Having multi-disciplinary technical leaders that understand all the different types of companies that may be considered for acquisition, funding, or post-investment growth is costly and often involves finding a unicorn.

We have technical leaders with decades of experience throughout the historical evolution of technical architectures and coding standards and methodologies. Calling upon our collective experience, we can evaluate not only the adherence to coding standards and the robustness of the software but also how the products can scale and integrate. We establish the cost to maintain existing code, add new features, and meet the market needs of an ever-changing marketplace. Our technical due diligence includes:

• Completion of our vetted due diligence checklist allows investors or acquirors to see a company’s readiness to grow product and technology post-event. The checklist reviews the maturity of the engineering processes through existing diagrams, procedures, and documentation. We also examine product roadmaps, bug backlog, release cycles and automation. By providing investors and/or acquirors with a broader view of the extensibility and scalability of the technology, we can help decision makers model technology costs and the company’s ability to integrate or pivot as necessary.

• Technology to Market mapping allows investors and/or acquirors to examine growth opportunities. The mapping couples our market and competition overview with technical and product flexibility and extensibility. We work to establish levels of effort and technology team structure necessary to meet the company’s growth needs or the potential integration with a parent product suite or service.

• Team dynamics and personnel evaluation provides information to the investor and/or acquiror about the culture of the technology team, the strengths and weaknesses of the team, and the identification of key personnel. This analysis aids in the establishment of the post-event fiscal requirements and use of proceeds. Through the identification of key personnel, we offer recommendations regarding retention programs and incentives. We also provide alternative staffing solutions or team structures depending on what we find during the diligence process.

EXAMPLE

The venture capital firm wished to invest in a company working in the video advertising market catering to large restaurant chains and physician networks. They had established a basic term-sheet and were interested in understanding if the product and technology could support a 5X growth in sales over the next 3 years.

We started by asking the video company to provide both a sales and a technical demonstration so we could understand how the company positions their solution and how they describe their technology. After the demonstrations we provided an initial set of information requests (i.e. technical diagrams, organizational charts, product roadmap, etc.). Using the provided information, we scheduled four “deep dives” with key personnel to understand the fundamentals of the solution, the technical infrastructure, and the team. Our report to the VC firm identified 3 key areas that needed attention and could impact the pricing of the funding round.

• The need for the team to invest in a more robust and reliable software release process to increase existing customer satisfaction.

• Removal of proprietary caching technology which ultimately would lessen the value of their solution to a longer-term exit. We also established a rough level of effort for this task using either existing staff or staff augmentation.

• The potential loss of key software architects and engineers in the next year due to their wishing to retire or move to different geographic areas.

Upon completion of our due diligence, we stayed on for a short 2-month engagement to help the company establish a technology plan for the caching solution and new product and engineering team structure.

Intellectual property is an integral facet of most modern transactions, whether M&A or financings.

Traditionally, many acquirers and investors have thought of due diligence as a routine, check-the-box exercise, to be parceled out to an uncoordinated network of law firms, auditors, and operating executives. But IP diligence rarely fits that mold. In any non-trivial case, IP diligence requires extensive inter-disciplinary cooperation, as it typically involves questions of law, technology, competitive analysis, product management, channel strategy, and many other interacting domains,

Every scenario is different, but in a typical engagement, MSP provides a thorough, actionable analysis of the following questions:

• What is the scope of the target’s IP portfolio?

• How effective is the portfolio, as both a sword and a shield?

• Are there major holes in the portfolio?

• Are there significant encumbrances on any of the IP assets? If so, can they be cured?

• How will the current morphology of the IP portfolio affect integration (in the case of M&A) or staffing (in the case of a financing)?

• Would the portfolio benefit from weeding & feeding? If so, is the client well-positioned to make the necessary investments?

• Can the proposed transaction create additional value by refactoring the IP portfolio, via spin-outs, cross-licensing, or partial asset acquisitions?

• How can the client minimize the IP risks – and maximize the IP benefits – of the proposed transaction?

It is impossible to answer these questions from a siloed perspective – even if the silo is that of an expert IP attorney. But MSP’s cross-disciplinary team can provide timely and seamless strategic advice on the most complex IP transactions.

EXAMPLE

Our client, an enterprise software vendor, was looking to acquire a smaller vendor of a point solution, in order to round out its product line. The target’s tech stack relied heavily upon open source components. Unfortunately, our client’s distribution model was different from that of the target, and potentially violated the license provisions of many of the OSS components used by the target.

We analyzed a BOM with over 100 OSS components, and helped our client determine, for each component:

• Can this component be used as is?

• Can this component be used with modifications, and if so, are those modifications practical and cost-effective?

• Can this component be replaced with an equivalent component, with more permissive licensing terms?

• Must this component be re-written from scratch, and if so, what is the scope of this effort?

This project could not have been further from traditional, check-the-box diligence. The acquisition had significant strategic implications for the client, and the diligence required deep inter-disciplinary insight, drawing upon law, technology and product management, all delivered on a demanding timeline. It would have been cumbersome, if not impossible, to complete this assignment using the traditional siloed approach to diligence offered by law firms, auditors, and tech consultants.