The Hidden Cost of Skipping Tech Diligence and How to Turn It Into a Value Lever
TL;DR
Skipping technology due diligence quietly erodes portfolio value. Learn how modern Tech Readiness turns risk into growth for private equity operators.
Private equity is losing millions in hidden technical debt.
Every operator knows the story. A company looks perfect on paper: strong EBITDA, smart leadership, clean books. Then integration week arrives, and everything starts to unravel. Systems do not connect. Reports do not reconcile. Automation plans stall before they start.
The deal did not break. The technology did.
Why Tech Diligence Really Matters
Financial and legal diligence are standard practice. Technology diligence still is not, and that gap is expensive.
Legacy systems, brittle integrations, and messy data do more than slow you down. They limit how far a company can scale after acquisition.
Most firms still treat technology diligence like an IT audit:
- Are the servers patched?
- Are backups in place?
- How much will upgrades cost?
That is the starting point. The real question is:Can this company scale, automate, and integrate at portfolio speed?
Without that answer, five to fifteen percent of deal value can disappear before your 100-day plan even begins.
The Real Cost of Skipping Tech Diligence
When you skip a full technology assessment, you are not saving time. You are buying risk.
| Missed Area | Typical Outcome | Financial Impact |
|---|---|---|
| Legacy codebases | Feature delivery slows by 3 to 6 months | £250K to £1M lost opportunity cost |
| Manual processes | Efficiency stalls and OpEx rises | +10 to 20% OpEx increase |
| Dirty data | Misreporting and forecasting errors | Up to 1x EBITDA misvaluation |
| Security gaps | Compliance or insurance problems | 2 to 4% margin hit |
| No integration roadmap | Delayed synergy capture | 6 to 12 months lost growth |
These issues rarely appear in the model until they surface after the deal closes.
What Modern Tech Diligence Looks Like
Modern diligence is not a checklist. It is a readiness scan for value creation.
It answers three questions that separate scalable deals from slow ones:
- Secure: Is the foundation safe and defensible?
(Cyber posture, data handling, vendor exposure) - Intelligent: Can data move through the business and fuel decisions?
(Integration, analytics, data architecture) - Perform: Can we build, automate, and scale faster once we own it?
(Cloud readiness, modularity, automation potential)
This is the Tech Readiness Model, a way to assess technology as capability capital, not cost.
Turning Diligence Into an Advantage
Done correctly, technology diligence becomes a value lever, not a risk audit.
- Faster 100-day plans, because the roadmap is clear before Day 1
- Higher exit multiples, because data and systems can scale
- Portfolio-wide advantage, as shared architectures compound ROI
One MOHARA client uncovered a 20 percent EBITDA uplift before closing simply by mapping automation readiness. That roadmap became their post-deal growth engine.
This is what we call digital headroom: the capacity to grow when your technology can keep up.
Moving From Audit to Advantage
Skipping technology diligence used to be a shortcut. Now it is a liability.
The best operators understand two things:
- Every company carries hidden technical debt.
- Every readiness point found before acquisition becomes alpha after it.
Technology diligence is not just risk management. It is value insurance.
Download the Tech Readiness Pre-Deal Checklist
Use our 15-point framework to benchmark technology readiness across security, data, and automation before the term sheet is signed. Designed for operating partners, investment directors, and portfolio CTOs who want to catch hidden risks and turn them into growth levers.
Download Checklist →FAQ
Q: Why does technology diligence matter in private equity?
Because hidden technical debt can quietly destroy value and delay portfolio growth.
Q: How does modern diligence differ from a standard IT audit?
It focuses on scalability, automation, and integration potential, not just infrastructure health.
Q: What is the Tech Readiness Model?
A structured approach to evaluate how secure, intelligent, and high-performing a target's systems are.
MOHARA Team
Innovation & Strategy