 600MEUR. They were researching the possible acquisition of a SaaS company and saw risks that should be eliminated with a due diligence project: “The tech stack is the core of any SaaS company. without being able to closely examine the technological aspects of a company, there are simply too many unknowns to reach a go/no go decision concerning acquisition”, says Iikka Lindroos, CDDO of Bravedo.

Tech due diligence projects have typically been within reach for only large corporations, but in the age of startups, lightweight options are available for smaller companies, too.

A technological due diligence project can have many different perspectives. For Bravedo, primary points of interest were technical quality, technical debt, knowledge, and practices.

“When evaluating a company, it’s extremely valuable to be able to see how up-to-date the tech stack, how healthy the codebase, and how up to speed with information security the company is. For instance, there might be technological debt that has been building for years and years – that’s very difficult to see without digging deep into a company’s tech stack. At the same time, these factors must be taken to account in the investment decision”, says Jaakko Pallari, CTO at Polar Squad and part of the Bravedo due diligence project team.

Mutual benefits

The due diligence project was beneficial for all parties involved. Bravedo was able to make an informed decision, while the Saas company under examination got a thorough health check of their systems: “Both companies got a lot out of the process – we were able to make an informed investment decision, while the company we acquired hit the ground running, armed with a clear list of improvements to take their technologies up to speed in short order”, states Lindroos.

The benefits of carrying out a technological due diligence project are numerous, from an investment as well as risk control perspective: “Even though the company we acquired represents a fraction of our revenue, it could have posed significant risks in terms of, for instance, compliance with GDPR or other info security aspects. Having an impartial third party to support us in this acquisition process proved to be invaluable”, says Lindroos.

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Have a chat with Tuomas Lindholm –
tuomas.lindholm@polarsquad.com – +358 40 177 1719