A Practical, Step-by-Step Guide to M&A Technology Engagement.

How to assess technology in a deal without contaminating valuation or over-engineering the answer

The whole point of this guide is to set out a clear, disciplined process for running a technology engagement during an M&A transaction.

It is designed for deal teams, executives, and advisers who need technology input that genuinely informs valuation, risk, and decision-making — not a future-state IT strategy.

The most important principle to hold throughout is this:

M&A technology work is not about designing the future.
It is about testing whether the deal thesis survives contact with technical reality.

Everything that follows is organised around that idea.

Phase 1 — Baseline Truth Capture (Rapid Review)

Objective: Establish what is real, not what is claimed.

This first phase is about stripping away narratives and getting to the ground truth as quickly as possible. Almost every target organisation has a story about its technology: how scalable it is, how “modern” it has become, or how easily it will integrate. Your job at this stage is not to argue with the story but to test whether it is supported by evidence.

This phase is intentionally quick, thorough, and somewhat uncomfortable.

How to approach it

Start by collecting existing artefacts only. Do not ask the target to create new documents “for diligence”.

The gaps, inconsistencies, and age of what already exists tell you a great deal about how the organisation actually operates.

You should expect to review:

• Application and infrastructure inventories (formal or informal)

• Hosting, cloud, and software contracts

• Security policies, audits, incidents, and risk registers

• Organisational charts, role descriptions, and dependency maps

Next, conduct a small number of highly focused interviews—typically 5 to 10. These should include:

• The CTO or senior technology leader

• An operations or service owner

• A security or risk owner

• A finance or commercial lead

• One or two long-tenured “linchpin” individuals
  

The goal of these conversations is not detail, but consistency. You are listening for alignment across answers, not depth in any single one.

What you are really looking for

During this phase, pay particular attention to:

• Contradictory answers to the same question

• Confidence without evidence

• Repeated reliance on “key people”

• Statements that begin with “we’re planning to…”
  

One question should be asked, in some form, in almost every interview:

“If this business doubled in size tomorrow, what would break first?”

This question bypasses aspiration and exposes structural limits.The outputs of Phase 1 are internal working materials, not presentation decks:

• A credibility-weighted baseline (what you trust, what you doubt)

• A known-unknowns list (areas you could not validate)

• A red-flag register (issues that could materially affect the deal)

If this phase feels messy, that is a sign it is working.

Phase 2 — Value, Risk & Drag Quantification

Objective: Translate technology facts into deal language.

Once you understand what exists, the next step is to express it in terms that matter to the deal. In M&A, technology only becomes relevant when it affects value, timing, or risk.

This phase is about disciplined quantification.

What must be quantified?

First, assess integration drag:

How long will integration realistically take, given the current state?

• What additional cost will be incurred during that period?

• What activities or synergies are delayed as a result?
  

Second, monetise technology debt:

• What remediation is unavoidable to operate safely and scale?

• What is optional or deferrable?

• What is the realistic cost, not the idealised one?
  

Avoid maturity models or qualitative scoring. They obscure more than they reveal.

Third, calculate cost-of-delay:

• If synergies slip by 6, 9, or 12 months, what is the financial impact?

• Where does technology directly constrain the timing?
  

Finally, assess operational fragility

Exposure to outages or service failure

• Security and compliance risk

• Dependency on a small number of individuals
  

If a risk cannot be monetised, it should only survive if it is clearly deal-critical.

By the end of this phase, you should have:

• A £-quantified view of technology exposure

• A risk ranking, clearly separating:

  • Deal-breakers

  • Price-adjusters

  • Manageable post-close risks

• Sensitivity impacts synergy and value cases.
  

At this point, technology has been translated into economics.

Phase 3 — Deal Impact Mapping

Objective: Shape the transaction, not the roadmap.

This is the phase where many technology teams make their most damaging mistake: they start designing solutions. Resist that instinct.

Your role here is not to fix anything but to shape the deal mechanics based on what you have learnt.

Take the quantified risks and exposures and map them directly to:

• Valuation adjustments

• TSA scope, duration, and cost

• Earn-outs and holdbacks

• Warranties and indemnities

• Integration sequencing constraints
  

For example:

• A brittle core system may justify a longer TSA

• Key-person dependency may require retention mechanisms

• Security gaps may drive warranties or conditions precedent

The outputs of this phase should be crisp and unambiguous:

• Clear implications for the SPA and TSA

• Explicit conditions precedent or post-close actions

• A list of assumptions that must be carried into IC papers
  

If a finding does not change the deal in some way, question why it exists.

Phase 4 — Executive Decision Making

Objective: Enable a clean go / no-go / reprice decision.

This phase is about clarity, not completeness. Executives do not need to know everything — they need to know what matters.

Your synthesis should answer four questions:

• What matters?

• What does it cost?

• What could destroy value?

• What is optional versus unavoidable?
  

A proven structure is:

1. Situation

2. Value at stake (£)

3. Top five risks (ranked)

4. Options (two or three only)

5. Recommendation

6. What must be validated post-close
   

There should be no architecture diagrams, no heatmaps, and no jargon. If it cannot be explained plainly, it is not ready.

Phase 5 — Post-Close Re-Baseline (Only if the deal proceeds)

Objective: Prevent diligence fiction from becoming delivery reality.

If the transaction completes, the most critical discipline is this: do not treat diligence artefacts as delivery truth.

Immediately post-close:

• Restart properly with a full baseline review

• Assume diligence materials are incomplete or biased

• Establish a delivery-grade understanding of the estate
  

This is where real transformation work begins — not before.

What this process deliberately avoids

This approach intentionally excludes:

• Full target operating model design during diligence

• Tool, platform, or vendor selection

• Agile, DevOps, or Cloud “recommendations”

• Maturity models disconnected from financial impact

All of these belong post-close.

Why this process works

This approach:

• Aligns technology directly to deal economics

• Protects executives from false certainty

• Creates a clean handoff from diligence to integration

• Prevents unvalidated plans from polluting valuation
  

So Whats Is the Bottom line ?

M&A technology engagement is not about the future state.
It is about validating whether the deal thesis survives contact with technical reality.

If you keep that principle front and centre, the process above will keep you honest — and keep the deal grounded in reality.